Sep 18 2009

Economy Sick, Health-Care M&A Healthy

By julie steinberg

Bogart and Bergman will always have Paris -- and in a downturn, investment bankers will always have health care.

And so follows health-care M&A staffing.

Jefferies Group Inc., which was recently sued for poaching UBS' entire health-care investment banking team, has added three more senior analysts to its health-care equity research team. Corey Davis (Pharmaceuticals research), Thomas Wei (Biotechnology research) and Jon David Wood (Life Sciences Tools) will join 14 other health-care analysts across equity and high yield.

Jefferies also named Ben Lorello, previously global head of health-care investment banking at UBS, as chairman of investment banking.

"The sector has great demands for capital, there's a tremendous amount of new company formation, so there's a lot of need for investment banking services. Health care is here to stay -- it's a growth industry," said Chris Kanoff, co-head of investment banking at Jefferies.

So why are banks so focused on drugs? (Aside from Mexico's recent decriminalization spree).

There's Obamacare, for one thing, which promises to shake up the industry, possibly providing opportunities for M&A action. And there's the spate of drug patents that are set to expire over the next few years, which puts pressure on pharma companies to supplement their R&D pipeline with acquisitions. Hence, the numerous deals that have been going down (Merck and Pfizer).

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