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The head office and logo of Valeant Pharmaceutical are pictured in Montreal on Monday May 27, 2013. Valeant announced an agreement Monday to buy Bausch + Lomb Holdings for US$8.7-billion in cash in a deal that will boost the Canadian drug maker's presence in the eye-care sector.Ryan Remiorz/The Canadian Press

Valeant Pharmaceuticals International Inc.'s $8.7-billion (U.S.) bid for eye-care company Bausch & Lomb Inc. on Monday wasn't just the largest purchase ever made by the deal-hungry company, it also made the list of top-ten mergers and acquisitions announced around the world this year.

And it's not alone. Health-care targets now make up four of the top ten spots in the global ranking of M&A, according to Thomson Reuters numbers pulled on May 28 -- deals worth nearly $46-billion.

But the year didn't start off that strong. All four of those top deals have come through the pipe since mid-April. And that's a reassuring sign for the sector, given that M&A was down in the first quarter of this year. Global health-care deals totalled just 201 acquisitions in the first quarter of 2013, down from 228 in the fourth quarter of 2012 according to KPMG's quarterly report on the sector. "Billion-dollar deals were few and far between," it noted.

Health-focused deals in the first quarter of the year certainly didn't experience the same kind of heat as investors in North America saw in the period. The S&P 500 Health Care Index has climbed a steady 16.5 per cent so far this year.

"Health-care has been the sector du jour over the last 18 months or so. It's across Big Pharma, but what's particularly driving it is the momentum is biotechnology," said Andrew Waight, long-time fund manager of CI Global Health Sciences Corporate Class mutual fund, in a recent interview. The red-hot stocks in this corner of health-care have been climbing as investors look for growth (rather than the traditional dividend plays the sector has become known for) and continue to demonstrate enthusiasm over upcoming drug launches.

So, will this recent pickup in activity fuel more deal-making? The KPMG research indicates we're already seeing more M&A coming out of biotechnology around the world. Volumes increased in that category more than almost any other over the course of the first quarter (only long-term care was up as much.)

It's a much smaller pool in Canada, though. On the S&P/TSX there are only two companies in the health-care index: Valeant, and medical imaging company CML HealthCare Inc. Valeant's chief executive Michael Pearson has made several comments about his company's M&A plans, most recently that he'd be interested in a "merger of equals" with another firm. CML has made several recent acquisitions, although they've been small.

Whether deal-making in the North American health-care space can stay hot remains to be seen, but there are some clues that consolidation will continue, especially in the U.S. In a recent health-care M&A outlook, PricewaterhouseCoopers noted that, "overall, the healthcare sectors remain active in M&A as companies prepare for the future of the US healthcare system."

But not all of that activity will be in the public markets, the PwC study from March of this year also called for 2013 to be a better year for private equity than 2012 by volume of deals.

(Jacqueline Nelson is a Globe and Mail Financial Services Reporter.)

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