Without tax reform, pharma M&A's still sluggish—but biotech's red-hot

M&A activity this year has tallied $207.6 billion across 1,040 deals in the pharma, medical and biotech sector, representing a 9.9% dip in value from the same period last year.

Back when the year began, the prospect of U.S. tax reform had pharma companies salivating for some M&A action. But with that reform still absent, drugmakers have put on the brakes instead.

Dealmaking in 2017 has so far seen a slowdown, tallying $207.6 billion across 1,040 deals in the pharma, medical and biotech sector, a new Mergermarket report (PDF) said. That's a 9.9% dip in value and 106 fewer transactions compared with the same period last year.

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The industry’s sluggish deal pace was particularly apparent last quarter; just $42.9 billion worth of deals came to fruition, the lowest quarterly value since the same period in 2014 and its $46.3 billion. And just one deal—Gilead’s $10.2 billion Kite buyout agreement, which will hand the Big Biotech newly approved CAR-T medication Yescarta—generated nearly 35% of the quarter’s dealmaking haul.

Make no mistake: It’s pharma that’s dragging down the overall category. Biotech, in fact, is red-hot, partly in thanks to the Gilead deal. Overall, the biotech field has already surpassed all annual totals that Mergermarket had on file, and its records date back to 2001.

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That’s not to say pharma M&A can't turn around—especially if tax reform shows up. Deal enthusiast Pfizer, for one, has listed uncertainty around tax reform as a reason to sit tight for now. Some analysts have suggested it may have its eye on Bristol-Myers Squibb, though, and that company would certainly cost a pretty penny.

Pfizer’s also potentially looking to sell off its consumer health unit, and analysts have suggested that Endo turn to the M&A arena to ease its struggles. Alvogen’s private equity owners have also held talks with Shanghai Pharmaceuticals that could lead to a $4 billion sale.

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