Buyers Flock to Pharmaceuticals, Again

Pharmaceutical deal activity made a comeback in the second quarter of 2018, with 41 transactions reported, and counting. That is the highest quarterly haul in two years, but what happened to dealmaking in the intervening period?

Deal volume dropped off soon after the 2016 presidential election, as companies and investors waited for President Trump’s promised tax overhaul. That legislation came in December 2017, and activity in this sector has picked up accordingly. In fact, the second quarter’s deal volume was 64% greater than that of the first quarter, and 156% better than what was reported in the second quarter of 2017, the sector’s nadir.

One of those transactions was a record-breaking $80 billion-plus deal, making for a total of $93.0 billion spent in the second quarter, which is the highest quarterly total ever (barely beating out Q4:14’s $92.6 billion). That $81.5 billion deal was announced by Japanese drug maker Takeda Pharmaceutical Co. Ltd., targeting the Irish drug maker Shire plc. Takeda is the largest pharmaceutical company in Japan and one of the global leaders of the industry.

Moving forward, President Trump has continued his grumbling about high drug prices and outlined a 44-page plan (called American Patients First) in May that details many potential actions his administration could take. That threat hasn’t slowed down M&A activity in the sector…yet.



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