Deal volume has climbed higher every year since 2012. Spending on those deals hasn’t been as predictable, which is why we watch deal volume more closely. But dollar signs attract attention, so here is where the preliminary results point.
Combined spending in 2018 now stands at $330.3 billion and may rise slightly higher as we uncover more prices. The total is 21% higher than 2017’s $311.6 billion, but doesn’t come close to the $387.7 billion spent in 2014. That was the year Actavis plc (now NYSE: AGN) paid $66 billion for Allergan plc; Medtronic plc (NYSE: MDT) paid $42.9 billion for Covidien; and Actavis (then NYSE: ACT) acquired Forrest Laboratories for $25.0 billion. That year saw eight deals with prices higher than $12 billion.
Last year’s biggest deals include Takeda Pharmaceutical’s (TSE: 4502) $81.5 billion for Shire plc (NASDAQ: SHPG), Cigna’s (NYSE: CI) $67 billion deal for Express Scripts (NYSE: ESRX) and Sanofi’s (NYSE: SNY) $11.6 billion for Bioverativ (NASDAQ: BIVV). And there the mega-deals ended. While 2014 posted 46 deals with price tags of more than $1.0 billion, last year was nearly equal with 45 such transactions. It’s not the quantity, it’s the prices.
The fourth quarter of 2018 turned in a respectable $41.5 billion, which is 34% higher than the previous quarter.
A year-over-year comparison shows a loss of 64% against Q4:17’s $115.5 billion total, which includes the $78 billion CVS Health/Aetna (NYSE: CVS/AET) tie-up. Subtracting that anomaly, the fourth quarter of 2017 would have posted just $37.5 billion in combined spending, and would have lagged Q4:18 by 11%.
Measured by spending, the technology sectors usually dominate and that was certainly the case here. The four tech sectors were backed by $34.2 billion and accounted for 82% of the quarter’s total. The Pharmaceutical sector led with approximately $11.3 billion, thanks to three big deals: GlaxoSmithKline’s (NYSE: GSK) acquisition of Tesaro Inc. (NASDAQ: TSRO) for $5.1 billion, Advent International’s $2.2 billion deal for Sanofi’s European generics business, and Swedish Orphan Biovitrum AB (STO: SOBI) paying $1.5 billion for the U.S. rights to Synagis, sold by AstraZeneca (NYSE: AZN).
