GADFLY: Big pharma mergers may suffer something of a malaise in 2018
Well, my prediction a year ago that biopharma mergers and acquisitions (M&A) would rebound in 2017 didn’t quite pan out. Last year was the sector’s third straight year of sequential deal-volume decline and the slowest since 2013. And the $95bn deal total for the year is a little flattering — 31% of that came from Johnson & Johnson’s purchase of Actelion. The good news is that most of the potential M&A drivers I mentioned last year are still intact. There’s a lot of money sitting around — cash stashes have grown for just about everyone but Johnson & Johnson and Gilead Sciences, which both made sizable acquisitions last year. Limited patent lives and the high and growing rate of research and development failure mean big pharma is constantly hungry for new drugs and drug candidates. And debt is cheap. There are a few things arguably making the case for M&A even more persuasive this year. US tax uncertainty has been resolved, and the new law looks largely favourable for pharma firms. Th...
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