This year’s been a big deal for big deals in pharma, biotech and medtech: There have been 869 deals worth $354.3 billion, according to a new Mergermarket report – the most the firm’s seen since 2001 by value. This is attributed, of course, to the eight megadeals this year – representative of the mass consolidation going on (cough, inversion, cough) in the industry – which alone accounted for $220.3 billion.
Though Mergermarket predicts the market for mergers to remain strong in Q4 2014 and beyond, the IPO market is predicted to be bleak. Here are some standout observations from the report:
– This infographic:
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– Despite inversion being a driver for M&A deals, deals like the potential AstraZeneca-Pfizer merge went moot thanks to “too strong a tax inversion strategy rhetoric,” the report said. By contrast, the $54 billion Shire-Abbvie merge remains notable because it “carries with it all the benefits of transatlantic deal-making coupled with the assurance of a cash generating pipeline.”
– The Eli Lilly deal in which it bought Novartis’ Animal Health portfolio stood out perhaps for the wrong reasons this year – the $5.4 billion buyout was valued nearly five times the 2013 revenues – “desperation to be a leader in one segment has a price to pay,” the report said.
– Consolidation isn’t just left to the big guys. Thanks to next year’s round of Medicare competitive bidding, there’s going to be lots of merging among small suppliers of durable medical equipment. “In the best case scenario, a successful bid will saddle a company with drastically reduced Medicare reimbursement,” the report said, “while in the worst case, operators could lose out on contracts entirely.” Smaller players in the device supplier sector may have to merge to survive – while larger players can don a more acquisitive strategy to gain size and scale.