London, United Kingdom, February 19, 2018 --(PR.com
)-- It's nothing new, big drug makers buy up smaller companies with innovative offerings to boost their product portfolios and research pipelines but given the wave of deal making in recent years, there is more competition for fewer worthy targets, which means that buyers often pay a sizable premium.
Last year, M&A deals in the pharmaceutical sector totaled $200 billion, led by Johnson & Johnson's $30 billion acquisition of Actelion and Gilead Science's $12 billion deal for Kite Pharma as well as the $75+ billion buyout of Aetna by CVS Health in December. PD Wealth Solutions strongly believes 2018 will exceed that mark as many of the largest, most cash-rich companies in the industry have not even begun to participate in M&A yet, and when they do, prices and deal volumes could step up significantly.
M&A activity is off to a blistering start for the sector in 2018 - Celgene's up to $7 billion agreed takeover of Impact Biomedicines and Novo Nordisk's $3.1 billion offer for Ablynx to name just a couple. Senior Wealth Manager Paul Graham said today, "These deals are a clear indication that Big Pharma is getting more aggressive again with acquisitions" and predicted "a phenomenal year for mergers and acquisitions across the board in both biotech and the broader technology sector."
PD Wealth Solutions believes that the recent U.S. tax reform, which lowered the tax rate for repatriating cash held overseas, has really helped smooth the way with technology and healthcare accounting for 85% of total S&P 500 untaxed cash overseas. (source: EY)
While acquisition price tags are relatively steep compared to 2016 and the first-half of 2017, this impending surplus liquidity can provide larger firms with more flexibility and confidence to assume risks. while many major pharmaceutical companies have been quite vocal about strengthening their product portfolios through M&A.
The market has experienced a long overdue correction in the past 24 hours or so and as Paul Graham remarked, "around $30 trillion globally, has been sitting on the sidelines for some time now, waiting for an event like this to take advantage of." PD Wealth Solutions suggests that investors ready themselves to act in kind, as opportunities like this are not to be missed for anyone looking to make solid investment returns in 2018.
For anyone wanting to know more or to request a copy of PD Wealth's recently published report on biotech M&A, please visit https://www.pdwealthsolutions.com