There’s frenzy in deal making throughout the healthcare industry, as businesses look to strengthen current companies and diversify. In 2014 alone over $153 billion have been totaled in the industry, the highest year-to-date since the tracking of such data existed.
Moody’s, whose CEO recently shared their first quarter earnings, predicts that the trading whirlwind in the healthcare system will continue through the year. Major deals currently moving involve the attempted possession of Allergan (maker of Botox) by Valeant Pharmaceuticals, while at the same time Allergan is rumored to be looking to acquire Shire Plc. In addition, consolidation trades for Novartis and GlaxoSmithKline are also taking place.
With generic drug makers looking to build scale and diversify, the activity of trading will remain high; companies who make branded drugs will look to purchase those with high-potential. According to Reuters, the credit ratings agency also said that we’ll likely see more divestment “as drugmakers shake up their portfolios to weed out or beef up businesses that lack critical mass.”
The animal health division of Novartis was sold to Eli Lily and Co. and Merck & Co is looking to close on selling its consumer healthcare unit for $14 billion. Moody’s added that that the aspiration of lower taxes is motivating such deals, and it could be of a benefit for ratings of corporate debt when paired with high use of equity funding.
One of the largest potential takeovers is worth $100 billion, with Pfizer Inc. approaching AstraZeneca Plc in Britain, which could greatly benefit from the lower tax rate if the deal were to go through.