Global pharma & life sciences deals insights: Q1 2018

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Deal volumes continued on a downward trajectory in Q1 2018, relative to historical trends. 

M&A volumes continued to decline in Q1 2018, mainly in Pharmaceutical (down 67% in Q1 2018 vs. prior year) and Medical Device (down approximately 42%). Simultaneously, values increased relative to Q4 2017, driven by four megadeals.

Pent up demand and surplus cash are expected to drive greater activity going forward.  As a result, we believe the Pharmaceutical and Biotech sub-sectors will be active due to potential transformational deals combined with smaller, bolt-on acquisitions by larger companies. For the Generics and Specialty Pharmaceutical sub-sectors where scale is critical, mid-tier companies are expected to consolidate, driving additional activity. Corporate divestitures will also be an active space, with private equity buyers primed to acquire many of these carve-outs, particularly in the Medical Device sub-sector.

We expect to see increased deal activity in Q2 2018 driven by some potential Pharmaceutical and Biotech activity.  We believe Medical Device and Services/Other will be active, mainly driven by increased volumes rather than large megadeals.

Global Pharmaceutical & Life Science Deals Landscape Poised for Growth

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Announced M&A transactions declined in Q1 2018

Deal volume continued the decline that began in Q1 2017, while a series of 4 megadeals helped drive an increase in deal value in Q1 2018, relative to the last 2 quarters of 2017.

While deal value more than doubled compared to Q4 2017, Q1 2018 posted the lowest deal volume over the past two years.

While Q1 2018 lacked an individual transaction such as those that drove the spikes in Q1 2017 and Q2 2017, Q1 2018 had four deals larger than $5.0 billion, which suggests that megadeals are expected to continue in future quarters, similar to the trends exhibited over the two years prior to the second half of 2017. 

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Glenn Hunzinger
US Pharmaceutical and Life Sciences Deals Leader, PwC US
Tel: +1 (646) 818 7742
Email

James Woods
Principal, US Deals, PwC US
Tel: +1 (617) 530 4133
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