Global Pharma and Life Sciences deals insights: Year-end 2018

Underlying fundamentals remain strong

While the dollar value of the deals may not be significantly higher (due to variability driven by megadeals), the underlying fundamentals remain strong and companies have spent 2018 developing their forward looking strategies and planning many of the acquisitions or divestitures needed to enact them.

Despite a strong desire for companies to be active in M&A and continued acquisition and divestiture evaluation, many buyers were kept from executing on their inorganic growth agendas due to inflated valuations (related to bid/ask differences), leadership changes (allowing time for new strategy to be actioned), and political and regulatory uncertainty (impacting drug pricing and the broader healthcare landscape). While the total deal value was higher in 2018 (primarily driven by the Takeda/Shire $81.7B megadeal), lower volumes reflect the challenges faced in completing deals.

Number of announced transactions decline, value increases YE 2018 vs YE 2017

The Pharma and Life Sciences (PLS) industry has been volatile over the past two years, likely impacted by major events such as leadership changes at major companies, tax reform and mid-term elections.

The PLS sector has seen eight megadeals in the 2018 fiscal year, matching the number of megadeals that were announced in the 2017 fiscal year.

In Q4 2018 deal volume declined after two quarters of increases. Deal value continues to fluctuate depending on the presence of megadeals.

While the deal volume of Q4 2018 decreased, it remained similar to the levels exhibited through much of 2017.