Pharma's top 10 M&A deals of 2014's first half

Print 20 November 2014
Eric Palmer, Feirce Pharma

Mergers and acquisitions have been non-stop this year, with lots of deals done, and some doozies that were unable to cross the finish line. Here we look at what's happened in the first half of the year; we will round out the entire year's activity in another report early next year.

The top 10 deals in the first half of 2014 totaled nearly $90 billion in value, with Actavis' ($ACT) $25 billion deal for Forest topping the list. According to EvaluatePharma's estimates, the deals worth about $50 billion surfaced in just the second quarter, making it the biggest quarter since at least 2007 if megamergers are factored out.

Much of that action was driven by tax inversions, U.S. companies using a process to buy European companies to lower their tax rates without having to move their offices. That was usually not the only factor. Some companies diversified portfolios, or pipelines, but avoiding taxes was the back story for much of the action, at least until the U.S. Treasury Department took steps to curb it.

And it was the deal that didn't get done that may have had the biggest influence on the government finally clamping down. That was Pfizer's protracted and unsuccessful run at AstraZeneca ($AZN), which Pfizer ($PFE) saw as a way both to bring some much-needed firepower to its pipeline and to lower its tax bill with a U.K. domicile.

It was a huge deal, with Pfizer ratcheting up its offer to more than $115 billion--greater than the total value of the 10 in this report--before the deal collapsed. Because of its size and the vocal resistance from many sectors, it galvanized U.S. efforts to find a way to stop U.S. businesses from using what many saw as tax dodge. Even though it collapsed of its own accord, it led to new tax rules. That resulted in killing another big deal later in the year, when AbbVie ($ABBV) pulled the plug on its $54 billion buyout of Ireland's Shire ($SHPG) because of the tax change. Of course it will never be known how many others, unannounced or just being discussed, died after that.

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