Monday's blockbuster biotech merger is once again fanning hopes on Wall Street of a revival in corporate dealmaking after three years of famine.

The all-stock deal between Idec Pharmaceuticals ( IDPH) and Biogen ( BGEN) is the second-biggest announced U.S. merger this year and seventh-largest worldwide.

It's also the latest in a flurry of corporate wheeling in the biotech sector, which also has been one of the stock market's hottest corners. With the Idec/Biogen deal, there have been 222 announced U.S. mergers in the biotech sector this year with a total dollar value of $16.9 billion, according to Thomson Financial. That's up from last year's pace, when there were 194 deals worth $13.7 billion at this time.

But the activity in the biotech sector stands as something of an aberration in what continues to be a woeful year for corporate deals. Notwithstanding today's transaction and Oracle's ( ORCL) hostile $6.3 billion bid for software manufacturer PeopleSoft ( PSFT), some say it's too soon to declare an end to the long M&A drought.

"We are quite a ways from a full recovery," said Tom Burnett, president of Merger Insight, a corporate advisory firm and an affiliate of Wall Street Access. "I don't think we are there yet."

For starters, May was the worst month for corporate deals in more than a decade. Moreover, even with Monday's biotech deal, M&A activity is still running behind last year's pace. And last year was one of the worst for corporate deals since the end of the last recession in 1992.

Little Pharma
Top U.S. biotech deals in 2003
Acquirer Target Price
Idec Biogen $6.6 billion
Johnson & Johnson Scios 2.4 billion
King Pharmaceuticals Elan 750 million
Novartis Idenix 612 million
Axcan Pharma Salix Pharmaceuticals 187 million
Source: Thomson Financial

To date, there have been 11,264 announced deals worldwide for a total dollar value of $520.2 billion, compared to last year's 12,480 deals valued at $548.9 billion, according to Thomson Financial. The U.S. numbers paint an equally bleak picture. As of today, there were 3,270 announced domestic deals valued at $155.2 billion, compared to last year's 3,402 deals worth $191 billion.

So far this year, the biggest announced U.S. deal is First Data's ( FDC) planned $7 billion acquisition of Concord EFS ( CE), a merger that would create one of the nation's largest electronic payment processing companies. Seven billion dollars is nothing to sneeze at, but it's a far cry from the mega-deals of the recent past.

Seasonality also plays a role in the pessimism. With the third quarter a notoriously weak period for dealmaking, the window of opportunity for a meaningful increase is closing as the July 4 holiday approaches.

Burnett, for instance, said he's not expecting a blitz of deals in the coming weeks. He wouldn't rule out more deals involving biotech companies because they are becoming the "minor leagues for major players" in the pharmaceutical business.

Investors banking on an M&A revival this year also should take notice of comments last week from executives at Morgan Stanley ( MWD), who contended it's premature to predict a significant uptick in corporate merger activity later this year. Additionally, investment banks continue to shed jobs, with Switzerland-based UBS ( UBS) saying last week it would give pink slips to about 500 employees in the coming weeks.

Still, any deal these days is good news for Wall Street's fee-hungry investment banks. And the biotech merger will most directly benefit Merrill Lynch ( MER), the adviser to Idec, and Goldman Sachs ( GS), Biogen's adviser.

With the second quarter coming to a close, the deal should cement Goldman as this year's leader in global M&A advising. The Wall Street firm, which is slated to report quarterly earnings on Wednesday, has been an adviser on $111 billion worth of corporate deals, according to Thomson Financial. Merrill, with $90 billion in deals under its belt, is battling J.P. Morgan Chase ( JPM) for third place in worldwide corporate advising work.