Within life sciences, medical technology is among the sub-sectors that has seen plenty of deal activity this year and EY's Jeff Greene expects that to continue for the remainder of 2017.
In the first half of the year, "there's been a bigger mix of medical device deals than we normally would have expected to see," said Greene, EY's global transactions leader for life sciences, in a recent interview.
That's because the med tech sector is less affected by potential changes to the Affordable Care Act than people might be anticipating, he noted.
"Med tech M&A also continues to be driven by ongoing consolidation, improving equity prices and sufficient financial firepower to do deals," Greene said.
In April, Becton, Dickinson & Co. (BDX) said it was buying medical technology peer C.R. Bard Inc. (BCR) for $24 billion, the largest-ever deal for the 120-year-old acquirer. Bard primarily offers devices for vascular medicine, urology, oncology and surgery, while BD specializes in syringes and infusion products.
Also in April, Medtronic plc's (MDT) announced the sale of its patient care, deep vein thrombosis and nutritional insufficiency businesses to Cardinal Health Inc. (CAH) for $6.1 billion in cash. The businesses are part of the patient monitoring and recovery unit of Medtronic's minimally invasive therapies group.
Other transactions include Royal Philips NV (PHG) 's deal in June to acquire Spectranetics Corp. (SPNC) , a maker of devices used in minimally invasive procedures within the cardiovascular system, in a transaction that carries an enterprise value of around €1.9 billion.
For the remainder of 2017, assuming there's no resolution of policy uncertainty, Greene doesn't expect a lot of change from a deal activity standpoint.
"Among sub-sectors -- particularly in the U.S. -- we'd expect to see more med tech, CROs (contract research organizations) and adjacent spaces like consumer health and possibly animal health," he said.
In the CRO realm, deals this year include INC Research Holdings Inc. 's (INCR) merger with inVentiv Health Inc., which is backed by Advent International Corp. and Thomas H. Lee Partners. The transaction, announced in May and expected to be completed in the second half of the year, will create the second-largest biopharmaceutical outsourcing provider, one of the three largest contract research organizations and the largest contract commercial organization.
In June, Carlyle Group LP (CG) and GTCR LLC agreed to acquire contract research, development and manufacturing organization Albany Molecular Research Inc. (AMRI) for $21.75 per share in cash or $933.73 million. Also in June, Pamplona Capital Management LLP agreed to buy biopharmaceutical services company Parexel International Corp. (PRXL) for an enterprise value $5 billion. Earlier in the year, Quad-C Management Inc. in February acquired clinical research organization Pharm-Olam International Ltd.
As for biopharma, M&A will tend to focus on targets based outside the U.S., Greene said.
An example is Johnson & Johnson (JNJ) 's acquisition of Allschwil, Switzerland-based biotech Actelion Ltd. in a $30 billion deal completed in June.
Greene also noted that anticipation regarding potential tax reform factors into dealmaking. For larger companies, the change in tax rate is perhaps less of a factor than repatriation, he said.
The prospect of tax repatriation is holding companies back from doing larger deals, Greene said. "We hear larger players saying, 'We'll continue to consider doing smaller deals,'" he said, referring to transactions under $5 billion.
Looking further into the future, Greene sees strong deal activity across the life sciences industry.
"Longer term, the strategic fundamentals that support robust life sciences M&A, such as the need to replenish pipelines to support growth, aren't going away," he said, "so we see healthy deal activity across the sector in 2018 and beyond."
Editors' pick: Originally published July 28.