| ZURICH, April 29
ZURICH, April 29 The deal-making frenzy sweeping
through the healthcare industry should continue apace in 2014,
as companies look to stock up new drug pipelines, bolster
existing businesses and diversify into new areas, Moody's
Investors Service said on Tuesday.
Deals totalling more than $153 billion have been struck in
the sector so far this year, the highest year-to-date level
since Thomson Reuters began tracking such data.
Credit ratings agency Moody's said acquisition activity
should remain high as makers of branded drugs look to buy
companies with complementary or high-potential pipelines, while
generic drugmakers seek to build scale and diversify.
A complimentary trend is divestment, as drugmakers shake up
their portfolios to weed out or beef up businesses that lack
critical mass, Moody's said.
This was the driving factor behind a series of transactions
announced by Novartis AG for instance. The Swiss
drugmaker agreed to trade more than $20 billion worth of assets
with GlaxoSmithKline Plc, with Novartis aiming to boost
its cancer business while GSK sought to bolster its position in
Novartis also sold off its animal health division to Eli
Lily and Co.
Merck & Co Inc is also in the final stages of
selling its consumer healthcare unit for close to $14 billion,
with Bayer AG and Reckitt Benckiser Group Plc
among contenders to clinch a deal, people familiar with the
matter have told Reuters.
A desire to lower tax rates is also influencing dealmaking
decisions, Moody's said, adding this could be positive for
ratings of corporate debt in the sector when combined with high
use of equity funding.
Pfizer Inc, which has approached Britain's
AstraZeneca Plc on a potential $100 billion takeover,
could benefit from lower tax rates if a deal were to go through.
Reported plans for a new bid by Botox-maker Allergan Inc
- itself facing an unsolicited bid from Valeant
Pharmaceuticals International Inc - to take over
Britain's Shire Plc would also play into the trend.
(Editing by David Holmes)