Business Corpus: Will Big Pharma's Giant Maw Scoop Up These Small-Cap Players?Bristol-Myers Squibb, Eli Lilly and Pfizer will be among a cadre of Big Pharma players "hunting for deals to boost growth" in 2019, a Credit Suisse analyst predicted in a recent report. The post Will Big Pharma's Giant Maw Scoop Up These Small-Cap Players? appeared first on Investor's Business Daily.

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Bristol-Myers Squibb (BMY), Eli Lilly (LLY) and Pfizer (PFE) will be among a cadre of Big Pharma players "hunting for deals to boost growth" in 2019, Credit Suisse predicted in a recent report.

Total biopharma deals have reached about $114 billion in 2018, Credit Suisse analyst Vamil Divan said in a report Dec. 13. Takeda Pharmaceuticals' $62 billion takeover of Shire (SHPG) accounted for more than half of that.

But 2019 could see more among Big Pharma's number becoming acquisitive, Divan said. He cited repatriation of cash from overseas and U.S. corporate tax reform as drivers behind pharmaceutical companies' continued appetite.

"With U.S. corporate tax reform enacted, we could see larger-scale (mergers and acquisitions) as U.S.-domiciled companies have greater access to ex-U.S. cash/earnings and look for growth drivers as well as potential synergies to boost longer-term growth outlook," he said.

Big Pharma Eyes Bigger Growth In 2019

Divan lists AbbVie (ABBV), Bristol, Lilly, Johnson & Johnson (JNJ), Merck (MRK) and Pfizer among the Big Pharma companies looking to boost their growth outlooks in 2019. But among them, Bristol, Lilly, Merck and Pfizer are most likely to seek smaller deals, he said.

For AbbVie, "a larger deal seems less likely until current pipeline comes more into focus and Humira biosimilar impact in the (European Union is) better understood," he said. J&J could look for a deal in medical technology after wrapping its $30 billion Actelion Pharmaceuticals buy in 2017.

Investors would like to see Bristol make deals outside oncology, Divan said. For Merck, "we would strongly favor business development to boost the mid-late stage pipeline and add additional growth drivers to the Merck story beyond Keytruda/oncology and Gardasil," he said.

Further, investors are less focused on a large deal for Pfizer. But midsize buyouts could bring multiple new growth drivers to Pfizer's story.

Which Pharmaceutical Companies Look Attractive?

A number of small and midsize pharmaceutical companies are attractive takeout candidates, Divan said. The largest among them are Alkermes (ALKS), Galapagos (GLPG) and Ironwood Pharmaceuticals (IRWD).

Of eight potential takeout candidates, just Alkermes, Ironwood and Portola Pharmaceuticals (PTLA) have approved drugs.

Aimmune Therapeutics (AIMT) recently asked for approval of a peanut allergy treatment. Alder Biopharmaceuticals (ALDR) and Foamix Pharmaceuticals (FOMX) are expected to soon ask the Food and Drug Administration to approve a migraine prevention drug and dermatology drugs, respectively.

Others are in late-stage clinical studies, including drugs from Galapagos and Allena Pharmaceuticals (ALNA).

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