FRANKFURT: The pha­­r­­­­­­­­­m­­a­­­ceuticals sector is facing an intensive period of mergers and acquisitions in the coming years, even if US firms Pfizer and Allergan recently failed to tie the knot, the corporate consultancy firm EY said on Monday.

“We’re going to see a high level of investments and divestments in the pharmaceuticals sector in the coming years,” said Gerd Stuerz, analyst at EY.

In April, Pfizer and Allergan calle d off a$160 billion (144bn euro) tie-up to create a new world leader in pharmaceuticals ahead of Switzerland’s Novartis due to a US crackdown on tax-saving mergers.

But that is unlikely to signify the end of a wave of major deals in the sector, EY said.

“Companies will sell off entire divisions or buy new ones in order to strengthen their position,” said another expert Siegfried Bialojan.

In face of fierce competition, external growth is now key for many companies.

“Pharmaceutical groups can only present innovations quickly if they buy these from outside,” Bia­lojan argued.

After a record year for M&A (mergers and acquisitions) in the pharmaceuticals sector in 2014, 2015 would have been even better if the tie-up between Pfizer and Allergan had materialised.

Bialojan predicted that the total market value of M&A deals could soon reach around $200 billion each year.

A number of major deals have been signed in recent years. After its failure to acquire Allergan, Pfizer rec­­­ently announced plans to buy Anacor Pharm­aceu­ticals, a specialist in ecz­ema treatment, for more than $5 billion.

Published in Dawn, May 31st, 2016