Enforcement May Stymie Health-Care Deal Activity in 2016

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By Che Odom

Dec. 21 — While mergers and acquisitions in the health-care sector likely will remain robust in 2016, ongoing enforcement activity may serve to slow deal growth, John Shire, partner in the Washington office of Fox Rothschild LLP, told Bloomberg BNA in an interview Dec. 17.

Shire, who represents sell-side and buy-side health-care companies in mergers and acquisitions, noted that there is government oversight from the Federal Trade Commission, the Justice Department, the U.S. Food and Drug Administration and their European counterparts.

To the extent that these entities and agencies increase their activity, “that could serve as a roadblock to future” M&A transactions, Shire said.

The health-care industry is consolidating at a furious pace, in part fueled by low lending costs, the search for efficiencies and even the Affordable Care Act, Shire said.

Mega Deals Under Scrutiny 

Among the mega transactions, Aetna Inc.'s $37 billion proposed acquisition of Humana Inc. continues to be scrutinized by the DOJ and FTC. Also under review is Anthem Inc.'s plan to buy Cigna Corp. for $54 billion.

The largest health-care deal of the year, the $160 billion combination of Pfizer Inc. and Allergan Plc., was announced Nov. 23, and it pushed annual global M&A volumes to a then-new record of $3.42 trillion, according to Bloomberg data.

Shire said he expects consolidations to continue in the life-sciences and biotechnology sectors, as well as among companies that make brand-name and generic products, as they all look for efficiencies.

Hospitals and health-services companies will also continue on a strong M&A pace, spurred on by regulations that are creating incentives for alignments, he added.

To contact the reporter on this story: Che Odom in Washington at codom@bna.com

To contact the editor responsible for this story: Yin Wilczek at ywilczek@bna.com

The interview is available at http://www.bna.com/2016-ma-predictions-m57982065401/.