Two drugmakers pay combined $20B for firms

The new year’s health care deals began to snowball Monday as Sanofi and Celgene Corp. scooped up assets that promise to offset pricing pressure for some of their top-selling drugs.

Within hours of each other, the two drugmakers announced deals worth about $20 billion combined. French giant Sanofi agreed to buy U.S. biotech Bioverativ Inc. for $11.6 billion to add treatments for hemophilia that still command high prices. And Celgene spent $9 billion on Juno Therapeutics Inc., getting into a breakthrough field of cancer therapies that cost more than half a million dollars.

The activity sent the deals volume in U.S. biotechnology to its highest level since the third quarter of 2010. Pharmaceutical companies are increasingly turning to specialty areas such as hemophilia because of the opportunities for higher prices, said John Rountree, a partner at pharma consulting firm Novasecta in London.

There may be more to come. Extra cash from the tax law passed at the end of 2017 has some investors hoping that the boom will be on in 2018. The tax law could unlock about $160 billion in overseas cash for big drugmakers to spend on takeovers, Goldman Sachs analyst Salveen Richter estimated.

Scientific innovation has pushed the number of late-stage and new marketed products to its highest since the 1990s, when companies were introducing drugs for blood pressure and cholesterol, said Christophe Eggmann, a Zurich-based fund manager with GAM Holding AG.

Both Sanofi and New Jersey-based Celgene are looking for new drivers of long-term growth. Sanofi’s best-selling insulin, Lantus, is up against competition from cheaper versions. Celgene, which suffered a setback last year for a drug it hoped could be a blockbuster, is planning ahead as its cancer treatment Revlimid is set to lose market exclusivity in about four years.