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Is The Macro Biotech Trend Pointing Up?

US tax reform has sparked a fresh wave of M&A in the biotech sector, representing a trend that Biotech Growth Trust manager Geoff Hsu believes has further to run and hopes to exploit after a difficult year for the investment trust.

Hsu notes that M&A in the sector was lower than expected last year, as a result of uncertainty surrounding the US government’s drug policy and question marks surrounding tax reform. However, now there is greater clarity on both fronts, consolidation activity has increased.

‘The 2018 run rate appears to have picked up and is on par with the heady days of 2014–15,’ Hsu said.

In part, he believes this is down to the significant amounts of cash that drug companies have available following the 15.5% one-time repatriation tax that has been applied to cash held overseas. This cash has been unlocked for acquisitions, share buybacks and dividends. Biotech companies have also benefited from the lowering of US corporation tax from 35% to 21%.

With this climate heating up, some of the smaller biotech companies are in direct focus heading into the rest of this year. Potential M&A Candidates? Time will tell but for now, there are a number of smaller enterprises making big waves in the market this week.

Click Here To See 3 Biotech Stocks Riding A Big Wave This Week