By LINDA A. JOHNSON and STEVE ROTHWELL

Associated Press

Merck scientist Janet Lineberger conducting research to discover new HIV drugs at the company plant in West Point, Pa.

* Drug makers trading to control costs and deploy surplus cash

In a big year for deal making, the health care industry is a standout.

Large drug makers are buying and selling businesses to control costs and deploy surplus cash. A rising stock market, tax strategies and low interest rates are also fueling the mergers and acquisitions.

It's all combining to make 2014 the most active year for health care deals in at least two decades. The industry has announced about $438 billion worth of mergers and acquisitions worldwide so far, about 14 percent of the $3.2 trillion total for all industries, according to data provider Dealogic. Overall, M&A is on track for its best year since 2007, the year before the financial crisis intensified.

"Health care has been a sleepy niche of M&A until recently, but the giant has been awakened," says Ken Menges, a senior partner handling mergers and acquisitions at law firm Akin Gump in New York.

To a large extent, the deals are being driven by "cost pressure on the entire health care system," as insurers and government health plans increasingly hold down or even reduce reimbursements to drug, device and service providers, says Ashtyn Evans, pharmaceutical and biotech analyst with investment firm Edward Jones in St. Louis, Mo.

Companies also are looking to expand market share, and boost their portfolios in hot areas such as drugs for cancer and hepatitis C, she says.

Originally posted here:

Health care leads the way in big year for deal-making