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Illustration: Shoshana Gordon/Axios

The pharmaceutical industry is sitting on a lot of cash and is ready to make big deals.

The big picture: Drug companies completed smaller deals during the pandemic and instead built up their cash reserves. But the prospect of federal legislation that could allow Medicare to set some drug prices and looming patent expirations will motivate many companies to start spending their pandemic windfalls.

Driving the news: CSL, a drug manufacturer based in Australia, said Tuesday it is buying Vifor Pharma for $11.7 billion.

State of play: These large deals are just the beginning, according to Wall Street analysts and company executives.

  • 18 of the largest global drug companies will have a combined $538 billion in cash on hand by the end of 2022 and billions more in debt-financing power, according to investment bankers at SVB Leerink.
  • Some companies, like Pfizer, BioNTech and Moderna, are "bolstered by a cash windfall from COVID vaccines and treatments," according to SVB Leerink.
  • Pfizer plans "to be very active in dealmaking, and we certainly have the ability to do that," Pfizer executive Aamir Malik said on an investor call to discuss the Arena acquisition.

Between the lines: The massive reserves, which also were boosted due to the Republican tax overhaul, will likely lead to larger acquisitions or possible pharma mega-mergers that haven't been seen since 2019.

What to watch: The deal-heavy JPMorgan health care conference is next month, so more deals could be imminent, or big M&A plans will be formulated there.

Go deeper

Ask Axios: What's the deal with "cashless" businesses?

Illustration: Brendan Lynch/Axios

Welcome to Ask Axios, where we answer your questions about the Columbus area.

Reader Nico asks: Can businesses legally refuse to accept cash for payment of goods and services? … Does the pandemic-accelerated trend of moving cashless overstep the laws on banking and money in the U.S.?

36 mins ago - World

Pentagon: 8,500 troops on high alert for possible deployment to eastern Europe

Photo: Anna Moneymaker/Getty Images

Defense Secretary Lloyd Austin has placed 8,500 U.S. troops on "heightened preparedness to deploy" to eastern Europe in case NATO activates its rapid-response force over tensions with Russia, the Pentagon announced Monday.

Why it matters: No decisions have been made to actually deploy U.S. forces, but the heightened alert level will allow the military to rapidly shore up NATO's eastern flank in the event that Russia invades Ukraine. The Pentagon warned that Russia has shown "no signs of de-escalating," and continues to amass troops on Ukraine's borders.

Updated 1 hour ago - Economy & Business

S&P 500 on track for worst-ever start to year

Data: FactSet; Chart: Axios Visuals

Stocks suffered their steepest drop of the year early Monday, putting the S&P 500 on course for its worst-ever start to a year.

Driving the news: The benchmark S&P 500 dropped for its fifth straight day, with losses nearing 3% in early trading, momentarily putting it on track to fall into a "correction." Some of the steepest losses were recovered in early afternoon trading.

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