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Health care companies, like many big American corporations, have a long list of complaints: regulation, global competition and, chief of all, taxes.
But increasingly, drug makers and medical device companies have found a way to self-medicate.
By buying a smaller overseas competitor and reincorporating abroad — a maneuver called inversion — health care companies are extricating themselves from the American tax regimen. Their new international domiciles also give companies easier access to overseas cash and make additional inversions more attractive.
Though nothing about the industry makes it more suitable for inversions than, say, food or technology, a number of factors have combined to make health care the focus of the inversion wave that is sweeping corporate America and annoying regulators in Washington.
A thoroughly international market for drugs means that health care companies are already global enterprises. An abundance of European drug makers means there are plenty of suitable targets. And as some health care companies strike inversion deals, others feel pressure to follow suit to avoid higher tax rates than their competitors.
On Monday alone, two multibillion-dollar health care inversions appeared to be sealed.
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With a fifth offer worth $53 billion, AbbVie, a big Chicago-based pharmaceutical company, has succeeded in winning tentative approval to buy the Irish drug maker Shire. If completed, it would be the biggest deal of the year. Also on Monday, Mylan Laboratories, based in Canonsburg, Pa., said it would acquire the international generic drug business from Abbott Laboratories in an all-stock deal valued at $5.3 billion and reincorporate in the Netherlands.
"As companies see competitors do it, they get more incentivized to do it as well," said Wilco Faessen, a managing director at Barclays. "The competitive pressure is higher when some companies do it and others haven't."
It appears that health care companies are playing an expensive game of keeping up with the Joneses.
"There is likely a herd mentality going on where pharma companies are afraid they will be put at a competitive disadvantage if they don't find a suitable foreign merger partner," said J. Richard Harvey Jr., a professor at the Villanova University School of Law.
Another factor driving health care inversions is that the industry is naturally a leader in mergers and acquisitions, with big corporations routinely buying smaller companies to grow and acquire new drugs instead of developing them.
"There's a lot of cost savings when you're dealing with acquisitions among pharmaceutical companies," said Juliane Keppler, managing director of the global tax and regulatory team within Nasdaq OMX Corporate Solutions. "It's less expensive to merge with a company than to go through all the R.& D.," she said, referring to research and development.
Because most big drug companies already have substantial international profits, inversions are particularly attractive. Once companies have headquarters overseas, they do not have to pay the relatively high United States tax rate on international earnings.
"For Pfizer, which has accumulated substantial profits in subsidiaries in low-tax foreign countries that would be taxed if paid to the U.S. parent, the territorial tax system is likely the most important tax benefit from such a merger, " a report by the Congressional Research Service said.
Finally, the robust European pharmaceuticals industry means that potential acquirers have many targets.
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"There are more assets that fit and have some strategic rationale and are available because they are public," Mr. Faessen said. "In financial institutions, you have regulatory issues. In the consumer sector, you don't have as many public companies that are actionable."
Buoyed by the inversion trend, the health care sector has been one of the most active for deals this year, with an estimated $328.8 billion announced through July 10 — a 207 percent increase from the period a year earlier, according to Thomson Reuters.
That figure appears likely to rise sharply by the end of the year.
AbbVie hopes to reach a deal for Shire before July 18, when it must make a firm offer or walk away for up to six months under British takeover rules.
Under the proposal Shire's board has accepted, AbbVie would pay cash and stock equal to about 53.20 pounds, or $91 a share for Shire. Shire shareholders would own about 25 percent of the combined company.
The latest offer represents a particularly rich premium — 53 percent above Shire's closing price of £34.67 a share on May 2, the day before AbbVie's first approach.
AbbVie's former parent also participated in an inversion transaction on Monday.
Abbott, which spun out AbbVie last year, will sell its pharmaceuticals operations in Europe, Japan, Canada, Australia and New Zealand to Mylan, which will then invert.
Under the unusual structure, being called a spinversion, Abbott Laboratories will divest itself of assets to allow a different company to strike an inversion. Abbott said it did not intend to be a long-term shareholder in Mylan and would seek to sell its stake.
Mylan's chief executive, Heather Bresch, the daughter of Senator Joe Manchin, Democrat of West Virginia, had been searching for an inversion. The company unsuccessfully pursued the Swedish drug maker Meda this year, but will now move to the Netherlands with its acquisition of the Abbott assets.
Meda, however, remains a potential target for other American drug companies looking to invert. Another target could be Omega Pharma, a Belgian over-the-counter drug maker that is exploring a sale, according to people briefed on the matter who spoke on the condition of anonymity. And while Pfizer had to walk away from its pursuit of AstraZeneca for at least six months, it could try again.
"Many predict a fresh wave of inversion-driven M.&A. in Europe in the remainder of the year, though execution will come under a great deal of public scrutiny from lawmakers," lawyers from Freshfields Bruckhaus Deringer wrote in a recent memo.
The rush to move abroad is raising concerns in Washington. "This 'second wave' of inversions again raises concerns about an erosion of the U.S. tax base," the congressional report said.
Representative Sander M. Levin, the Michigan Democrat who is the ranking member of the House Ways and Means Committee, said on Monday that news of the probable AbbVie inversion was "another wake-up call that corporate inversions present an immediate problem that requires urgent action." He added in a statement, "Action on this critical issue cannot wait for comprehensive tax reform."
Congress and the White House are considering laws that would temporarily halt inversions, or prohibit them altogether. That, in turn, is increasing pressure on companies to act fast.
"Companies that are still located domestically don't want to say, 'I didn't take advantage of the tax opportunities,' " Ms. Keppler said. "There's an element of keeping up with the latest fad here."
—By David Gelles and Chad Bray