Both companies declined to comment on a report by The Sunday Times that Ireland-based Shire made an informal approach to Actelion. It seems unlikely that a deal is imminent – yet the talk was enough to send Actelion shares 7 percent higher and Shire around 2 percent lower in early trading on Monday.
Shire does have the financial firepower for such a deal, although it has usually stuck to smaller acquisitions in the past. The company, which made its name with medicines for ADHD, has shareholder approval to increase net debt to $12 billion if needed.
However, a 30-percent-plus premium to Actelion's share price at close of play on Friday may be required to secure a deal, according to analysts at Deutsche Bank. The reported Shire offer is of just a 20-percent premium.
The value of M&A transactions in this industry in Europe is up 76 percent from this time last year, according to figures from Mergermarket.
Last year, a wave of deals in the sector were backed by the wish to do a tax inversion – where a U.S. company buys another in a country with a lower corporate tax rate and moves its tax jurisdiction to that country, as a way of avoiding taxes. The U.S. government has pledged to crack down on inversions, a promise which scuppered AbbVie's £32-billion accepted bid for Shire last year.
Cheap credit, combined with the ongoing need for larger companies to bolster their pipeline of promising drugs, has helped create a febrile environment for deals.
John Studzinski, vice chairman at Blackstone Group and one of the best-known dealmakers in the U.K., told CNBC that healthcare had been the "most active sector" for M&A recently – and predicted that this would continue.
"This is driven heavily by the capital structure of the industry and the demographics globally, and it's the sector that going to continue to have the biggest force to consolidate," he added.
- By CNBC's Catherine Boyle