NEW YORK – The banner year for biopharma M&A that characterized 2014 – a total of 364 deals for a whopping value of $215 billion – is unlikely to be repeated, at least in terms of value, but the rate of dealmaking is expected to continue, especially as data roll out for hot indications such as immuno-oncology.

The past year was a great one for the industry, noted Effie Toshav, partner at Fenwick & West LLC, pointing to the M&A figures, the rise in venture capital investments to pre-recession numbers and the lucrative sales of a number of venture-backed firms. "A lot of venture capitalists were happy at J.P. Morgan this year," she said. (See BioWorld Insight, Jan. 12, 2015, and Jan. 20, 2015.)

But the question on everyone's minds, she said during a Monday panel on emerging dealmaking structures at the BIO CEO & Investor Conference, is, "Is this momentum going to continue?"

In terms of value, the answer is probably not.

Mark Schoenebaum, an analyst with Evercore ISI, noted that the M&A stats from 2014 were inflated by a couple of particularly large deals.

Last year saw the combining of specialty pharma firms when Actavis plc snagged Allergan Inc. – amid hostile overtures from Valeant Pharmaceuticals International Inc. – in a deal valued at about $66 billion. Dublin-based Actavis also bought Forest Laboratories Inc. for $28 billion and Warner Chilcott for $8.5 billion, its buying spree driven at least in part by cheap debt and tax inversions. (See BioWorld Today, July 3, 2014, and Nov. 18, 2014.)

But tax inversion deals are on the wane, thanks in part to efforts by the U.S. Treasury to reduce the economic benefits of such transactions. (See BioWorld Today, Sept. 24, 2014.)

"Tax inversions aren't dead, but they're definitely going to slow," said Schoenebaum, who predicted an overall decline in deal value in 2015, though he said he thinks the "number of transactions probably will go up."

He also expects the number of licensing deals to increase as well, mostly because a large portion – he estimated 50 percent to 70 percent – of big pharma's cash is trapped overseas. "So licensing is more attractive.

"This is a weakness" for big pharma, he added. "They actually don't have balance sheet flexibility in the U.S."

Even better for prospective biotech partners, some pharma firms exclude up-front payments from earnings – they are listed in the non-GAAP portion of the financials – so "there's no limit to what they can pay up front because it's free to investors," Schoenebaum said.

So dealmaking should continue apace, but the economics of 2014 were likely an anomaly. Luckily, dealmaking in biopharma goes beyond economics.

In fact, David Donabedian, vice president and head of ventures and early stage collaborations at Abbvie Inc., in response to a question from Schoenebaum, told conference attendees that deals sunk because the parties couldn't agree on dollars were few. If both parties are flexible, "other parts of the deal are just as important," he said.

Product-related reasons are more far more likely to derail deal negotiations, he added.

There are other reasons to stay flexible in the negotiation process. Reimbursement issues are taking greater precedence in dealmaking, diagnostics are gaining importance and technologies are in development that could change the entire treatment paradigm.

Regenerative medicine, for instance, has the potential as a one-off therapy. "A lot of our portfolio is curative," said C. Randall Mills, president and CEO of the California Institute of Regenerative Medicine. Programs are under way for indications such as blindness, which comes with a "tremendous cost" to the health care system. The possibility of a single treatment to cure blindness would "easily offset downstream costs in a few years."