Jacob Lew - U.S. Treasury Secretary

Reining in pharma's tax inversion craze

Name: Jacob Lew
Title: U.S. Treasury Secretary

You don't have to work in biopharma to shake things up in the industry, and U.S. Treasury Secretary Jacob Lew certainly showed that last year. In September, he rolled out new, stricter rules to discourage tax inversions, which pharma companies at the time were completing left and right.

The result? A handful of deal cancellations last year, some of which sent reverberations throughout the industry and beyond. Take AbbVie's ($ABBV) aborted $55 billion tie-up with Shire, for example. It had some major pharma consequences, to be sure: Shire ($SHPG), now flying solo, has said it's about to go on somewhat of a shopping spree with all its spare cash (a factor that helped put CEO Flemming Ornskov on this very list of influential people).

But the consequences outside the industry were pretty hefty, too. Plenty of investors--and investment banks--lost big betting on the deal, which has left M&A hedge funds feeling gun shy and at least one peeved hedge fund manager weighing a lawsuit.

Fast-forward to 2015, and Lew's rules are still playing a significant role in the dealmaking arena. Pfizer ($PFE), for one, has said in the past that they won't stop it from moving its tax domicile overseas, but the pharma giant now has restrictions it didn't have when it went after British rival AstraZeneca ($AZN) last year. One-time rumored target Mylan ($MYL), for one, would have been too small to help Pfizer achieve its tax ambitions, analysts said.

Instead, so far, the only company the deal-hungry pharma giant has agreed to buy this year has been Hospira ($HSP)--a drugmaker that may not have made a good match had it followed through with a rumored Danone inversion of its own last year. You get the picture.

-- Carly Helfand (email | Twitter)

For more:
Tax-deal crackdown's victims, say analysts? Mylan and Abbott, not Pfizer and AZ
Treasury's crackdown on inversion could scupper Medtronic-Covidien deal
Who loses in biopharma as Treasury moves to block tax inversions?

Jacob Lew - U.S. Treasury Secretary
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