LONDON, March 5 (Reuters) - AbbVie's $21 billion deal to buy Pharmacyclics shows big pharma's hunger for new drugs at a time when research at smaller biotechnology companies is driving some of the most promising advances in medicine.
Competition for tomorrow's blockbuster drugs is now intense, inflating the cost of deals and pushing pharmaceuticals to centre stage in overall mergers and acquisitions (M&A).
So far this year, pharma deals have accounted for 10.5 percent of total M&A worldwide, up from a more traditional share of 3 to 4 percent, according to Thomson Reuters data.
AbbVie's planned purchase of Pharmacyclics is the largest global pharmaceutical deal of 2015 to date and takes M&A activity in the sector to a six-year high.
M&A transactions targeting biotech and pharma companies in 2015 have now reached $59.3 billion, a 94 percent increase over the same period a year ago and the highest volume for this stage in any year since 2009. For a graphic on pharma deals see link.reuters.com/tyc34w
Across the industry, big drugmakers are eyeing medicines developed by nimble biotech firms as they seek to replenish portfolios that are being eroded as older products face loss of patent protection.
Pharmacyclics gives AbbVie access to a blood cancer treatment called Imbruvica that is expected to be one of the world's top-selling cancer drugs, reducing its reliance on the ageing rheumatoid arthritis drug Humira.
"This acquisition serves as a reminder that large pharma is willing to pay up for novel, quality products," said Maxim Jacobs, an analyst at Edison Investment Research.
The deal also signals AbbVie Chief Executive Richard Gonzalez's readiness to chase other assets after a failed deal to buy Shire for $55 billion last year.
In many ways, 2014 was the year of deals that didn't happen. Not only did AbbVie's plans for Shire unravel but Pfizer proved unable to land AstraZeneca after a $118 billion takeover fight.
Yet both U.S. predators have now bounced back with alternative deals, with Pfizer agreeing to buy Hospira, a specialist in injectable drugs, for around $15 billion last month.
Valeant Pharmaceuticals also agreed last month to acquire gastrointestinal drugmaker Salix Pharmaceuticals for more than $10 billion in another notable biotech transaction.
Editing by Pravin Char