Pharmaceutical companies paid twice as much for acquisitions in 2016 than a year earlier, according to an analysis of the 316 drugs-sector deals of the past three years carried out for the newspaper Financial Times (FT). London-based pharma consultancy Novasecta stressed that cheap credit and the need to secure a pipeline of new drugs inflated the value of deals.

The median value of the 2016 transactions was 39 times the revenue of the acquired company, compared with 19 times a year earlier and eight times in 2014, Novasecta found. While the number of deals concluded last year fell to 78 from 86 in 2015, the median value almost doubled to $1.97 billion. Not only has the value of transactions increased, the consultants remarked. Buyers are having to pay much more for companies to build sales and take on greater risk.

Novasecta’s figures point to fewer deals at the lower end of the market. Some $1.3 billion was spent on acquisitions worth $20-100 million, compared with $1.9 billion in 2015. The value of M&A transactions worth $100 million to $1 billion fell sharply from $15.8 billion in 2015 to just under $9 billion in 2016.  For the largest deals, by contrast, acquisition costs soared. Altogether, $144 billion was spent on buys worth more than $1 billion, compared with $117 billion in 2015.

John Rountree, partner at the consultancy, told the FT that many deals may be overvalued. “People are taking more risk and paying for hope – they are paying for growth that cannot be assured,” he said. “The companies now being acquired cannot on average be worth twice as much as they were only five years ago.”

While suggesting that in 2016 political uncertainty and pressure from pharmacy benefit managers in the US as well as competition from generic drug manufacturer held up the M&A process, the consultants said they believe it will accelerate in 2017 as the search for new drugs intensifies.

The FT recalls a recent remark by Pfizer CEO Ian Read, that “the whole industry is on pause,” delaying investment decisions until the new US president takes office on Jan. 21. Trump’s tax-cutting plan would allow US companies to repatriate tens of billions of dollars of cash held overseas and boost their firepower to pursue deals in the US, the newspaper said.