FORTUNE — Pharmaceutical deals are booming — and drug makers are moving beyond the typical acquisition.
The number of pharma and life sciences deals, including medical device and diagnostics companies, increased 40% while the dollar value jumped almost 123% over the first quarter compared to a year earlier, according to research from PwC.
The boom is being fed by drug makers acting as both buyers and sellers. Pharma companies are divesting businesses — over $10 billion worth last quarter alone — that aren’t core to what they do and using that spare cash to double-down on areas of interest and developing new business models, said Dmitri Drone, U.S. pharmaceutical and life sciences deals leader at PwC.
The recent rush of deals also looks different: It isn’t just straightforward mergers or acquisitions. “There’s some very creative things that have been put forth,” said Drone. “We’re seeing a blurring between non-M&A and M&A deals.”
Asset swaps and other types of strategic alliances have become particularly prominent. Companies are looking at what they do well and where they are weak, and then turning to competitors that can complement those areas. Such deal structures can conserve cash and help a corporation avoid painful adjustments.
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A nearly $19 billion swap between GlaxoSmithKline and Novartis (NVS) in April provided Glaxo with a vaccine unit while it handed off its cancer treatment business to Novartis. The two companies also formed a joint venture to develop a consumer healthcare business.
Tax inversions — a scenario in which a company reincorporates itself in a location with more advantageous tax policies, and a topic that has received increased attention amid Pfizer’s recent bid for AstraZeneca — are another important consideration for acquisitions big and small. Drug makers tend to have a large amount of cash outside of the U.S., said Drone, and they are looking for ways to deploy that cash and add on the tax benefits.
“Many of them, if not all of them, have thought about the topic of inversion,” said Drone. “The trend is clearly prevalent today, and there’s nothing to suggest it will slow down.”
Drug makers, especially those that may be inversion targets, are seeing their share prices inch higher. In the first quarter of 2014, pharma and life sciences stocks outperformed the S&P 500, increasing by 5.4% compared to 1.3% for the overall market.
Rising values may be starting to pump up deal prices: Total deal values reached almost $45 billion in the first quarter, jumping 20% from the prior quarter and over 122% from a year ago.
“Investors have bid up some of these companies assuming they may be M&A targets, especially inversion targets,” said Drone. But that’s unlikely to dampen the rush for deals soon since strong equity markets, overall economic stability, and individual sector trends are “creating an environment ripe for further investor interest,” he said.
