LONDON, April 22 (Reuters) - Shares in European drugmakersreceived a shot in the arm on Tuesday amid a flurry of activity,with Novartis striking a multi-billion dollar deal withGlaxoSmithKline and reports U.S. giant Pfizer had approachedBritain's AstraZeneca over a deal.
Pfizer and AstraZeneca declined to commenton a Sunday Times report of a possible $100 billion deal, butthe potential bid fueled speculation the sector was ripe forconsolidation as drugmakers build scale in specialized areaswhere they can find growth.
The European healthcare sector index was up 2.8percent at 0927 GMT, led by AstraZeneca, up 6.5 percent at 4,030pence, and GSK, up 5.4 percent at 1,643 pence.
Shares in Britain's Hikma Pharmaceuticals and BTGalso rose more than 4 percent, while Shire, a perennialsubject of takeover speculation, was up 4.6 percent.
Analysts also pointed to Belgium's UCB SA, up 3.1percent, and Switzerland's Actelion, 1.5 percentstronger, as potential targets for a larger rival.
Citi said the "usual suspects were likely to return tofocus", noting that previously cited potential targets in Europeincluded Shire, Actelion and UCB, based on either promisingpipelines or significant cost and tax synergies.
"We expect renewed interest in the use of offshore cash heldby US companies to fund ex-US M&A," the analysts said in abriefing note.
The Sunday Times cited sources saying informal conversationshad taken place between Pfizer and AstraZeneca but the Britishcompany resisted the approach.
A big driver behind Pfizer's interest is drugs to treatcancer, including promising experimental medicines inAstraZeneca's pipeline know as immunotherapies, analysts said.
Novartis is also strengthening its oncologyportfolio with the GlaxoSmithKline deal, an area in which GSKsaid it ranked outside the global top 10.
The Swiss drugmaker is paying $14.5 billion for GSK'soncology business and is also divesting its vaccines business toGSK for $7.1 billion plus royalties.
In a separate transaction, Novartis said it had agreed todivest its animal health division to Eli Lilly for about$5.4 billion.
Novartis shares rose 2.5 percent in morning trade to 76.5euros. (Reporting by Paul Sandle and Belinda Goldsmith; Editing byMark Potter)