When Congress passed a business-friendly tax package last year, pharma prognosticators predicted 2018 would be the year that mergers and acquisitions in the sector would finally gain steam. They were wrong. Despite the industry’s newfound ability to repatriate cash at a 15.5% tax rate versus the 35% rate they had to pay before, biopharma companies did not make 2018 the year of M&A.

But 2019 will most certainly be that year, analysts say. Sure, many of the worries that kept potential acquirers on the sidelines last year still exist, but biotech valuations have come way down—the Nasdaq Biotechnology Index has dropped nearly 7% in the year ended Dec. 16, in fact—and that could make all the difference.

"We think there’s been a pent-up demand for acquisitions, especially with many companies preparing for patent cliffs," Michael Levesque, senior vice president at Moody’s, said in an interview with FiercePharma. "The combination of that, plus lower valuations and increasing levels of cash—these are all signals for M&A."

Total cash holdings by the 10 largest U.S. pharmaceutical companies grew by $15 billion in the third quarter of 2017, reaching a total of $155 billion, according to Moody’s. Add in the cash held by overseas pharma giants—Novartis has $14 billion, for example, and Novo Nordisk $16 billion—and you get a lot of companies that are well-positioned for shopping sprees. In a November note to investors, Levesque called the growing pharma cash pile "considerable dry powder for acquisitions."

Deal volume is already picking up as 2018 comes to a close. There were 74 pharma and life sciences deals in the third quarter of the year—the second quarter in a row that saw an M&A volume increase after nearly two years of declines, according to PwC. Since then, Takeda has won shareholder approval for its $58 billion megamerger with Shire, and GlaxoSmithKline has agreed to pay a 62% premium to acquire oncology drugmaker Tesaro, laying out $5.1 billion so it can get into the red-hot market for PARP inhibitors. In late December, Japan’s Taisho agreed to pay $1.6 billion to acquire Bristol-Myers Squibb’s consumer business.

Several likely acquisition targets have emerged in the last few weeks, as well. Bayer announced in late November that it would cast off its animal health unit amid a major restructuring. And reports emerged that PARP maker and Tesaro rival Clovis Oncology is under pressure from a major shareholder to pursue a sale. Given the rich valuation GSK put on Tesaro and the fact that Clovis has a marketed drug with plenty of expansion potential, it could fetch a high price, too.

What could dampen the M&A appetite? If federal lawmakers pass legislation that puts limitations on drug pricing, that could be a risk, Glenn Hunzinger, a partner in PwC’s deals practice, said in an interview. It’s a legitimate worry, considering President Donald Trump and congressional representatives on both sides of the aisle have rallied around the issue of bringing down drug prices.

"The capital markets assume companies can charge a certain amount for drugs, and [acquirers] may realize they just can’t do that," Hunzinger said. "That creates uncertainty around the M&A environment."

Pharma CEOs might also be exercising extreme discipline when it comes to making big acquisitions, particularly in the wake of some notable deals that didn’t live up to their rich valuations. Celgene, for one, bought Receptos for $7.2 billion in 2015, only to get slapped with an FDA rejection of its multiple sclerosis drug ozanimod this past summer.

In oncology, AbbVie paid $10 billion to buy Stemcentryx and its lung cancer drug, Rova-T a few years back, only to suffer one setback after another as it tried to get the asset to market. Most recently, AbbVie had to halt enrollment in a phase 3 trial of the drug due to poor survival rates.

Then there was Gilead’s $11.9 billion acquisition of Kite Pharma, which developed Yescarta, the personalized cell-based therapy for some blood cancers. The product has been slow to take off because of reimbursement hurdles, both at home and abroad.

Hunzinger predicts that despite such setbacks, oncology will continue to be a hot area for M&A in 2019. Executives may be wary of past missteps, but they’re likely to see them as more of a learning opportunity than as a deterrent to future deals, he says. "With CAR-T, they’re buying into a different business model," he said. Manufacturing CAR-T treatments involves taking immune cells from patients and engineering them to be able to recognize and attack their particular cancers. "It’s really exciting and innovative, but companies have to learn how to integrate those business models and figure out how to scale them. It’s different from standard drug manufacturing."

But the opportunity to shake up the pipeline with truly innovative products will continue to be irresistible to companies with the cash to make large acquisitions—particularly now that biotech valuations have come down—Hunzinger said. "These larger, more established companies are really trying to figure out how to grow in different therapeutic areas," he said. "They want the secret sauce. We’re going to see a lot of thoughtfulness and a lot of learning. But the volume of deals will be there."