Johnson & Johnson’s $14.6 billion buyout of Intra-Cellular Therapies in the first month of 2025 suggested it would be a big year for high-priced transactions in the biopharma industry. But it was a false alarm.
With unprecedented turnover at the FDA fueling concerns about the agency’s procedures and timelines, and amid President Donald Trump’s threats to impose tariffs and set most-favored-nation (MFN) prices for drugs, companies put their business development plans on hold as uncertainty reigned.
But, later in the year, when drugmakers gained more clarity on the new regulatory and pricing landscape, the M&A market heated up. Of the 10 largest transactions executed in 2025, eight came in the second half of the year, with six of those deals in the fourth quarter.
Will the trend continue in 2026? Many industry watchers—based on what they saw in the fourth quarter—believe the market is primed for a banner year for M&A.
“As people got more comfortable with what the regulatory regimes looked like, they were able to build that into their model and how they were looking at targets,” Gabrielle Witt, an M&A Partner at law firm Hogan Lovells, said in an interview with Fierce. “We think that sort of momentum will continue in 2026.”
Bart Van de Vyver, an M&A consultant with McKinsey, takes it a step further.
“We’ve seen an acceleration of (major deals) in the second half of ’25 and we expect a further acceleration of that in 2026,” he said in an interview.
Pierre Jacquet, of Boston-based L.E.K. Consulting, added that “pressure to rebuild pipelines is intensifying,” because companies are losing $300 billion in revenue through the loss of exclusivity of their products by 2030.
“Supported by significant patent-cliff risk, strong balance sheets, and improving biotech sentiment, 2026 is likely to see a major acceleration in dealmaking, including 20-plus acquisitions over $1 billion,” Jacquet predicts.
The rebound of valuations
The biotech industry hit a bottom in the spring of 2025, according to the XBI, a stock index of U.S. biotechs. After Trump revealed his Liberation Day Tariffs in early April, the XBI tumbled to its lowest figure in 18 months. But, by December, the index had increased by 75%, to its highest price since 2021.
The uptick in valuations has leveled the playing field between buyers and sellers in the M&A market, fueling more transactions, Arda Ural, EY Americas life sciences sector leader, said on Fierce Pharma’s "Top Line" podcast in December.
“We are in the normalization phase of dealmaking, going back to historical normals,” Ural said.
Given their firepower and the oncoming wave of patent expirations pharma companies are facing through the end of the decade, many are anxious to make deals, Van de Vyver explained, even at higher valuations.
While there are still risks with biotech investments—especially considering the continued turbulence at the FDA—analysts at William Blair believe the uptick will continue in 2026 as the “worst-case scenarios are off the table” with respect to tariffs and MFN pricing.
“As long as the sector continues to reward strong clinical results and companies are able to commercially launch drugs without significant government regulations around pricing, we believe specialist investment in biotech can continue to have strong performance,” the analysts concluded.
Increased specificity of M&A targets
Over the last decade, Sandy Donaldson, the co-founder and chief strategy officer of Impiricus, an artificial-intelligence-powered platform connecting healthcare professionals with pharma resources, has witnessed more selectivity with respect to what assets drugmakers are targeting.
Donaldson pointed to Novo Nordisk’s $5.2 billion October acquisition of Akero and its promising candidate for metabolic dysfunction-associated steatohepatitis (MASH). Data from a phase 3 trial of the prospect, which were called “transformational” by analysts at Evercore ISI, triggered a doubling of the biotech’s share price.
For Novo, the treatment efruxifermin isn’t just a random target of opportunity. It fits into the Danish company’s cardiometabolic wheelhouse. Its expertise in the treatment area produced revolutionary GLP-1 drug Ozempic.
To fill gaps in their pipelines, “big players are taking very specific thematic bets,” Donaldson said in an interview.
“I think you’re gonna see more of that in very specific therapeutic areas within rare disease, next-generation biologics, oncology,” Donaldson added. “The pipeline gaps, the need for innovation and the more innovation around de-risked models is really kind of driving this M&A growth that we’re seeing.”
Jessica Bisignano, also an M&A Partner at Hogan Lovells, echoed the recent emphasis companies are placing on filling gaps in their pipelines.
“There’s just continued demand for companies, for strategic acquirers, to be more disciplined with their capital,” she said. “I really think they are trying to buy into their pipelines as opposed to just making unrelated acquisitions.”
Shifting treatment targets
Another new industry trend emerging is the push for neurology assets, evidenced by the two largest transactions in 2025—J&J’s buyout of Intra-Cellular and Novartis’ $12 billion purchase of Avidity Biosciences.
Close behind neurology and oncology as the top targets in 2025 were cardiometabolic assets, fueled by the “GLP-1 gold rush,” Ural noted.
This was “an absolute diversion from past trends when oncology really dominated everything through and through,” Ural added.
The “gold rush” was illustrated by Pfizer and Novo Nordisk’s pursuit of obesity drug developer Metsera. Pfizer ultimately won the race in November with its $10 billion acquisition. That came after Metsera initially agreed to a $4.9 billion up-front deal with Pfizer. Just over a month later, Novo dropped a bombshell offer of $6.5 billion up-front for the biotech, which is developing a longer-acting, monthly-dosed GLP-1. All of the public Metsera offers featured contingent payments based on potential future milestones.
As for oncology, antibody-drug conjugates (ADCs) and bispecifics remain the top two targets.
“That continues to be a very vibrant space,” said Van de Vyver, who added that many of the licensing deals for the oncology candidates are coming out of China, which has developed into a hub for innovation.
“We’ve seen at least five deals this year with a headline value—admittedly a good chunk of that is biobucks, milestone-based, etc.—of more than $2 billion,” Van de Vyver said, speaking specifically of Chinese companies.
“The entrepreneurial energy in China is quite impressive. There’s 1.5 billion people, many of which have advanced degrees. There’s a high savings rate and a large availability of capital and a willingness and a desire to move fast and invest at scale and that has been built up over the past decade," Van de Vyver added. "As evidenced by some of these deals, we’re seeing innovation that’s viewed as valuable around the world.”
Also worth watching in the oncology space in 2026 are tri-specifics and tetra-specifics, according to Cyriac Roeding, CEO and co-founder of Stanford spinout Earli, who notes that companies such as AbbVie, J&J, Merck, Gilead and Novartis are developing the next-generation therapies.
Any slowdown in AI will be temporary
There is widespread agreement that AI will play an increased role in the way that pharma companies conduct business and especially in their efforts to make R&D more efficient, according to Witt. But in the short term, there could be a slowdown in its adoption, Ural warns, as the industry figures out how to shift from generative AI to agentic AI.
“How fast AI evolved from generative AI to agentic AI has been stunning for the industry,” Ural said. “But now there is a tremendous inflection point for how the industry will be able to use AI. The adoption curve will probably be stalled as the industry is figuring out: How do I do the change management with individuals who will be using it in my company. What are the use cases that make the most sense? How do I adjust my workflow in my company?”
Donaldson added that AI is becoming a more significant deal catalyst as people are getting a better understanding of its tangible impact.
“You see AI being a major element for the pharma companies as they look to accelerate drug discovery, improve their clinical outcomes and success predictions, and also get much better commercial models,” Donaldson said. “I think there’s going to be a lot more AI deals going forward.”
Are major consolidations in the works?
During Trump’s first term as president, there was a run of huge transactions, with large drugmakers acquiring other companies of significant size.
These included Takeda’s $64 billion takeover of Shire, AbbVie’s $63 billion buyout of Allergan and Bristol Myers Squibb’s acquisition of Celgene for $74 billion, which remains the largest deal in industry history. Each of these transactions included companies where both the buyer and the seller generated revenue of at least $15 billion in the year before the deal.
Since then, biopharma has not seen any mergers that fall into this category. With Trump back in office, is it time to expect these similar-sized consolidations?
Bisignano and Witt don’t think so, saying that investors in the current environment are insisting that capital be used “judiciously.”
Donaldson agrees, saying that while the regulatory environment would likely not be an impediment to these sorts of transactions, he believes that drugmakers are no longer looking to grow horizontally.
“I do think we’ll see, if anything, more downsizing of a lot of these companies and more focus,” Donaldson said. “Companies are not saying they want to be active in 25 therapeutic areas, like Pfizer was 20 years ago. I think you’re going to see much more specialization and focus on very specific areas and, if anything, more vertical integration within the areas that they dominate.”
Van de Vyver dismisses the idea that Trump’s regulatory approach had much to do with the splurge of major biopharma deals in his first term. But he does see the potential for larger M&A deals.
“There is an appeal to having scale, so that you can have multiple (blockbusters),” Van de Vyver said. “The cost to keep replenishing the pipeline has gotten higher. If prices are under pressure and innovation doesn’t become cheaper, pharma companies will need to find more efficiencies elsewhere and consolidation would be one way of getting those.”