Pharmas Write Massive M&A Checks Once more as Patent Urgency Seizes C-Suites
Biopharma insiders agree that the tempo of M&A offers will choose up subsequent 12 months as pharma corporations head towards essential patent cliffs and the trade buzzes after a high-profile bidding conflict between Pfizer and Novo Nordisk.
“We’re simply seeing the beginning of a giant M&A season coming, 2026, 2027,” Coya Therapeutics CEO Arun Swaminathan instructed BioSpace in a current interview. “If I had a crystal ball, I see huge M&As coming via.”
It’s a well-known prediction for a year-ahead exit outlook, however in contrast to the previous two years when the optimism was maybe much less properly based, consultants say there are actually clear indicators of inexperienced shoots.
For one, rates of interest are lastly taking place, with the Federal Reserve executing its newest lower on December 10. And importantly, Massive Pharmas are dealing with main patent expirations within the subsequent few years, main Swaminathan and others to conclude that pharmas have to be making offers now.
Pfizer and Novo’s dramatic battle for weight problems biotech Metsera has additionally been a significant indicator of a revitalized M&A setting, quite a few consultants instructed BioSpace.
“Metsera signaled a return of big-pharma confidence in writing significant checks once more,” mentioned Kevin Eisenfrats, CEO of male contraception biotech Contraline. “That enthusiasm ought to persist into 2026 for a easy macro cause: Pharma’s income cliffs haven’t gone anyplace and inner R&D productiveness nonetheless lags.”
Drug candidates don’t often transfer amongst Massive Pharma, however these 5 biotechs helped facilitate such hand-offs, scooping up belongings from one pharma on a budget earlier than being purchased out for billions by one other.
The patent scenario and Metsera deal have signaled “one of many strongest M&A environments in years,” agreed Michael Allwin, head of biopharma funding banking at Truist Securities.
What Is Pharma Searching for?
As has been the theme all 12 months, pharma is on the hunt for later-stage medical belongings. However a scarcity of such belongings has compelled consumers to look to earlier-stage biotechs.
A current McKinsey evaluation decided that there have been 17 “unencumbered part three belongings” accessible available on the market proper now which can be price a few billion {dollars}, and that depend has dwindled additional as offers have been signed.
“The quantity of substrate, particularly should you want income within the close to time period, is pretty low,” mentioned Greg Graves, senior companion in McKinsey’s life sciences observe. “Greater than half the offers are early-stage offers. At this time limit, I feel that’s going to proceed.”
Swaminathan added that consumers should open up their wallets to safe one of the best belongings. “I do assume that there’s going to be a premium on medical stage belongings and firms, as a result of then it’s been derisked,” Swaminathan mentioned. However pharmas nonetheless need differentiated belongings, so it doesn’t matter what they purchase, they’re taking threat, he added. “On the finish of all of it, M&A is an informed guess.”
Graves added that AI goes to play a better position in acquisitions going ahead—and never simply because corporations could also be trying to purchase such applied sciences. He mentioned pharmas with good AI infrastructure might extra rapidly discover synergies with the businesses they purchase.
“In case you have gotten the efficiencies out of AI, significantly on the again workplace and industrial aspect, does that truly make you a greater acquirer?” Graves speculated.
This might significantly come into play for bigger offers—which Graves predicts extra of in 2026—which can be a a lot heavier carry to fold into current operations.
AI can be serving to smaller biotechs function like a lot greater operations, in response to Philip Poulidis, CEO of ODAIA, which supplies AI industrial intelligence options for the life sciences trade.
J&J nonetheless holds the highest deal of the 12 months by worth with its $14.6 billion purchase of Intra-Mobile in January, however the subsequent 4 greatest acquisitions got here prior to now 4 months.
“Patrons need greater than compelling belongings—they need proof of business self-discipline. What’s new is that AI now provides rising corporations the power to function with the industrial rigor of a lot bigger organizations,” Poulidis mentioned in an electronic mail. “That readiness to execute and the power to punch above their weight will play a bigger position in how consumers consider corporations.”
How A lot Will Pharma Spend?
Swaminathan pointed to an organization like Merck, which not too long ago gained approval for a subcutaneous model of Keytruda in a bid to increase its decade of dominance earlier than patent expiry. However that may solely add just a little gas to the drug’s eventual decline. Swaminathan’s former firm Bristol Myers Squibb is one other that should do some procuring because the Pfizer-partnered blood thinner Eliquis nears its patent cliff.
These corporations have loads of money accessible, in response to Allwin. He mentioned pharma has about $300 billion in income nearing lack of exclusivity and about $500 billion in stability sheet capability. Stifel estimated that pharma has mixed firepower of $1.2 trillion accessible in an October evaluation.
The theme of late, nevertheless, has been smaller offers. “Pharma is getting good at doing a number of small acquisitions to diversify their portfolio, versus simply taking out one huge firm,” Swaminathan mentioned.
Going into 2026, Allwin expects this development to proceed, forecasting that pharma will deal with offers within the $5 billion to $10 billion bolt-on vary.
But it surely’s not simply Massive Pharmas available in the market proper now. Invoice Roegge, M&A and Activism Protection companion on the regulation agency Cooley, famous that mid-cap corporations are additionally on the hunt for offers to diversify their pipelines. Leerink Companions not too long ago predicted that Regeneron, Vertex Pharma, Biogen, Moderna and Jazz Prescribed drugs might strike quickly with offers.
What Kind of Belongings Will Be Purchased?
One positive guess is that pharma will proceed to eye obesity-focused offers. However Graves sees this house getting extra exact. When the frenzy for weight problems belongings started in 2024, Graves mentioned pharmas had been in search of any asset simply to get within the sport. Because the house has matured and turn out to be extra crowded, Graves mentioned corporations might want to go after particular sub-populations and unmet affected person wants. They will even search for belongings that don’t impression muscle mass as a lot because the accredited brokers have been discovered to do.
Value will even play a task, as the price of accredited therapies from Novo Nordisk and Eli Lilly have dropped from 4 figures to a couple hundred {dollars} for a month’s price of therapy.
Novo Nordisk goes “on the offensive” following Trump deal that additionally included rival Eli Lilly, placing an exclamation level on quickly declining GLP-1 drug costs. Specialists say the weird scenario makes it arduous to foretell what’s subsequent.
Swaminathan agrees that weight problems and metabolic ailments proceed to draw consideration. He additionally thinks neuroscience—the place his firm Coya performs—might see some motion. There’s numerous threat however excessive rewards for corporations prepared to guess on neuroscience, the CEO mentioned.
Swaminathan additionally mentioned that oncology is getting harder to deal in because the house will get increasingly more fragmented and the affected person populations smaller. Offers will at all times occur there, however Swaminathan thinks corporations might have to look elsewhere for mega-blockbuster potential.
Graves argued that the weight problems frenzy has had a task in driving corporations away from oncology, as a result of the GLP-1 breakthrough supplied entry to an enormous potential inhabitants of sufferers.
“What the weight problems pleasure has achieved is paved the best way for big inhabitants ailments once more,” Graves mentioned. He cited offers in cardiovascular, renal and broader metabolic ailments as proof.
With rates of interest coming down, there could possibly be extra urge for food for threat.
“I’m not an economist, however I’d say should you’re sitting on billions of {dollars} of money, that’s not one of the best place to go away it proper now,” Swaminiathan mentioned. “The most effective place to go away it’s in some investments. So my guess is the monetary folks at these Massive Pharmaswill be taking a look at that as properly.”
