Welcome to Part 1 of our 2026 Life Sciences Industry Outlook series. We are kicking off the week with a look at life sciences M&A activity in 2025 and what it may signal for 2026.
M&A activity in 2025 accelerated sharply, marking one of the busiest years on record. Aggregate deal value and the number of announced transactions rose meaningfully from 2024, buoyed by marginally improving financing conditions, greater boardroom confidence, and clearer regulatory expectations in the second half of the year. Mega-cap and upper‑mid‑market deals returned alongside a still‑healthy cadence of bolt‑on acquisitions and other smaller transactions by companies focused on incremental pipeline enhancements and portfolio gaps. Therapeutically, 2025 activity remained anchored beyond traditional oncology into cardio-metabolic (including obesity-adjacent assets) and neuroscience/CNS, while radiopharmaceuticals continued to command strategic interest and autoimmune/immunology remained a steady source of durable, de-risked, later-stage pipeline reinforcements.
Regulatory review stayed active, but clearer expectations and tighter deal planning improved execution for high-quality, strategically aligned transactions. As we continue into 2026, a more predictable regulatory environment and potentially declining interest rates may lay the groundwork for a further uptick in M&A activity.
Key drivers that will dictate the pace of M&A activity in 2026 include potentially lower borrowing costs, mounting pipeline pressures from an approaching “patent cliff” for large pharma, and expectations of a return to more traditional regulatory norms at the federal level, which together may enable additional large, transformative deals. Therapeutic areas such as oncology, radiopharmaceuticals, and cardio‑metabolic conditions—bolstered by the continued success of GLP‑1 drugs—are likely to remain at the forefront. The GLP‑1 impact is also expected to extend beyond traditional therapeutics, influencing adjacent markets such as medical devices and surgical procedures by potentially reducing demand for bariatric surgeries and other obesity‑related interventions, as well as treatments for conditions linked to metabolic dysfunction (e.g., insulin resistance) that accompany obesity. While the setup has promise, execution risks remain, and the cadence of mega‑deals will still depend on regulatory stability, constructive credit markets, and the availability of de‑risked, high‑quality assets.
Notable 2025 deals included Merck’s $9.2 billion acquisition of Cidara Therapeutics and Roche’s up to $3.5 billion acquisition of 89bio, each of which underscored an appetite for strategic growth. In addition, private equity’s role in M&A continued to expand, targeting scalable platforms like CROs and specialty biotechs. The trend of bolt-on acquisitions is expected to continue into 2026, with companies leveraging smaller, strategic transactions, particularly in the private company space, to bolster their pipelines and expand technological capabilities. Larger deals, aimed at addressing high-value areas like neurology, advanced diagnostics, and rare diseases, may also feature prominently. Additionally, companies are increasingly pursuing select acquisitions and partnerships to internalize platform capabilities in cell therapy and gene editing, particularly where in vivo delivery and manufacturing know-how can be leveraged across multiple programs.
CVRs continue to be used in life sciences M&A as a practical way to bridge valuation gaps where buyers discount assets for clinical, regulatory, or commercialization uncertainty while sellers want credit for future upside. Market data shows the CVR tool has stayed prevalent and, in some segments, increased. Deal tracking data found that a majority of biotech deals in 2025 included CVRs, reflecting increased use of this tool as a means to bridge valuation gaps in a volatile market.
Reverse merger activity remained robust in 2025, with investors of failed companies seeking a path to recycle cash and a glut of private companies aiming to reach the public markets against the backdrop of a warming capital market environment. These trends are expected to continue as concurrent PIPEs allow private companies to lock in a valuation earlier than the traditional IPO process and make reverse merger a viable IPO alternative, such as the Q4 2025 reverse mergers and concurrent PIPEs for Damora Therapeutics ($285 million PIPE) and Yarrow Bioscience ($200 million concurrent financings).
Another notable trend for 2025 is a continuing wave of liquidation-as-a-service (LaaS) deals for struggling public biotechs with negative enterprise values. LaaS transactions typically involve a tender offer with a back-end merger structure, distributing to the stockholders (i) net cash at closing (less a modest fee and accruals for wind-down/legacy liabilities) and (ii) CVRs representing the right to receive net proceeds from potential platform/legacy assets sale and out-licenses. LaaS transactions offer pragmatic, transparent alternative to formal liquidations with a more rapid return of cash and reflect 2025 life sciences themes of capital discipline and faster capital redeployment to higher-value programs.
Risks to the 2026 M&A environment include geopolitical disruptions, overheated valuations, inflation (and the impact on interest rates), pharmaceutical tariffs, and uncertainty surrounding regulatory priorities, particularly around drug pricing and access. Nonetheless, a reasonably favorable macroeconomic environment, a more favorable regulatory environment, ongoing innovation, and the ever-looming “patent cliffs” for large pharma are expected to drive a more robust M&A environment in 2026.