Analysts, like long-suffering sports fans, have spent the last couple of years predicting a big year in M&A that never materialized. Could 2026 finally be the championship season?
The stars are aligned for forward momentum, “notwithstanding anything disruptive or inexplicable,” said EY Americas life sciences leader Arda Ural. Goldman Sachs has gone so far as to predict a record-breaking year for pharma and biotech M&A in 2026, while Ural says he sees a steady recovery and expects deal value to hover around historical levels in the new year.
A predicted M&A surge might have materialized in 2025 had the market not been buffeted by political uncertainties. From pharma tariffs to mass layoffs and resignations at the FDA, the year was marked by rapid changes that prompted many pharma leaders to press pause, Ural said.
That’s not to say it was a bad year. Overall, the value of 2025’s deals will likely end up close to, if not above, historical averages, according to Ural. While deal volume was down, the average per-deal value almost doubled from $1 billion to $1.9 billion year-over-year, he said. But headline values can be misleading because they often include money that will only be realized if the company achieves future milestones, he noted.
Among the larger pacts signed in 2025 was Johnson & Johnson’s $14.6 billion deal to acquire Intra-Cellular Therapies, driven by its bipolar disorder drug, Caplyta. In addition, AbbVie signed a $2.1 billion deal to acquire Capstan Therapeutics and its CAR T-cell autoimmune therapeutics, while Merck & Co. made a $10 billion pact to buy respiratory-focused biotech Verona Pharma.
Valuations have also bounced back, which could encourage more companies to come to the table, and sellers are motivated, given that M&A activity has been slow for several years, Ural said. There are pent-up dollars to spend.
“The firepower value is now $1.3 trillion over the top 25 pharmas, which is one of the all-time high numbers,” he noted.
Leading M&A targets
Buyers are expected to focus on many of the same therapeutic areas that drove activity in 2025 particularly marketed and phase 3 assets, which comprised 58% of total deal value in 2025, Ural said. Top targets will likely be in oncology, central nervous system and neurology.
In oncology, multi-specifics, radiopharmaceuticals, and protein degraders continue to garner attention.
“Typically, oncology is the king of the hill in these deals,” Ural said.
But in a surprising shakeup, CNS and neurology deals overtook oncology in the first 10 months of 2025, and interest remains high in areas such as Parkinson’s disease, Alzheimer’s disease, and ALS.
What was less surprising was the continued interest in the blockbuster class of GLP-1 weight loss drugs.
Immunology and inflammation drugs, along with treatments for rare diseases will also remain popular targets, although the high cost of therapies in this category has infused some uncertainty into the landscape.
Experts also expect continued interest in dealmaking with Chinese biotechs.
“About 35% of the deals announced in 2025 originated in China,” Ural said.
China now rivals U.S. drug development, due in part to its ability to accelerate clinical trials. In 2024, China overtook the U.S. in oncology trials — 39% were China-based, versus 32% in the U.S., Ural said.
“The trend is now to get the asset early on from China, because they can get to the first in human faster … and cheaper,” he added.
Policy and regulatory headwinds
Predictions for 2026 are tough to set in stone with so many unknowns on the horizon.
“One factor we have seen affecting the dealmaking is the most favored nations policy,” Ural said.
Companies might hesitate to hammer out licensing deals because of the shifting sands around MFN policies, which may have implications for U.S. drug pricing down the line, he said.
The Trump administration has already secured deals with industry players such as Pfizer and AstraZeneca that are designed to align U.S. drug prices with what other nations pay. U.K. officials also recently agreed to raise their drug prices by 25% in exchange for three tariff-free years on pharmaceutical exports.
Looking ahead, drug price negotiations through the Inflation Reduction Act could also impact pharma leaders’ attitudes towards dealmaking along with worries over the FDA’s ability to keep up with the licensing applications that help pipelines remain on track — a challenge that has slowed the rate of approvals in 2025.
Even so, the industry may be more willing to withstand more uncertainty than in the past, simply because they may not be able to afford to delay deals any further.
“The next 12 months look much brighter than the last 12 months,” Ural said.
