Many analysts had predicted pharma M&A was on track for a rebound in 2026. Even so, the dealmaking numbers have been eye-popping.
The life sciences industry has already notched nearly $196 billion in deal values, marking a 140% increase over the first half of 2025, according to Subin Baral, a partner at Ernst & Young and the EY-Parthenon global life sciences deals leader. Average deal size is also up by 71% over last year and deal volume grew by 41%.
“We knew this was going to be a stronger year, but this is turning out to be a turbocharged year,” Baral said.
EY has been tracking first half M&A for its forthcoming “Firepower” analysis report and uncovering other trends that are making 2026 unique, including who’s making the deals, and when and what they’re buying.
In a typical year, the top 25 Big Pharma companies make up the largest share of buyers. In 2025, they accounted for 69% of the total biopharma spend. In the first half of 2026, Big Pharma companies made up just 45% as mid-sized companies took a larger share of the dealmaking pie, Baral said.
There’s also more diversification in terms of dealmaking size.
“In the first half of the year only five deals were greater than $10 billion,” he said, noting that 41 deals fell in the $1 billion to $10 billion range.
Acquisitions of earlier-stage assets are also in vogue, Baral said. In the first half of the year, 63% of deals involved pre-phase 3 assets. In all of 2025, that number was 39%, he said.
And companies are now more willing to go all-in at the dealmaking table.
“These are not alliances anymore; these are acquisitions,” Baral said “What it shows is that there is a large intent to own these modalities.”
Argenx’s $2.2 billion acquisition of immune-focused Forte Biosciences, which was announced this week, is a notable case in point. The deal not only fell into that mid-sized dollar range, it included an early-stage first-in-class anti-CD122 drug being tested in vitiligo and celiac disease that was targeted by a mid-sized pharma.
What’s driving the M&A surge
While many deals are still inspired by large pharma companies’ need to shore up pipelines and buffer the blow from blockbusters coming off patent in the next few years, various factors are moving the market.
“They're looking past the immediate loss of exclusivity,” Baral said, noting that instead, companies are also determining future priorities. “Deals are much more strategic in nature.”
For smaller companies, reduced access to funding as investors become more selective is driving the need to find new avenues for capital.
“A lot of these early-stage companies need to find a way to do deals amongst themselves to make sure they have a critical path to achieve scientific innovation,” Baral said.
Companies with good data that are further along in their clinical evolution or are backed by credible management with a track record are still securing investor funding, Baral said. Others have to find a different pathway.
Oncology still dominates dealmaking activity but neuroscience is gaining traction, Baral said, and many companies are coalescing around similar modalities including gene therapies, antibody-drug conjugates and bispecifics.
“Everybody wants the same things,” he said. “Good assets are the emphasis here.”
And of course, China is now a major deal destination. So far, China-based companies have accounted for 54% of alliance biobucks in the first half of 2026 — a notable bump from 34% in 2025, said Baral.
“I knew the numbers were going to be on the rise, but 20 points in the first half is quite astronomical,” he said.
This jump comes despite rising geopolitical pressures and pushback on U.S. pharma’s ties with Chinese drugmakers. Regulations like the Biosecure Act were designed to restrict those ties, and now, Congress is making moves to provide additional oversight over U.S. investments in Chinese companies. But that doesn’t seem to be deterring the industry’s interest in hunting for promising assets in the region.
“Companies are saying to us that they will work through geopolitics as long as the innovation makes sense,” Baral said, noting that pharma companies are often focused on navigating other risks of doing business in China, such as data protection.
But overall, one type of deal has been absent from pharma’s M&A picture: the mega-merger.
“We never say never,” Baral said, but he predicted larger-scale deals will be few and far between. “For now mid-sized deals are the ones we’re watching.”
