
A variety of elements are converging to create a significant spike in biotech mergers and acquisitions.
The noteworthy bidding conflict between Pfizer and Novo Nordisk concerning Metsera and its key weight loss drug candidate illustrates how fierce competition has become within certain areas of the industry, as Big Pharma scrambles to address the impending revenue gap.
Several of the top-selling medications worldwide are approaching loss of exclusivity in critical markets—a scenario often referred to as “the patent cliff.” By the year 2032, the loss of exclusivity for top-selling brands is estimated to result in at least $173.9 billion in annual revenue loss, as per CNBC’s analysis. Projections vary regarding the overall revenue at risk when including smaller brands, with some analysts estimating this total to be between $200 billion and $350 billion.
This represents a genuine threat to the sales figures of their manufacturers, unless they succeed in replenishing their pipelines with innovative revenue-generating products.
The necessity for pharmaceutical companies to rejuvenate their pipelines aligns with the overall biotech sector reviving after years of stagnant valuations following a surge in healthcare investments during the Covid-19 pandemic.
Mergers and acquisitions within the sector saw substantial increases in September and October 2025, following a dismal start to the year. The alleviation of pressures from Trump’s opposition to high drug costs for Americans and threats regarding potential triple-digit tariffs on the pharmaceutical sector, combined with the initiation of a cycle of lower interest rates, has further stimulated deal-making.
Currently, companies are confronted with the necessity to replenish their pipelines while also dealing with heightened competition for prime assets.
Addressing the revenue gap
The biopharmaceutical field is distinctive in that companies must contend with the expiration of patents on leading assets approximately every ten years. This asset life cycle necessitates that companies continuously innovate—or acquire those that do.
“Biotech, as the driving force of innovation within healthcare, has traditionally been where pharmaceutical firms have turned to build their biopharma operations,” observed Linden Thomson, senior portfolio manager at Candriam, in a CNBC interview.
Pharmaceutical companies, many of which originated as chemical enterprises, usually established their businesses on basic small molecule drugs, while biotech firms utilize living organisms to develop medicines like antibodies and mRNA. Over time, the boundaries between the two have blurred, as pharmaceutical companies heavily invested in biotech, with numerous drugs available today either discovered by biotech firms or produced through biotech methods, according to Thomson.
The impending patent cliff, which encompasses the expiration of exclusivity for Bristol Myers Squibb’s Eliquis, Merck’s Keytruda, and Novo Nordisk’s Ozempic, is a significant catalyst for mergers and acquisitions and integral to the strategic objectives of many major pharmaceutical corporations.
Analysis conducted by healthcare market researcher and consultant Joanna Sadowska indicates that nearly half of the blockbuster pharmaceuticals approved from 2014 to 2023 were acquired rather than developed internally. The top two most successful companies in terms of blockbuster approvals during this period were Eli Lilly and AstraZeneca, having acquired eight and five drugs out of a total of 13, respectively.
Prominent European corporations like GSK and Novartis are clearly recognizing the necessity to enhance their pipelines via acquisitions. Both are actively pursuing what they consider “bolt-on deals” that align with their primary therapeutic and technological focuses.
At an investor event in London in November, Novartis CEO Vasant Narasimhan highlighted the company’s robust cash flow “that truly enables us to reinvest in our business.”
While Novartis does not specify the scale of these bolt-on acquisitions, having executed deals costing up to $12 billion, GSK provides a clearer vision.
Chris Sheldon, global head of business development at GSK, refers to it as the “sweet spot”: targeting validated biology, often during mid-stage development within the $1 billion to $2 billion range, where the results of a drug candidate are not yet evident. Many acquisitions of late-stage assets often convert into a mathematical evaluation issue, Sheldon noted to CNBC, especially when dealing with a public company that has reached fair market value.
“Business development is something I consistently liken to a contact sport. If an asset possesses sufficient quality, there are usually several interested parties,” he mentioned.
Transactions can vary from partnerships and licensing agreements to straightforward buyouts.
“We would prefer licensing every day instead of M&A if feasible, as it allows for better risk management while rewarding the partner as value is realized and risks are alleviated,” Sheldon expressed.
Nonetheless, acquiring a company at a hefty upfront price may sometimes be the only feasible route, and it can yield attractive advantages, such as gaining complete oversight over development strategies and acquiring both talent and drugs. “The reality is that sellers often dictate these terms, a fact many people overlook,” Sheldon stated.
A competitive landscape
As biotech mergers and acquisitions gained traction once more, November witnessed perhaps the most notable event in the sector for the year: the public auction between Pfizer and Novo Nordisk over the clinical-stage weight loss pharmaceutical company Metsera, ultimately clinched by Pfizer for a deal valued at up to $10 billion.
Public bidding is infrequent, noted Stefan Loren, managing director at Oppenheimer. “Pursuing a company so publicly can lead to reputational risks: A, if you lose; B: if you become overly enthusiastic and proceed to purchase,” he stated to CNBC.
“This clearly highlights the dynamics of the biotech marketplace and the pressures companies face to catch up,” Loren remarked. “They are reacting to their circumstances, which include the impending expiration of numerous patents.”
[Business development] I always describe as a contact sport. If an asset is good enough, there’s multiple suitors.Chris SheldonGlobal head of business development at GSK
Generally, pharmaceutical acquisition frenzies typically last up to eighteen months before they retract, Loren remarked.
The GLP-1 market for weight loss pharmaceuticals has emerged as one of the most fiercely competitive segments in global pharmaceuticals, as leading companies race to obtain next-generation assets through internal advancements and acquisitions, according to researchers at PitchBook in their 2026 Healthcare outlook published in early December. Over 120 metabolic assets are presently under development across 60 companies, providing a substantial pool of potential M&A targets, they indicated.
“The fierce conflict between Pfizer and Novo Nordisk for Metsera highlights the growing strategic imperative in this domain,” they asserted. “We anticipate that competition will escalate as differentiation opportunities shrink and policy support proliferates through enhanced reimbursement and regulatory backing.”
While the obesity sector illustrates the prevailing competitive landscape well, the biotech surge is not limited to a single therapeutic realm. Neurology, oncology, immunology, and inflammation are other significant fields of initiative.
“It’s somewhat unpredictable what will be popular at any specific time,” stated Loren. “Companies are pursuing opportunities to fill their pipelines as rapidly as possible.”
A cycle of boom, bust, and renewed growth
During the Covid-19 pandemic, biotech surged to the forefront of investors’ priorities. Amid heightened interest, investor enthusiasm, and low interest rates, the sector thrived, with valuations soaring and numerous biotech firms going public or being acquired by larger companies.
As the biopharma sector involves costly research operations, securing funding is vital for drug development. Early-stage biotech firms operate under high stakes, often becoming the first casualties during a risk-averse market like the one following the pandemic’s peak.
For a considerable portion of 2025, the Trump administration further complicated biopharma prospects with threats of steep industry tariffs, funding reductions to federal health agencies, and declining drug prices. However, as companies have negotiated agreements with Trump regarding pricing and the president has indicated that investment in U.S. manufacturing would exempt them from added tariffs—two substantial pressures have been alleviated for the industry.
A surge of favorable data releases has also lifted biotech valuations, Loren noted. Just a year ago, even positive data releases frequently resulted in stock declines. “Investors were using any opportunity as a reason to exit,” he explained.
By late spring, the market began to change, and now investors capitalize on positive data developments. “There’s a threshold where things drop so significantly that, at the end of the day, what’s the risk?” Loren remarked. “And now, with the noticeable increase in M&A, the positive developments have now become very tangible.”
Increased transactions anticipated in 2026
In 2026, analysts predict a potential increase in deals.
“We anticipate 2026 to present one of the most favorable investing climates seen in decades,” state the PitchBook analysts, fueled by the resolution of U.S. healthcare policy overhangs and further interest rate reductions prompting more speculative investments.
Rajesh Kumar, head of European life sciences and healthcare equity research at HSBC, also foresees a “significant increase in deal activities” in the upcoming year, now that uncertainties surrounding drug pricing have settled.
“The market’s margin expectations for the years following [2026] might be a touch too optimistic, but nevertheless, companies are investing capital in the U.S., expanding manufacturing capacities, clarity exists, and this represents a promising phase for executing biotech deals and funding early-stage biotech,” he informed CNBC’s “Squawk Box Europe.”
Other emerging trends in the pharmaceutical sector may create another year of significant challenges—potentially heightening the urgency for drug manufacturers to pursue deals.
Pricing for certain leading drugs is anticipated to decline under the U.S. Inflation Reduction Act in 2026, which seems to categorize medications with the same active ingredients from the same manufacturer as equivalent, constraining options for lifetime management in certain instances, according to analysts at HSBC. Additionally, launching biosimilars in the U.S. might become more straightforward if a recent draft guidance from the Food and Drug Administration is enacted.
“Collectively, these elements could suggest that the decline after patent expirations, especially for biologics, may be more pronounced than in prior periods,” the analysts concluded.















