In Tight Deal Environment, Pharma May Need To Think Big

Large pharmaceutical companies have some big pipeline holes to fill. The industry’s biggest players, like Eli Lilly, are rising to heights never seen before, leaving others in the dust. This has created an environment where a paradigm-shifting megadeal could thrive—but only if executives are willing to think outside the box.

Despite being loaded up with over a trillion dollars in acquisition firepower, according to a recent Ernst & Young report, Big Pharmas are continuing a pattern of acquiring mid-cap biopharmas rather than pharma-on-pharma mergers, said Ben Zercher, senior biotech and pharma analyst at PitchBook.

“Pipeline replenishments remain the focus rather than large-scale integration and its associated R&D disruption baggage,” Zercher told BioSpace. That means deals in the $10 billion to $15 billion range, or even smaller tuck-ins.

Whether happening in public or private, biopharma M&A is fiercer than ever. Experts point to patent pressures, herd mentality and a declining stock of available biotechs with mature assets.

March 11, 2026

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5 min read

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Still, McKinsey’s Jake Henry believes the conditions are right for an awe-inspiring blockbuster deal. The stock of biotechs with late-stage or validated assets in that price range is low, he said, compounding the problem and perhaps forcing executives to think bigger as they face looming patent cliffs and pressure to innovate within the confines of new drug pricing policies.

“The shakeup of the way that biopharma companies have to look at assets and the value of them, both in their pipeline and then externally, has gone through turmoil over the last five to seven years with these major regulatory shifts,” Henry explained. “[These] policy shifts have created a secular shift in the way that the industry dynamics function. And so, now, do we look at it differently? Is the real question, will we now see another round of consolidation in the industry?”

An M&A History Lesson

Let me take you back: It’s 2018. We’re all blissfully unaware of the global pandemic to come. The J.P. Morgan Healthcare Conference hasn’t even started yet, and we already have the biggest, craziest pharma deal imaginable.

Bristol Myers Squibb—then still sporting the hyphen that would soon be eradicated from its branding—is buying Celgene, the big cancer biotech of Revlimid fame. The deal is valued at $74 billion, a sum not heard of since, well, the year before when Takeda Pharmaceuticals bought Shire for $62 billion.

The industry was abuzz. All year, people were speculating on who would be next. Then AbbVie struck, snapping up Allergan, the maker of Botox, for $63 billion.

There was a several year period when these mega-super-duper-deals seemed like the norm. “In that timeframe, they were all really solving immediate patent cliffs,” Henry explained.

AstraZeneca’s $39 billion acquisition of rare disease biotech Alexion was a standout in December 2020, and the most recent to raise eyebrows and spur whispers of a megadeal renaissance was Pfizer’s Seagen tie up, valued at $43 billion, in 2023.

Since then, deals have been smaller. Johnson & Johnson bought Intra-Cellular for $14.6 billion in January 2025, drawing a gentle round of applause from the industry for the 11-figure price tag.

Transact to Transform

But the industry has fundamentally changed now, according to Henry. Drug pricing legislation and orders from the White House have finally succeeded in targeting high-price therapies. In the case of the Inflation Reduction Act, passed in August 2022, the longevity of certain patents have been upended, shifting incentives elsewhere. Henry wonders if it’s time to think differently, even if mega deals haven’t felt feasible for a long time.

“If you can’t replace your revenue and the [loss of exclusivity] cliff that you’re facing with assets that you can purchase externally, you don’t have first to market assets that are going to stay the course and be definers of the class—which have been hugely important to pharma [companies’] performance over time, what do you do?” Henry said. “That’s where you start to wonder if some of these consolidations will actually transpire.”

Henry did not speculate on which companies could comprise these transactions, only pointing to the top 20 to 30 pharmas in general. Companies are also grappling with the rise of direct-to-consumer marketing, overall market headwinds and biosimilar competition, he noted.

“There’s a lot of reasons that all of a sudden, you start to now say it might be time.”

There hasn’t been a headline-stealing deal at J.P. Morgan yet. Nevertheless, the mood is positive amid green shoots and a flurry of dealmaking to end 2025.

January 13, 2026

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2 min read

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Bigger deals have gotten easier to pull off, too, as Pfizer CEO Albert Bourla noted on the company’s recent earnings call. The Seagen integration was aided greatly by AI, he told analysts. The technology helped Pfizer explore all available synergies and speed the process.

“The whole idea of AI, we talk about transact to transform operations,” Henry said. “When scale gives you another way to be able to go to another level of performance, even beyond what just standard synergies would deliver, that’s where you get really excited about that.”

AI could in the future make some of the most impossible sounding deals possible, Henry continued. “Does AI start to change what you can possibly do in your transformation? And can you return that back into deal premium? That’s an intriguing thing to keep an eye on.”

Zercher notes that AI is also easing mid-cap deals. “AI is streamlining post-acquisition integration, reducing what has historically required years and multiple consulting firms,” he said.

He still sees the mid-cap space as the future of pharma dealmaking, as companies seek to duck regulatory scrutiny rather than draw attention with an out-of-this-world pharma-to-pharma takeover.

Still, Henry is not alone in his thinking that now is the time for a bigger deal. Leerink Partners offered a similar perspective in an October 2025 M&A outlook report: “Companies facing revenue declines in 2025–2030 may need to pursue larger deals that provide immediate revenue contribution,” the firm said, pointing to Bristol Myers Squibb, Amgen and Pfizer as members of this camp.

Pfizer, of course, bought Metsera for $9.8 billion last year, winning a bidding war with Novo Nordisk; but the New York pharma’s executives have said they have $15 billion more to play with.

Amgen is hurtling toward a steep patent cliff and executives have hinted that the company could execute a big deal. Amgen has a history of striking massive transactions, having bought Horizon Therapeutics for $28 billion in October 2023.

BMS, for its part, executed a sizable $14 billion transaction for Karuna Therapeutics in December 2023, but the main asset, Cobenfy, has since struggled.

“Therefore, we believe [BMS] is likely to maintain an appetite for late-stage acquisitions,” Leerink Partners wrote.