Off the cliff, into the deal room: pharma M&A in 2026 and beyond

The global biopharmaceutical industry entered 2026 facing one of the largest waves of patent expirations in its history.

The potential revenue impact is significant: industry analysts expect more than $200 to $300 billion in yearly sales are at risk as patents expire, with the top 20 drugs at the edge of the patent cliff accounting for $176 billion worth of revenue in 2025 alone. The next five years will see the loss of exclusivity over blockbuster patents which represent some of the most profitable drugs in cancer, heart disease, immune disorders, diabetes, and eye disease, including Keytruda, Eliquis, Opdivo, Xarelto, Eylea, and Stelara.

The threat of major revenue disruption has galvanised industry participants to explore how they can offset the impact of patent cliffs through strategic transactions. We've reflected on how this has shaped the market in 2025, and what this might mean for 2026 (and beyond).

What 2025 revealed: fewer deals, larger tickets

2025 saw newly emerging trends which provide a hint as to how the market may adapt to the threat presented by the wave of patent cliffs. Buyers have leaned into products with a clearer and shorter path to market, rather than riskier and more speculative bets on emerging products, as more mature products are generally easier to slot into development pipelines. The safer and quicker route to a de-risked portfolio comes with a higher price tag, with the average deal size in 2025 roughly doubling to around $2 billion. In turn, deal volume has diminished – even though M&A spend in the Life Sciences space increased by 81% between 2024 and 2025.

Despite strong interest from biopharma in more proven targets, 2025 still had many hallmarks of a buyers' market.  Reduced access to finance, a challenging regulatory landscape and an uncertain economic outlook have left many biotechs and their investors looking for exits or structured partnerships. At the same time, competition was fierce for the right targets, as highlighted by the bidding war between Pfizer and Novo Nordisk over the obesity and metabolic disease biopharma, Metsera, in late 2025. Assets demonstrating “proven biology” and robust trial results are expected to continue being in high demand in 2026, with radiopharmaceuticals, RNA therapies, cardiometabolic drugs, and antibody-drug conjugates being potential hotspots for investment.

Licensing and alliances are expanding

Share acquisitions are commonly used in biotech portfolio expansion where acquirers seek broad pipeline access and full control - examples in 2025 included Johnson & Johnson’s $14.6 billion acquisition of Intra-Cellular Therapies, Merck’s $10 billion purchase of Verona Pharma, and Sanofi’s $9.5 billion acquisition of Blueprint Medicines.

While share acquisitions are an effective way to take ownership of an asset, outright ownership comes at the cost of assuming all the risks inherent in bringing a new product to market. Market trends in 2025 have revealed a more buyer-cautious approach, driven in part by uncertainty around tariffs and U.S. drug pricing, leading to an increased reliance on asset-level transactions and strategic alliances, including licensing and partnership deals.

We predict that licensing and alliance structures (including joint ventures and minority investments coupled with options to acquire) will increasingly be used by biopharma companies to place measured bets on assets as 2026 unfolds.

Licensing or investing in assets developed in China has also emerged as a strategy which companies are more readily exploring. Investment from U.S. and European biopharma companies into companies based in China has risen by 30% between 2020 and 2025, and five of the ten highest-value alliance deals in recent years have involved Chinese companies.

Outlook for 2026 

2026 is expected to be a transaction-intensive year, as biopharma companies respond to the pressure to address pipeline gaps, diversify product portfolios and secure access to new platform technologies.

For biotech teams and their investors, the strategic implication is clear. Where an asset is supported by robust data and a clear route to market, there should be attractive opportunities to realise value in 2026.