This time last year, we wistfully remarked that M&A activity in the life sciences sector had decided to slim down and join the GLP-1 trend. Since then, dealmakers in the space have discovered their appetite again – and then some. Johnson & Johnson (J&J) kicked off 2025 with its $14.6 billion acquisition of Intra-Cellular Therapies, a timely reminder that Big Pharma’s hunger for innovation would not be kept at bay for long. While an unexpected case of indigestion followed in the early months of 2025 – with dealmakers chewing on US tariff-related uncertainties, US Food and Drug Administration leadership changes, shifting priorities at the US Department of Health and Human Services and an executive order on most-favored-nation pricing – the sector’s hunger for deals returned by mid-year, and life sciences M&A roared back with renewed confidence in transformative acquisitions.
In our annual review that follows, we unpack the latest trends and developments we are seeing in the market and offer our prediction for a robust life sciences M&A market continuing into 2026.
What’s driving the deals:
Patent cliffs, platform plays and pipeline replenishment
Last year, we predicted that 2025 dealmaking would be “more targeted and strategic, with a focus on emerging technologies and therapeutic breakthroughs.” This prediction rang true as industry players grappled with (and continue to gameplan around) a patent cliff through 2027 that puts approximately $150 billion of pharmaceutical revenue at risk. High-value acquisition targets and interest in single promising clinical-stage assets remain strong.
The approaching patent cliffs are also driving increased interest in platform-based deals – transactions that focus on core technology that supports multiple drug programs. Because these deals are designed to both support current revenue and generate future products, they are complex to navigate. Focus areas include shared rights to underlying technology, milestone payments tied to multiple programs and careful allocation of intellectual property (IP) ownership across indications. These transactions, like AbbVie’s Capstan deal and Novartis’ agreement to acquire Avidity, require discipline and attention to value allocation and protection across an entire technology ecosystem (compared to just a single compound).
Platform deals also often require hybrid structures that combine elements of traditional acquisitions with licensing agreement concepts: retained rights, co-development obligations and sublicensing restrictions that survive closing. Representations and warranties must address not just the target’s existing products but the validity and freedom to operate of underlying platform IP. Indemnification provisions increasingly carve out or specifically address platform-related claims, and buyers often demand tighter IP reps and more robust data integrity warranties as clinical stage valuations climb.
Regulatory certainty: A new administration’s impact
Leadership changes at the Federal Trade Commission (FTC) have provided a more predictable enforcement climate for dealmakers. The FTC has moved enforcement away from the novel theories of harm, like the bundling theory litigated in Amgen’s 2023 acquisition of Horizon, toward traditional horizontal competition analysis. The FTC has also demonstrated a greater willingness to resolve overlaps through remedies, such as divestitures, and a lower propensity for litigation, which has provided additional avenues for acquirers to secure antitrust clearance. Procedurally, early termination is back, allowing parties to request that the US government terminate the Hart-Scott-Rodino (HSR) waiting period early – though it is not yet clear whether the agencies are back up to historical levels of granting early termination (about 80% of requests).
That said, companies shouldn’t interpret a friendlier enforcement posture as a green light for deals that raise antitrust risks. Transactions with genuine horizontal overlaps or nascent competition concerns still warrant careful structuring – including detailed efforts covenants, clear definitions of what remedies are required and realistic outside dates that account for extended HSR review. As FTC Chairman Andrew N. Ferguson summarized it: “[I]f we’ve got a merger … that violates the antitrust laws, and I think I can prove it in court, I’m going to take you to court. And if we don’t, I’m going to get the hell out of the way.” And Ferguson has made good on that – litigating two life sciences transactions since taking the helm with a split record of success.
States are also getting more involved in merger review, with some states requiring antitrust filings to be submitted if certain thresholds are met, though these have not yet materialized into enforcement actions.
At the same time, the Committee on Foreign Investment in the United States (CFIUS) review has become increasingly prevalent in cross-border life sciences transactions, with biopharma’s sensitive data and dual-use technologies drawing particular scrutiny. As with antitrust, deal documents should include carefully crafted provisions addressing CFIUS approval (if needed) and related risks, including the potential for a protracted regulatory review.
Transaction structuring and deal terms
Pre-signing competition heats up
As the market heats up, so too does competition for the best M&A assets. In the last year, we’ve seen an increasing number of sale processes with multiple, highly engaged acquirers vying for targets right up to the final competitive moments before signing – a noticeable departure from a landscape previously dominated by bilateral processes. Lundbeck’s $2.6 billion acquisition of Longboard Pharmaceuticals, the Alumis/ACELYRIN all-stock merger and the sale of Chimerix to Jazz Pharmaceuticals all featured active pre-signing processes, according to public disclosure, to name just a few examples.
These competitive dynamics have put deal protection mechanisms front and center. The negotiation of break-up fees, “match” rights and information rights provisions has become increasingly robust. Although a competitive process shifts leverage to sellers in many respects, at the same time, buyers who know other bidders are in the wings can see themselves as having the high ground in pushing for seller friendly deal protection provisions with respect to any continued post-signing activity. Where these terms land often depends on deal-specific factors, but expect these provisions to continue to consume meaningful negotiating bandwidth.
Post-signing topping activity also hot
The Metsera/Pfizer/Novo Nordisk topping-bid situation captured industry attention and was an active reminder that regulatory clearance is only one hurdle on the road to closing a public deal. In today’s environment, topping bidders can – and, we predict, will increasingly – emerge post-announcement. Recent examples, including Lundbeck’s decision to attempt to top an agreed transaction, as well as the highly publicized Warner Bros./Netflix/Paramount situation outside the life sciences sector, have put increased focus on topping-bid dynamics as a tool in the tool kit in buyer and target boardrooms alike.
This uptick in deal jumping has refocused attention on the enforceability of no-shop provisions and the circumstances under which boards are permitted to change their deal recommendations. As discussed in our recent article on deal jumping, Delaware courts continue to scrutinize whether boards have properly discharged their Revlon duties when evaluating topping bids and if negotiated deal protection provisions impermissibly constrain those duties. Both buyers and sellers, if well counselled, will be wise to negotiate deal protection structures with litigation risk in mind – clear triggering events, unambiguous procedural requirements that provide a roadmap for compliance and termination fees at levels that courts will enforce.
Overall, the lesson for public company boards is clear: Deal-jumping risk must be anticipated at signing and always with the board’s fiduciary duties and attendant litigation considerations in mind.
CVRs and earnouts: Leaning in but with caveats
As industry observers know, a contingent value right (CVR) is a type of contingent consideration in the form of a contractual right that entitles its holder to payments well after the closing of a transaction, subject to the occurrence of certain specified milestones (such as regulatory approvals, commencement of clinical trials or net sales thresholds). CVRs are similar to earnouts in private company acquisitions.[1]
Deals featuring CVRs surged in 2025. Thirty-four public company healthcare deals included a CVR in 2025 (out of 78 transactions, 43.6%),[2] compared to only 12 in 2024 (out of 54 transactions, 22.2%). This trend reflects continued buyer caution toward underwriting bullish upfront valuations, sellers being more aggressive in their valuation expectations, and yet both parties being motivated to get creative in a competitive market to get a deal done. In addition, some financial buyers tie CVR milestones to disposition of early-stage assets rather than development or sales milestones.
The contours of a buyer’s diligent effort to achieve the milestone(s) is a key issue in structuring a CVR or earnout. Following the September 2024 Auris Health litigation, in which the Delaware Court of Chancery awarded former stockholders more than $1 billion in damages for J&J’s earnout covenant breaches (the largest such award in Delaware history), many buyers have become increasingly focused on limiting post-closing litigation exposure. According to SRS Acquiom’s study[3] of private-target life sciences M&A transactions, the percentage of bio/pharma deals with development milestones subject to typically heavily negotiated “commercially reasonable efforts” standards dropped from 94% (2017 to 2019) to just 74% (mid-2023 to mid-2025), while provisions granting buyer discretion climbed from 31% to 47% over the same period.
Cross-border activity accelerates
Cross-border life sciences M&A accelerated in 2025, with global pharma acquiring targets across the US, Europe and Asia. Transactions touching multiple jurisdictions require coordination across regulatory regimes, careful attention to governing law and dispute resolution mechanics and deal documentation that accounts for cross-jurisdictional complexity.
Cross-border deals often require careful navigation of corporate and securities law regimes impacting deal structuring and timing, multijurisdictional IP ownership and licensing structures, tax-efficient cash repatriation and global merger control and foreign direct investment timelines that can meaningfully extend deal runways and complexity. As a result, parties are increasingly focused on negotiating appropriately calibrated outside dates, interim operating covenants, and regulatory cooperation/risk shifting provisions to manage timing risk exposure.
European activity remains robust
European pharmaceutical companies remained active acquirers of US clinical-stage assets, most recently evidenced by Merck KGaA’s acquisition of SpringWorks and Novartis’ acquisition of Regulus. Cross-border acquisitions of early-stage European assets by global pharma are on the rise – in particular, AstraZeneca’s acquisition of EsoBiotec and Taiho’s (a subsidiary of Otsuka Holding) acquisition of Araris Biotech. In these transactions, upfront cash payments are often modest relative to total deal value, with contingent consideration designed to align long-term incentives while limiting near-term capital deployment.
China becoming major global player
China’s evolution into a global “supply pool” of innovative drug candidates, particularly in oncology, autoimmune diseases and obesity, is among 2025’s most significant developments. Despite geopolitical headwinds and policy uncertainty, the overall pace and collective value of China-related biotech deals remained elevated in 2025, with industry analysts noting record activity in licensing, collaborations and strategic transactions involving China-originated therapeutic assets.
In addition to outbound partnering and licensing activity, Chinese strategic buyers are consolidating domestic biotech through M&A – for example, Sino Biopharmaceutical’s acquisition of LaNova Medicines reinforced the trend of national champions strengthening their pipelines for both local and global competitiveness through strategic purchases.
Overall, industry data suggests that Chinese biotechs are increasingly becoming sources of global innovation rather than just regional players and that Western large pharma companies have taken note.
However, the legal and regulatory landscape remains complex. To navigate these hurdles, parties are increasingly engaging in early-stage structuring, including asset carve outs, staged or conditional closings, ring-fencing of sensitive operations and bespoke mitigation commitments.
Food for thought: 2026 and beyond
That’s a lot to digest, and 2025 may shape up to look like just an appetizer to 2026 deal momentum. We expect another strong year, with more global impact and more complexity.
Some food for thought for the coming year:
- Value drivers will continue as hungry buyers search for platform plays and pipeline replenishment.
- Competitive processes, both pre-signing and topping bids, will continue in this frothy market.
- Regulatory scrutiny will remain in line with 2025, with traditional theories of harm carrying the day and a focus on remedies over litigation.
After a few years of lean eating, the M&A buffet is ready for a second helping.
[1] While it is possible for CVRs issued to public company stockholders to be transferable if they are registered with the Securities and Exchange Commission (SEC) and listed on an exchange, almost all CVRs are not transferable and will therefore stay with the original stockholder at the closing of the transaction, often for many years.
[2] Source: DealPointData, transactions in “Healthcare” industry for 2024 versus 2025.
[3] Source: SRS Acquiom, 2025 Life Sciences M&A Study.
