Global life sciences dealmaking jumped in 2025, with M&A investment hitting $240 billion. That’s an 81% jump from $130 billion in the prior year. One factor driving the convergence is patent expirations, which are pressuring the growth outlook. For instance, Merck faces Keytruda patent protections expiring around 2028 in the U.S. Meanwhile, AbbVie has already seen Humira sales dip since U.S. biosimilar competition began in early 2023.

The figures, from EY’s annual M&A Firepower report released earlier in January, cover deal value for signed transactions across biopharma and medtech globally. Despite overall deal volume dipping 12%, the composition shifted. Biopharma deal count fell 19% while medtech rose 6%. In broad strokes, companies are prioritizing fewer, larger bets on near-launch-ready assets rather than early-stage pipeline plays.

The mean per-deal investment hit $2.1 billion, more than double the 2024 average. Merck’s $10 billion acquisition of Verona Pharma and its $9.2 billion Cidara deal highlight the scale of bets companies are placing on de-risked assets.

EY projects a growth gap of $100 billion by 2028, expanding to $370 billion by 2032 as blockbuster products lose market exclusivity and geopolitical risks intensify.

China emerging as an innovation source

Western pharma companies are looking eastward to replenish their pipelines. In all, China captured 34% of total alliance investment from U.S. and European biopharma companies in 2025, up from just 4% in 2020, with five of the year’s 10 highest-value alliance deals involving China-based companies. Examples include Pfizer and 3SBio, which entered into a global licensing deal for SSGJ-707, a PD-1xVEGF bispecific. That deal was valued at up to $6 billion ($1.25 billion upfront plus milestones). In addition, Takeda paid $1.2 billion upfront for the rights to two oncology assets from Innovent Biologics, with up to $10.2 billion in milestones on top. Other notable deals include AstraZeneca, which put down $100 million upfront, plus up to $1.91 billion in milestones, for JAB-23E73, a clinical-stage pan-KRAS inhibitor from Jacobio Pharma. In addition, Ipsen and Simcere Zaiming entered into a deal worth up to $1.06 billion for SIM0613, an antibody-drug conjugate candidate targeting LRRC15. Finally, Bristol Myers Squibb and Harbour BioMed signed a research pact worth up to $1.1 billion for next-generation multi-specific antibodies.

While alliance deals typically quote total potential value including milestones, EY notes that only about 7% was paid upfront on average in 2025. But in any event, the Chinese innovation ecosystem appears to offer a faster, lower-cost pathway from R&D to global commercialization.

AI reshaping the deal landscape

The role of AI in pharma has accelerated since the launch of ChatGPT in 2022. And it is clear that artificial intelligence is transforming how companies identify and integrate acquisition targets. EY’s report highlights a 256% increase in the potential value of life sciences deals aimed at accessing AI technology platforms.

The largest AI-focused life sciences deal to date was Recursion Pharmaceuticals’ $688 million acquisition of Exscientia, which closed in late 2024. The all-stock deal combined Recursion’s biology exploration capabilities with Exscientia’s precision chemistry and automated synthesis platform to create what the companies called a “full-stack technology-enabled drug discovery platform.”

More recently, AstraZeneca signed a $200 million deal with Tempus AI and Pathos AI in April 2025 to build a multimodal oncology foundation model for cancer drug discovery. And Tempus itself has been on an acquisition spree, paying $81.2 million for pathology AI company Paige in August 2025.

There’s room for improvement in deal execution overall: only 32% of acquisitions achieved at least 100% of their expected revenue targets, with higher success rates when acquirers stayed in therapeutic areas where they already had expertise.

2026 outlook

With a record $2.1 trillion in Firepower (EY’s model measuring deal capacity based on cash and equivalents, debt capacity, and market cap), the life sciences industry is well-positioned to accelerate dealmaking this year.

Separate analysis from Evaluate’s 2026 Preview Report echoes this outlook. “M&A drove the market’s rise at the end of 2025. In October and November, we saw $36 billion deployed in biotech buyouts,” said Daniel Chancellor, vice president of thought leadership at Norstella, Evaluate’s parent company. “We will see more M&A action in 2026 as the approaching patent cliff requires further decisive action to navigate.”

The patent cliff pressure is real: over $300 billion in branded prescription drugs will lose exclusivity through 2030, with near-term revenue losses expected from drugs like Eliquis, Entresto and Stelara, with projected losses of more than $2.5 billion, $2.25 billion, and $2.1 billion respectively.

On the growth side, Evaluate forecasts 57 novel drugs will launch in the U.S. in 2026, with combined fifth-year sales approaching $50 billion. The metabolic space remains white-hot: Eli Lilly is anticipated to overtake Novo Nordisk as the GLP-1 leader this year, according to Pharmaceutical commerce, with tirzepatide (Mounjaro/Zepbound) projected to hit $45 billion in global sales versus semaglutide’s $40 billion. Keytruda is forecast to remain the top-selling drug brand in 2026, helped by its new subcutaneous formulation approved last September.

Goldman Sachs has predicted a record-breaking year for pharma and biotech M&A in 2026, while EY’s Arda Ural expects deal value to hover around historical levels. Either way, “2026 is likely to see a major acceleration in dealmaking, including 20-plus acquisitions over $1 billion,” predicts SVB’s Jonathan Jacquet.