After a flurry of deals over the past week from Eli Lilly, Merck and Biogen, analysts predict more M&A action from other big names, including Novartis, Amgen and AbbVie.
A flurry of pharma M&A over the past week has galvanized the biopharma sector, and several big names such as Amgen, AbbVie and Bristol Myers Squibb could extend the streak, according to analysts.
“We believe there is more room to run,” BMO Capital Markets wrote in a Wednesday note to clients summarizing the recent M&A activity.
Key deals over the past week include Merck’s $6.7 billion acquisition of Terns Pharmaceuticals, Eli Lilly’s $6.3 billion purchase of Centessa Pharmaceuticals and Biogen’s $5.6 billion Apellis Pharmaceuticals buy. These deals helped boost M&A spending to nearly $47 billion in the first quarter.
BMO said the deals “mark a return of large scale deal making, following a disappointingly uneventful JPM at the beginning of January.” The announcements have been coming despite a “more challenging macro” environment, the firm added.
Jefferies concurred. “The biotech funding/deal environment is clearly improving in Q1:26, supporting the notion of normalcy,” analysts said Thursday.
In addition to the recent big-ticket deals, pharmas including Gilead, Novartis and Servier have also been active scooping up biotechs in the $1–$3 billion range. “We also like the breadth of Big Pharma’s appetite, which includes four $5B+ deals as well as smaller $1-2B tuck-ins,” Jefferies wrote. If the pace of deals over $500 million continues, the analysts say that 2026 could near record highs in terms of volume and reach $172 billion in total. This would exceed the $111 billion spent in 2025 across 32 deals.
Companies are, for the most part, shelling out big bucks for the companies they want. BMO noted that premiums have ranged from 38%–140%. Biogen, for example, paid an 86% premium to Apellis’ 90-day volume-weighted average stock price. While the deal makes sense—Biogen will see key patents expire beginning in 2032 and 2033, and Apellis brings with it a team that could help commercialize the larger company’s investigational kidney disease drug—the company received some grief from investors and analysts alike over the high price.
Merck, on the other hand, may have pulled its punches on the Terns deal, the analysts noted, leaving space for a potential rival buyer. “We frame it as a great deal for Merck, but think Terns shareholders may have left some upside on the metaphorical table,” BMO said.
Biotechs also appear to be pushing for contingent value rights, which can pile on additional payments for achieving certain milestones down the line. Three of the last five deals included a CVR, according to BMO.
Lilly’s Centessa transaction had the biggest CVR potential, which could boost the deal by $1.5 billion. BMO suspects that Lilly included this as a way to deflect risk in the difficult neuro sector. The payment hinges on FDA approval of Centessa’s assets.
Despite the sudden rush, BMO suspects that pharma is likely not done. The firm named Amgen, which has $18.6 billion in capacity, as well as AbbVie with $33.6 billion, BMS with $21.9 billion and Novartis with $53 billion, as high potential acquirers.
Novartis in particular has been on a hot streak, buying immunology-focused Excellergy on March 27 for $2 billion. BMO thinks the Swiss pharma still has plenty of room for more, with particular interest in cardiometabolic and rare disease.
Gilead, Merck and Lilly could also conduct more deals yet, although they may be more selective for the perfect fit, according to BMO.
“Significant deal firepower remains, and recent transactions are suggestive of a constructive deal-making environment,” the analysts wrote. “In our view, the most common therapeutic areas where we will see deals made will be Oncology and I&I—given the large opportunity sizes and significant overlap with existing biopharma pipelines.”
M&A exits are overall great for the entire sector and could raise all boats, according to Jefferies.
“In theory, more large M&A activity could allow investors to put more money to work, driving secondary/IPO offerings higher.”
