2026 is set to be a banner year for M&A in biopharma, as buyers facing major patent cliffs fight for a small pool of late-stage assets.
Biopharma insiders agree that the pace of M&A deals will pick up next year as pharma companies head toward critical patent cliffs and the industry buzzes after a high-profile bidding war between Pfizer and Novo Nordisk.
“We’re just seeing the start of a big M&A season coming, 2026, 2027,” Coya Therapeutics CEO Arun Swaminathan told BioSpace in a recent interview. “If I had a crystal ball, I see big M&As coming through.”
It’s a familiar prediction for a year-ahead exit outlook, but unlike the past two years when the optimism was perhaps less well founded, experts say there are now clear indicators of green shoots.
For one, interest rates are finally going down, with the Federal Reserve executing its latest cut on December 10. And importantly, Big Pharmas are facing major patent expirations in the next few years, leading Swaminathan and others to conclude that pharmas need to be making deals now.
Pfizer and Novo’s dramatic battle for obesity biotech Metsera has also been a major indicator of a revitalized M&A environment, numerous experts told BioSpace.
“Metsera signaled a return of big-pharma confidence in writing meaningful checks again,” said Kevin Eisenfrats, CEO of male contraception biotech Contraline. “That enthusiasm should persist into 2026 for a simple macro reason: Pharma’s revenue cliffs haven’t gone anywhere and internal R&D productivity still lags.”
The patent situation and Metsera deal have signaled “one of the strongest M&A environments in years,” agreed Michael Allwin, head of biopharma investment banking at Truist Securities.
What Is Pharma Seeking?
As has been the theme all year, pharma is on the hunt for later-stage clinical assets. But a shortage of such assets has forced buyers to look to earlier-stage biotechs.
A recent McKinsey analysis determined that there were 17 “unencumbered phase three assets” available on the market right now that are worth about a billion dollars, and that count has dwindled further as deals have been signed.
“The amount of substrate, especially if you need revenue in the near term, is fairly low,” said Greg Graves, senior partner in McKinsey’s life sciences practice. “More than half the deals are early-stage deals. At this point in time, I think that’s going to continue.”
Swaminathan added that buyers will have to open up their wallets to secure the best assets. “I do think that there’s going to be a premium on clinical stage assets and companies, because then it’s been derisked,” Swaminathan said. But pharmas still want differentiated assets, so no matter what they buy, they are taking risk, he added. “At the end of it all, M&A is an educated bet.”
Graves added that AI is going to play a greater role in acquisitions going forward—and not just because companies may be looking to acquire such technologies. He said pharmas with good AI infrastructure could more quickly find synergies with the companies they buy.
“If you have gotten the efficiencies out of AI, particularly on the back office and commercial side, does that actually make you a better acquirer?” Graves speculated.
This could particularly come into play for larger deals—which Graves predicts more of in 2026—that are a much heavier lift to fold into existing operations.
AI is also helping smaller biotechs operate like much bigger operations, according to Philip Poulidis, CEO of ODAIA, which provides AI commercial intelligence solutions for the life sciences industry.
“Buyers want more than compelling assets—they want evidence of commercial discipline. What’s new is that AI now gives emerging companies the ability to operate with the commercial rigor of much larger organizations,” Poulidis said in an email. “That readiness to execute and the ability to punch above their weight will play a larger role in how buyers evaluate companies.”
How Much Will Pharma Spend?
Swaminathan pointed to a company like Merck, which recently gained approval for a subcutaneous version of Keytruda in a bid to extend its decade of dominance before patent expiry. But that will only add a little fuel to the drug’s eventual decline. Swaminathan’s former company Bristol Myers Squibb is another that needs to do some shopping as the Pfizer-partnered blood thinner Eliquis nears its patent cliff.
These companies have plenty of cash available, according to Allwin. He said pharma has about $300 billion in revenue nearing loss of exclusivity and about $500 billion in balance sheet capacity. Stifel estimated that pharma has combined firepower of $1.2 trillion available in an October analysis.
The theme of late, however, has been smaller deals. “Pharma is getting good at doing multiple small acquisitions to diversify their portfolio, as opposed to just taking out one big company,” Swaminathan said.
Going into 2026, Allwin expects this trend to continue, forecasting that pharma will focus on deals in the $5 billion to $10 billion bolt-on range.
But it’s not just Big Pharmas in the market right now. Bill Roegge, M&A and Activism Defense partner at the law firm Cooley, noted that mid-cap companies are also on the hunt for deals to diversify their pipelines. Leerink Partners recently predicted that Regeneron, Vertex Pharma, Biogen, Moderna and Jazz Pharmaceuticals could strike soon with deals.
What Type of Assets Will Be Bought?
One sure bet is that pharma will continue to eye obesity-focused deals. But Graves sees this space getting more precise. When the frenzy for obesity assets began in 2024, Graves said pharmas were looking for any asset just to get in the game. As the space has matured and become more crowded, Graves said companies will need to go after specific sub-populations and unmet patient needs. They will also look for assets that do not impact muscle mass as much as the approved agents have been found to do.
Price will also play a role, as the cost of approved therapies from Novo Nordisk and Eli Lilly have dropped from four figures to a few hundred dollars for a month’s worth of treatment.
Swaminathan agrees that obesity and metabolic diseases continue to attract attention. He also thinks neuroscience—where his company Coya plays—could see some action. There’s a lot of risk but high rewards for companies willing to bet on neuroscience, the CEO said.
Swaminathan also said that oncology is getting tougher to deal in as the space gets more and more fragmented and the patient populations smaller. Deals will always happen there, but Swaminathan thinks companies may need to look elsewhere for mega-blockbuster potential.
Graves argued that the obesity frenzy has had a role in driving companies away from oncology, because the GLP-1 breakthrough provided access to a massive potential population of patients.
“What the obesity excitement has done is paved the way for large population diseases again,” Graves said. He cited deals in cardiovascular, renal and broader metabolic diseases as evidence.
With interest rates coming down, there could be more appetite for risk.
“I’m not an economist, but I would say if you’re sitting on billions of dollars of cash, that’s not the best place to leave it right now,” Swaminiathan said. “The best place to leave it is in some investments. So my guess is the financial people at these Big Pharmaswill be looking at that as well.”
