The two most historically deal-conservative Big Pharmas have the most money to play with for a major M&A transaction, according to a recent Stifel analysis.
Who has the most cash to spend on M&A? According to a new analysis from Stifel, it’s Johnson & Johnson and Roche, each with $119 billion in “stretch firepower” that could be deployed on buying new companies or assets.
Stifel’s analysis of the top 18 pharmas is calculated based on EBITDA (earnings before interest, taxes, depreciation, and amortization) and factors in net debt that could be taken on. Stifel defines “stretch firepower” and “comfortable firepower” based on calculations of EBITDA and net debt ratios. This hypothetical cash could then be used to fund an acquisition.
For comfortable firepower, Novo Nordisk tops the list with $63 billion. The Danish pharma’s stretch goal would be $113 billion. J&J has $59 billion in comfortable firepower while Roche has $60 billion.
Stifel notes that some companies like AstraZeneca and Takeda have in the past pushed their stretch firepower, willing to go well beyond “comfort” levels as calculated in the analysis. J&J and Roche, meanwhile, have historically been more conservative and “reluctant to use obvious balance sheet capacity in order to be fully prepared for industry rainy days,” according to the report.
So J&J is unlikely to actually spend $119 billion on a deal, or combination of deals. But Stifel’s analysis gives a sense of scale for the M&A possibilities in the industry right now. The 18 pharmas have a total of $1.2 trillion in stretch firepower and $500 billion of comfortable firepower between them, according to Stifel. The total firepower has risen since Stifel last did this analysis in 2020 and 2023.
Notably, Amgen has $0 available in comfortable firepower but could muster up $33 billion for a stretch.
Below, BioSpace examines the M&A outlook for the top five companies on Stifel’s list.
J&J
Comfortable: $59 billion
Stretch: $119 billion
J&J CEO Joaquin Duato put a damper on the prospects for a big M&A play from the healthcare giant at Morgan Stanley’s Global Healthcare Conference on September 10.
“Unlike other companies, we don’t need to do large M&A in pharma because we are delivering the growth,” Duato said. Referring to John Reed, J&J’s executive VP of Innovative Medicine and R&D,Duato continued, “He’s always asking for more money in order to develop more medicines.”
J&J did, however, kick off the year with what remains the largest transaction of 2025. The company paid $14.6 billion for Intra-Cellular, gaining approved schizophrenia med Caplyta and a pipeline of other neuroscience assets. Afterward, Duato and crew said that deals would shrink.
Duato’s more recent comments point to a doubling down on J&J’s internal drug discovery, but the CEO left the door open for some early-stage opportunities “that we can nurture with our scale in every area, clinical development, manufacturing, commercialization, and that’s where we are going.”
Roche
Comfortable: $60 billion
Stretch: $119 billion
Roche had been fairly mum on its M&A plans of late, sticking to big ticket licensing deals, including a $5.3 billion pact with Zealand Pharma for an obesity asset. But on September 18, that stalemate broke, as Roche offered $2.4 billion for metabolic dysfunction-associated steatohepatitis (MASH) biotech 89bio.
The deal fits right into Roche’s recent interest in metabolic disorders, which was underscored by the Zealand partnership.
Prior to the 89bio deal, Roche Pharma CEO Teresa Graham gave a frustratingly vague answer to a question on M&A during the Swiss pharma’s first half earnings call in July. The analyst was probing for details on whether Roche would go after a company in the PD-L1/VEGF space. Graham demurred, agreeing that oncology is a focus of Roche’s deal hunt but declining to give specifics.
“We look at thousands and thousands of deals a year. And certainly, oncology is a focus area, but we look at many different oncology mechanisms and other diseases. So I won’t comment on any specific one at this juncture,” Graham said.
Before 89bio, Roche’s last acquisition was a clutch of CDK inhibitors developed by Regor Pharmaceuticals for $850 million upfront just over a year ago.
Merck
Comfortable: $58 billion
Stretch: $115 billion
Merck has been busy conducting deals of late, including acquiring Verona Pharma in July for $10 billion and EyeBio for $3 billion in mid-2024. Both of these brought “a multibillion-dollar opportunity,” CEO Rob Davis told Morgan Stanley Conference attendees on September 8. The Verona deal is so far the second largest acquisition of the year behind J&J’s $14.6 billion Intra-Cellular grab.
“So as we sit here today, we feel good about the pipeline we’re building, the commercial potential we have. We have to realize it, we have to add to it,” Davis said. “We’re going to continue to invest in, augment and accelerate our internal pipeline. And we’re going to continue to look to do business development. So we’re not slowing down across any of those fronts.”
Merck is currently heading towards a significant patent cliff as cash cow immuno-oncology stalwart Keytruda will lose exclusivity in the next few years. When considering potential acquisitions, Davis said Merck watches out for new mechanisms of action, first-in-class or best-in-class potential or assets that can fill an unmet need.
“We like to talk about first, best, next,” Davis said.
That means considering the combination potential of an asset, which has become a key pillar of the Keytruda franchise.
“I feel like we’ve done a good job. We’ve moved with urgency. We’ve invested over $50 billion into business development since I’ve become CEO,” Davis said.
He suggested that Merck needs a few more deals the size of Verona or EyeBio, but he wouldn’t completely rule out a blockbuster deal.
“I’m not opposed to doing a commercial deal. But it has to be one that still comes down to the basis of science. I think doing something just to solve a short-term problem is the wrong answer. It has to be sustainable,” Davis said. “So the $1 billion to $15 billion that we’ve been following continues to be our preferred area, but we remain open to others if the parameters of value, science come together in the right way.”
Novo Nordisk
Comfortable: $63 billion
Stretch: $113 billion
It’s safe to say that things at Novo Nordisk are in flux, as new CEO Maziar Mike Doustdar has just taken the helm. He has not yet laid out his strategy for business development but is conducting a review of the business and implementing an aggressive cost-cutting plan that is expected to claim some 9,000 employees.
If we set aside the acquisition of contract development and manufacturing organization Catalent, which was actually done through parent organization Novo Holdings, Novo Nordisk has not done an M&A transaction since 2023. Instead, the company has stuck to licensing and research pacts to bolster its pipeline.
But we got a sense that there might be some announcements to come when newly minted executive vice president of R&D Martin Holste Lange, who also serves as chief scientific officer, nearly let slip some big news at the European Association for the Study of Diabetes 61st Annual Meeting on September 17.
“So exciting times ahead. And at the same time, with my new job and new title, I’m obviously also focused very much on building the research pipeline and portfolio—and I was about to say something I was not supposed to say,” Lange said. “But in the not-so-distant future, you will hear more about what we plan to do with the research pipeline and how we progress that.”
Novartis
Comfortable: $45 billion
Stretch: $92 billion
Novartis is undeniably on a deal spree, with three acquisitions this year alone, plus multiple licensing deals to bring in even more potential programs down the line.
Executives have not been shy about their desire for more deals.
“It’s not for lack of trying or any risk averseness. We would like to find more bolt-on M&A opportunities to continue to further strengthen our pipelines,” CFO Harry Kirsch said in a July earnings call.
Overall, Novartis has spent roughly $6.18 billion on M&A this year already across three deals, which is firmly in bolt-on territory.