Even with Johnson & Johnson’s (J&J) $14.6bn buyout of Intra-Cellular Therapeutics in January setting a strong deal-making tone, 2025 still delivered a few surprises.
A bidding war between Pfizer and Novo Nordisk for weight loss drug developer Metsera caught investor attention due to its rare occurrence. Genmab joined big pharma in the top ten M&A deals despite being a biotech. In addition, another league-topping deal for a neuroscience specialist indicated the commercial prospects of central nervous system (CNS) pipelines.
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With less than a month of 2025 to go, data already shows a significant jump in deal value compared to 2024. What acted as M&A fuel this year, and what could be in store in 2026?
2025’s tail-heavy deals
The largest M&A this year was Johnson & Johnson’s (J&J) buyout of neuroscience specialist Intra-Cellular Therapeutics for $14.6bn. The deal strengthened J&J’s neuroscience portfolio with Caplyta – a drug already FDA-approved for schizophrenia and bipolar depression.
Importantly, J&J is now marketing Caplyta for major depressive disorder (MDD) after FDA approval late in 2025, expanding its addressable market significantly since MDD affects far more patients than schizophrenia alone. Analysts expect Caplyta could become a multi-billion-dollar product (with estimates of ~$5bn in annual sales under J&J), giving a powerful revenue driver to the company’s neuroscience unit.
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By GlobalDataCompared to the largest deals exclusively between two biopharma companies, it is on par with Bristol Myers Squibb’s $14bn takeover of Karuna Therapeutics in 2024.
However, when comparing across the board of pharma M&A activity, 2025 has outperformed the previous year.
“Overall deal value is up, but the volume’s down. That’s an indication that the deal sizes have gone up. The average deal size now is nearly at about $1.9bn-$2bn mark, which is significantly higher than full year 2024,” says EY LifeSciences global deals leader Subin Baral.
Although J&J’s deal for Intra-Cellular Therapeutics occurred early in the year, much of the M&A activity unfolded in a surge in the second half of 2025. US President Donald Trump, who assumed office in January, created market volatility with the imposition of tariffs and drug pricing reforms. As a result, many pharma companies opted to steer clear of significant acquisitions.
Alison Labya, senior analyst of pharma business fundamentals at GlobalData, says: “Uncertainty surrounding President Trump’s policies initially heightened the perceived risk of large-scale M&A. As a result, H1 2025 continued to be shaped by smaller, bolt-on transactions, apart from a handful of billion-dollar deals driven by large pharma, such as J&J’s acquisition of Intracellular Therapies.”
As the year went on, however, the landscape of the international market shaped by tariffs began to take shape. Equipped with a clearer forecast on financial implications, companies returned to the M&A arena. A report by GlobalData revealed a 36.7% quarter-over-quarter increase in total M&A deal value in Q3 2025, reaching a total of $43.2bn.
Amongst this flurry across October and November were Novartis’ $12bn acquisition of RNA specialist Avidity Biosciences and MSD’s two deals buying Verona Pharma and Cidara Therapeutics for $10bn and $9.2bn, respectively.
“Feedback from CEOs of biopharmas suggests that companies are a lot more comfortable with the outlook of the US commercial market. M&A transactions that we expected to probably be more spaced out during 2025 have come more towards the end of the year,” says Linden Thomson, senior portfolio manager at asset management company Candriam.
Looking ahead to next year, Baral sees the dealmaking pace continuing.
“We don’t see the pace of dealmaking slowing as the availability of biopharma firepower will remain, and loss of exclusivity demand will continue,” he comments.
Patent cliff boosts biopharma appetite
The looming patent cliff – one of the worst-kept secrets in the pharma industry – is a central force behind the dealmaking in 2025.
The wave of upcoming drug patent expiries is anticipated to be one of the largest to hit the industry. A recent report by GlobalData projects that a significant share of global drug sales under patent protection will decline by 2030. Only 4% of global drug sales will have patent protection, compared to 12% and 6% in 2022 and 2024.
MSD’s Keytruda (pembrolizumab) and J&J’s Darzalex / Faspro (daratumumab and hyaluronidase-fihj) are both losing US core exclusivity in the next few years, representing a particular headwind in oncology. Keytruda, approved to treat a range of solid tumours, was the top-selling drug in the world in 2024, netting over $29bn in annual sales.
Baral comments: “It’s natural that external innovation and external access via deals and partnerships will be centre stage for biopharma companies. As the patent runway shortens, there seems to be a much more urgency to make these moves to ensure that they replenish their pipelines.”
Meanwhile, Novartis’ deal for Avidity comes as the big pharma company braces for key patent expirations for top-selling heart failure treatment Entresto (sacubitril / valsartan) and asthma drug Xolair (omalizumab).
Patent expiries for Novartis, MSD, and J&J, amongst others, will contribute to a US drug market that is set to lose over $230bn in revenue between this year and 2030.
“We’re expecting 2026 to be one of the most active years ever for biopharma dealmaking – both in terms of deal volume and transaction size. The wave of patent expirations […] will have a significant impact on the sector,” says Kenny Walker-Durant, partner in technology and life sciences at law company Goodwin.
Oncology no longer dominates the US market
Across the global landscape, oncology remains the leading therapeutic area of focus for M&A. But data show the fast emergence of metabolic disease candidates, largely in the weight loss arena.
The US market – traditionally a powerhouse for M&A regions also saw a changing of the guard in 2025. According to data from EY, the central nervous system/neurology segment captured $30.7bn in 2025, overtaking oncology’s $23.5bn.
Indeed, the record acquisitions in both 2024 and 2025 were driven by neuroscience-focused biotechs. The neurodegenerative disease and psychiatric disorders spaces are particularly lucrative due to the large patient size and immature market. The trend is exemplified by J&J’s $14bn acquisition of neuroscience specialist Intra-Cellular Therapeutics, the biggest M&A deal in 2025.
Meanwhile, surging demand for obesity assets came to a head during a fierce bidding war between Pfizer and Novo Nordisk to buy Metsera, a biotech developing long-lasting glucagon-like peptide-1 receptor agonists (GLP-1RAs). Pfizer eventually sealed a $10bn deal for the company. The demand for weight loss drugs even helped Eli Lilly become the first healthcare company in the world to have a market cap of $1tn in November 2025.
Milestones help deals go the distance
The structure of deals in 2025 reflected a broader trend of de-risking in the pharma industry amid market volatility, with milestone payments playing a primary role.
“The average milestone payment for M&A deals increased by 255% in Q4 2025 so far, compared to Q3 2025. This suggests that while there has been an uptick in activity in H2 2025, buyers remain risk-averse,” Labya comments.
Contingent value rights (CVRs), a financial instrument that gives shareholders in publicly traded companies more value upon a milestone, have also been employed more than in previous years. Pfizer’s acquisition of Metsera, Novo Nordisk’s acquisition of Akero Therapeutics, and Roche’s $3.5bn acquisition of 89bio all incorporated CVRs into the deal structure.
“For me, the CVR utilisation is the biggest change this year. There’s a risk sharing of the pipeline value, and CVRs seem to have played a role in quite a lot of the deals this year. Biopharma has targeted a lot of late-stage and de-risked acquisitions, as opposed to earlier-stage counterparts,” Thomson says.
Baral says: “Unlike financial-focused traditional milestones, we’re now seeing more operation-based milestones. We believe this will be the norm as buyers and sellers bridge valuation gaps.”
The shift to late-stage asset targeting is becoming a more common strategy for biopharma companies. For example, Galapagos CEO Henry Gosebruch told Pharmaceutical Technology in November that the company is targeting post-clinical proof-of-concept drug candidates as part of its impending dealmaking push.
A report by Deloitte says that, rather than plugging the gaps with late-stage acquisitions, a shift towards smaller-scale, early-stage acquisitions focused on promising innovation is crucial for building a sustainable pipeline amid the looming patent cliff. Whether biopharma opts for this approach or remains willing to pay a premium for late-stage assets in 2026 remains to be seen.
China’s role in 2026
Chinese companies are responsible for 20% of drugs in development globally, reflecting the powerhouse role the country has embraced in the pharmaceutical industry. Licensing deals between US and Chinese biopharma companies hit record highs in 2024, a 280% increase from 2020, according to analysis by GlobalData.
“There is no turning back from China. It is there to stay as an innovation hub. The question is not whether but how to do deals in the county,” Baral affirms.
While agreeing that China will remain an opportunity on a long-term basis, Thomson suggests that the highs of 2025 value might not repeat in 2026.
“We’ve probably got towards the end of the obvious deals, and there are only so many assets available currently. There is somewhat of a view that the next deal needs to be richer than the last, and if you get too far down that path, it becomes cheaper to just buy again in the US.
“China will remain an area that all of biopharma will look to, but I wonder whether there might be somewhat of a slowdown in 2026,” Thomson concludes.
Gearing up for JP Morgan 2026
As 2025 draws to a close, the 2026 JP Morgan Healthcare Conference looms as a key barometer for corporate strategy and dealmaking momentum.
While headline transactions this year have set ambitious benchmarks, industry watchers will be scrutinising which sectors – neuroscience, oncology, or beyond are poised for further M&A activity. Alongside pipeline updates and innovation showcases, the conference will be a test of how companies translate strategic intent into actionable deals in an increasingly competitive and capital-intensive market.
