Following a cautious 2025, dealmakers now demand tangible evidence of an asset's value. This "proof over promise" approach involves conducting integration planning during due diligence and heavily favoring targets with clearer regulatory pathways to minimize post-acquisition surprises.
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The nature of biopharma M&A changed dramatically in a year. After a period with no deals over $5 billion, there are now seven or eight such transactions, reflecting a pivot by large pharma to acquire de-risked assets with large market potential to offset looming patent expirations.
Recent biotech deals are setting new valuation records for companies at specific early stages: preclinical (AbbVie/Capstan, ~$2B), Phase 1 (J&J/Halda, $3B), and pre-Phase 3 (Novartis/Abitivi, $12B). This signals intense demand for de-risked innovation well before late-stage data is available.
A successful acquisition strategy goes beyond the highest bid. It involves 'thinking like the molecule'—evaluating which buyer has the specific expertise, capabilities, and cultural alignment to best steward the asset's development. This reframes M&A from a financial transaction to a decision about the asset's future.
The old assumption that small biotechs struggle with commercialization ("short the launch") is fading. Acquirers now target companies like Verona and Intracellular that have already built successful sales operations. This de-risks the acquisition by proving the drug's market viability before the deal, signaling a maturation of the biotech sector.
Private equity firms are again actively pursuing life sciences carve-outs and platform investments. Their characteristic speed and flexibility are pressuring corporate buyers, who now face increased competition and must adapt their own processes to compete effectively on deals.
Many M&A teams focus solely on closing the deal, a critical execution task. The best acquirers succeed by designing a parallel process where integration planning and value creation strategies are developed simultaneously with due diligence, ensuring post-close success.
By the time a strategic acquirer enters due diligence, the desire to do the deal is already high. The process's primary purpose is not to hunt for deal-breakers but to confirm key assumptions and, more importantly, to gather the necessary data to build a robust and successful integration plan.
Companies used the "choppy" 2025 market to re-evaluate post-COVID spending, reduce redundancies, and implement automation. This disciplined cost takeout wasn't just about efficiency; it was about creating the operational and financial readiness to aggressively pursue new deals in the current year.
The current biotech M&A boom is less about frantically plugging near-term patent cliff gaps (e.g., 2026-2027) and more about building long-term, strategic franchises. This forward-looking approach allows big pharma to acquire earlier-stage platforms and assets, signaling a healthier, more sustainable M&A environment.
To achieve a high-value acquisition, biotechs must first build a credible strategy to succeed independently, creating a position of strength. Concurrently, leaders should keep multiple potential suitors proactively informed on all business aspects—not just clinical data—to facilitate a competitive bidding process when the time comes.
