Biotech deal activity has surged in early 2026 as established pharmaceutical companies move aggressively to replenish pipelines ahead of a series of patent expiries. The first quarter has already recorded roughly $84 billion in biotech M&A transactions, a sharp rise from $44.4 billion in the same period a year earlier and the strongest quarterly start since 2019, when annual deal value reached $147.7 billion, according to Dealogic data.
The drivers behind the uptick extend beyond a simple rebound to pre-pandemic levels, multiple industry participants said. While the impending patent cliff is a central motivator, analysts, investors and bankers point to substantial cash holdings at large drugmakers, comparatively attractive valuations in the biotech sector, an influx of newly approved drugs and evolving confidence in navigating regulatory review as compounding factors that are sustaining heightened M&A activity.
One recent industry note projects that, should the current pace continue, 2026 biopharma M&A volume could exceed $250 billion, placing this year second only to 2019 when blockbuster transactions such as Bristol Myers Squibb’s acquisition of Celgene helped push total M&A value to $328 billion.
Patent pressure and revenue at risk
Patents for a number of top-selling medicines are due to lapse in the coming years, intensifying strategic urgency. A notable example cited by market participants is Merck’s cancer therapy Keytruda, a drug that accounts for more than half of the company’s revenue and is slated to lose exclusivity in 2028. Peers including Eli Lilly, Gilead, Bristol Myers Squibb and Pfizer also face upcoming losses of exclusivity on certain blockbuster products.
Estimating the scale of the exposure, Eason Hahm, director of biopharma investment banking at William Blair, put more than $300 billion of sector revenue at risk of loss of exclusivity over the next five years. That magnitude of potential revenue erosion is influencing corporate behavior, with buyers increasingly looking outward for late-stage programs and approved products to replenish near-term sales capacity.
"The combination of strategic urgency, tighter private funding, and an uncertain IPO market has created the perfect environment for accelerated dealmaking," said Patrice Mesnier, founding partner at Oldenburg Capital Partners.
Balance sheets enable action
Strong liquidity positions at many major drugmakers are enabling boards to approve acquisitions more readily. GLP-1 market leader Eli Lilly finished 2025 with more than $7.27 billion in cash and equivalents, and Dealogic tallies show the company has spent in excess of $35 billion through April 29 this year. Alongside Eli Lilly, Gilead Sciences and Merck are among the biggest acquirers so far in 2026.
Advisors and bankers argue that large companies cannot afford to wait the lengthy timelines required to rebuild internal pipelines, often eight to ten years or longer. "They are no longer buying optionality. They are buying time," said Mesnier.
Deal sizes and corporate change
Much of the activity is concentrated in the mid-market. Industry participants observed a particularly active sub-$10 billion deal environment, where companies are taking more risk with M&A to spread exposures across multiple programs and technologies. Recent CEO changes at firms such as GSK and Novo Nordisk have accompanied more assertive acquisition postures, and shifts in senior development and strategy roles at companies including Bristol Myers Squibb, Gilead and AbbVie have also shaped which negotiations advance and how acquirers price risk.
Bernstein analysts highlighted the scale of the challenge, noting that future global revenue exposed to patent expiry over the next seven years is roughly 2.5 times higher than that seen in the prior 16-year period. This disparity, they argue, helps explain why dealmakers are adopting a "risk-on" stance in numerous mid-size transactions.
Ropes & Gray partner Emily Oldshue, who advised Eli Lilly on its acquisition of Ajax Therapeutics announced earlier this week, said companies are deploying a range of deal structures to hedge and spread risks. Oldshue also advised Pfizer, Gilead and Novo Nordisk on recent transactions.
Scientific themes drawing interest
Oncology remains a primary focus for acquirers, with immunology, neurology, cardiovascular disease and obesity also drawing notable interest because successful therapies in these categories can generate substantial sales to offset patent-driven declines. In parallel, companies leveraging artificial intelligence and machine learning to accelerate discovery and streamline clinical development are increasingly attractive targets. "Because of AI, you’re going to be able to develop these things much more quickly," said Mark Kvamme, CEO of the O.H.I.O. Fund.
Deal advisers note buyers are balancing portfolios by placing multiple bets across therapeutic areas and technological approaches, reflecting both the scale of revenue at risk and the diverse paths to replenishing future sales.
Market implications
Industry observers see the current wave of dealmaking as broader and potentially more enduring than a simple cyclical rebound. While patent expiries provide a clear deadline for action, the confluence of capital availability, sector valuations, clinical approvals and growing regulatory experience is producing an environment in which acquisitive strategies are increasingly logical for companies aiming to stabilize revenues and maintain competitive positioning.
How sustained this environment proves to be will depend on whether companies maintain the current pace of transactions and continue to find suitably priced targets that can meaningfully augment near- and mid-term revenue streams.