Will the surge in biotech M&A persist?
Perspectives from BofA Global Research’s Leading Analysts
July 13, 2026
Tazeen Ahmad, Senior Research Analyst, Large-Cap & Small Cap Biotechnology
Big pharma acquisition spree coming to the forefront
M&A remains an important part of the backdrop for emerging biotech. A key driver is the looming “patent cliff” for pharma, as many high-revenue drugs are expected to lose patent protection by 2030. These products represent $150bn in 2025 worldwide sales, and expiration of patent protection would open the door for generic and biosimilar competition. Given this reality, a surge in M&A activity to replenish and sustain big pharma’s future revenue and earnings growth was a matter of when, not if. Furthermore, leadership change at the Federal Trade Commission (FTC), indicating a more permissible M&A regulatory framework, has given acquirers more confidence that proposed deals can be consummated. We have been continuously highlighting this theme, and we believe material levels of dealmaking are now taking shape.
Strategic buyers target near-term revenue accretion
In the universe of U.S.-listed, therapeutics-focused biotech companies, there have been 16 acquisitions in the first half of 2026, accounting for $78bn in deal value with an 82% average take-out premium. Sequentially, we have seen the transaction values accelerating, with $71bn in deals in 2H25 and $36bn in 1H25. The trend we have seen since 2025 is interest in biotech companies currently generating or close to generating revenues. In terms of therapeutic areas of interest to acquirers, we see heavy appetite for companies in oncology, rare disease and immunology & inflammation (I&I) due to their large patient populations or significant pricing potential given severity of disease and high unmet need for these patients.
We think acquirers will continue searching for these more mature acquisition targets with exposure to these types of end markets.
These needs are reflective of the upcoming pharma patent cliff and the need for large and sustainable near-term revenue contributors rather than investing years of R&D into early-stage drugs with a more uncertain path to revenue generation. We expect M&A activity to remain elevated and provide valuation support for the broader biotech sector.
Macro factors drive sell-off despite strong fundamentals
2026 has experienced multiple vectors of macro uncertainty related to the Iran conflict, a new Federal Reserve Chair signaling potential for a rate policy pivot, AI-related job loss concerns, inflation expectations and uncertainties in leadership tenure at the Food and Drug Administration (FDA). Subsequently, we see many examples of revenue-generating biotech companies that have lagged the broader biotech sector despite showing strong fundamentals. Patent expirations will occur regardless of the macro environment, and we think this is notable for strategic acquirers as they have consistently reiterated discipline on valuation as a key factor in their M&A decision-making.
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