Biotech and Pharma M&A: 2025 Outlook

Following a year of smaller deals in 2024, the biotechnology and pharmaceutical sectors began the year poised for a resurgence in mergers and acquisitions in 2025 — though growing market risks could disrupt their momentum.

Although broad economic uncertainty and the Trump administration’s aggressive trade policies have led to recent stock market declines, the healthcare sector remains better positioned than others. Several mega-caps in the biopharma sector have looming patent cliffs and could rejuvenate their product pipelines through acquisitions — and there is plenty of dry powder to fuel deals. In addition, the sector is more insulated from macro and political impact because of its domestic focus and essential nature.

The Case for M&A in 2025

This year is shaping up to be critical for large companies to replenish their pipelines as patent cliffs loom. Patents on 190 drugs are set to expire by 2030, and a drug’s price can drop as much as 90% after it loses patent protection. 

Major players facing patent cliffs include: 

• Merck, whose drug Keytruda, which represents around 45% of the company’s total revenue, is set to start losing patent protection in 2028
• Bristol-Myers Squibb, facing patent expiration for key products Opdivo, Eliquis, and Revlimid
• Pfizer, which developed Eliquis jointly with Bristol-Myers Squibb, is also facing loss of patent exclusivity for the drug in 2028, on top of Prevna (a pneumonia shot, in 2026) and the cancer drugs Ibrance and Xtandi in 2027

Big Pharma’s deal capacity in 2025 is estimated to be more than $1.5 trillion, according to IQVIA. Already this year, Johnson & Johnson announced the acquisition of Intra-Cellular Therapies Inc. for $14.6 billion, making it the largest deal in the sector since Pfizer acquired Seagen in 2023. 

In March, Merck’s CFO was bullish, saying, “Business development remains a top priority for our company, and we will continue to augment our portfolio and our pipeline with scientifically focused, value-creating business development across all stages of development and commercialization and deals of all sizes.”

Consequently, those companies facing patent cliffs will likely be among the major players exploring strategic acquisitions. Concurrently, smaller biotech firms and midsized companies offering promising innovations, particularly in high-demand therapeutic areas such as oncology, immunology, neuroscience, and cardio-metabolic conditions, are expected to become highly attractive targets. 

In addition, experts in AlphaSense’s Expert Transcript Library say the growing involvement of private equity, especially in sectors intersecting with emerging technologies like artificial intelligence, is anticipated to amplify deal-making activities, marking 2025 as a pivotal year for strategic realignments and accelerated growth across biotech and pharma.

Potential M&A Hurdles

Even though there are several factors supporting increased deal activity in 2025, political and macroeconomic uncertainty continue to cloud the outlook. Some leaders in the biotech industry are hopeful the Trump administration will focus on regulation of pharmacy benefit managers (PBMs) instead of drug price reform — leaving companies free to seek profits; however, the unpredictability demonstrated by the new administration continues to give many in the sector pause.

Although the Trump transition team sidelined two Kennedy aides who were outspoken vaccine critics, the recent departure of FDA leader Peter Marks, who cited differences with Kennedy as the reason, underscores that the health secretary’s long-standing disapproval of the pharmaceutical industry is a wildcard. Meanwhile, layoffs across HHS began April 1, and while the department stated reductions at the FDA would not affect drug or medical device reviewers or inspectors, the Nasdaq Biotech index and XBI were still down on the news. 

Because of these variables and looming tariffs, which will affect pharma and biotech’s ability to source materials from abroad, not all pharma leaders are enthusiastic about expanded dealmaking in 2025. Sanofi’s CFO recently said the company will remain financially disciplined when it comes to M&A this year. Similarly, Roche’s CEO said his company would take a “disciplined” approach to dealmaking in 2025 in the areas of oncology/hematology, immunology, neurology and ophthalmology to strengthen their pipeline. 

What’s Next for Biotech and Pharma M&A

Even in uncertain environments, breakthroughs in biotechnology have continuously pushed the boundaries of what is possible. From the development of CRISPR gene editing medicine to GLP-1s for diabetes and obesity, advances like these are not only on the market now, but have opened doors to new areas of research that have unprecedented possibilities for global health. 

Widespread adoption of AI could spark the next wave of discoveries, from research to production and marketing new drugs. Currently, the biggest impact of generative AI has been in speeding up the process that brings a new molecule to the pre-clinical candidate stage. AI has proven useful in patient recruitment and trial design, making it possible to find and track patients that are more likely to respond to treatment. AI and machine learning’s strength lies in the ability to synthesize and analyze immense quantities of data to find patterns that would elude humans, and the promise of AI in biotechnology is to speed up targeting and drug discovery while also radically bringing down costs. 

Still, questions remain that will undoubtedly shape the M&A landscape for the sector this year: How will the reorganization at HHS affect FDA approvals? How will changes to NIH funding affect the discovery of new drugs? How will tariff policies play out? These are just some of the questions biotech and pharma players are weighing as they consider M&A this year. As dynamics continue to unfold, new questions will most certainly arise and AlphaSense will be there to monitor developments with the help of first-person expert insights.