Biotech, pharma M&A picks up in 2025

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I’m back in Recent York City after spending nearly per week in San Francisco for the annual JPMorgan Health Care Conference – the most important gathering within the U.S. of biotech and pharma execs, investors and analysts (and health reporters, after all). 

The week featured questions on the incoming Trump administration, updates on business outlooks and drug portfolios, heightened security on the bottom and, for the primary time in recent memory, sunny weather in San Francisco. 

The news kept coming all week, even after the conference ended mid-Thursday. The Biden administration on Friday announced the subsequent 15 drugs included in Medicare price negotiations, which include Novo Nordisk‘s blockbuster diabetes drug Ozempic and its obesity counterpart Wegovy. 

But after corporations announced a handful of deals last week, I’ll zero in on some takeaways for M&A activity within the industry in 2025. 

M&A appears to be off to start this 12 months. However the query is whether or not it can last. 

A few of the deals announced in the course of the conference boosted optimism, particularly Johnson & Johnson‘s proposed $14.6 billion buyout of Intra-Cellular Therapies. That appears to be the most important transaction we have seen within the pharmaceutical industry since 2023. That agreement got here amid a wave of smaller deals from GSK, Eli Lilly and lesser known radiopharmaceutical corporations. 

“That is five deals in a single and a half business days,” Stifel analyst Tim Opler said in an email to clients last week. “That is going to be a really different 12 months for M&A than 2024.” 

Last 12 months was marked by smaller and smarter deals within the pharmaceutical industry, in accordance with EY’s M&A Firepower report released last week. Big pharma sought deals with lower cost tags for products and corporations in earlier development, which could repay more handsomely in the long term. 

While this 12 months has began off with more activity, the report pointed to potential restraints on M&A in 2025: Ongoing margin pressure on biopharma corporations remains to be “reducing the appetite for giant spending,” and probably the most prized acquisition targets within the industry are still commanding high premiums available in the market, amongst other aspects that would dampen transactions.

That tracks for some large pharma corporations. 

During a presentation on the conference after J&J announced its Intra-Cellular Therapies deal, J&J CEO Joaquin Duato said “for us, larger deals are more outliers.”

“The vast majority of the worth that we create is thru smaller deals and partnerships where we are able to use our scale,” Duato said, pointing to the 75 smaller deals that J&J inked last 12 months. 

However the EY report said there are “strong structural reasons to expect a return to dealmaking,” including the industry’s $1.3 trillion in dealmaking “firepower,” which refers to the flexibility to fund transactions and make deals. 

Large pharma corporations are also bracing for upcoming drug patent expirations that would wipe out $300 billion in revenues by 2028, putting more pressure on them to offset losses with recent products. 

Pfizer, for instance, faces a wave of patent losses over the subsequent few years that would threaten some $17 billion to $18 billion in annual sales, the corporate’s CEO Albert Bourla said during a presentation on the conference. But Bourla said the corporate’s series of deals lately, corresponding to its acquisition of cancer drug developer Seagen, should help offset those losses. 

The Trump administration could also offer “significant tailwinds” to the industry by cutting corporate taxes or changing FTC policy “as a part of a general deregulatory shift,” in accordance with the EY report. 

But we’ll must see how this all plays out later this 12 months. 

Be at liberty to send any suggestions, suggestions, story ideas and data to Annika at annikakim.constantino@nbcuni.com.

Digital health startups within the U.S. raised $10.1 billion across 497 deals last 12 months, in accordance with a recent report from Rock Health. That total fell from $10.8 billion in 2023, and is about in keeping with the $8.2 billion raised prior to the pandemic in 2019 when adjusting for inflation. Digital health M&A success a decade low last 12 months, because the segment notched just 118 deals.

A rise in early-stage fundraising activity, together with smaller late-stage deals, account for the lower investment in 2024, Rock Health said. This might spell trouble for later-stage startups that raised money at sky-high valuations during Covid, potentially pushing them toward acquisitions or shuttering operations entirely in 2025.

Moreover, large megafunds, health-systems and tech corporations held an outsized amount of influence over digital health in 2024, Rock Health said. Enterprise firms Andreessen Horowitz and General Catalyst, which secured 20% of all committed LP capital within the U.S. in 2024, were the sector’s top investors, for example. 

And while artificial intelligence was still a hot investment area inside digital health, it’s becoming harder for startups to beat out large incumbents. Rock Health said tech corporations like Microsoft that may afford to construct and maintain expensive foundation models pulled ahead in health-care AI, as did organizations like Epic that may deploy applications of those models on an enterprise-wide scale. 

There’s still room for smaller AI startups to seek out a distinct segment inside health care, but Rock Health said they’ll have to “consider carefully about their positioning.” 

“These dual trends—early-stage startup activity amidst big moves by large healthcare players—have created a David and Goliath dynamic within the healthcare innovation landscape,” Rock Health said.

If JPM was any indication, we’re in for an additional interesting 12 months in digital health. We’ll see what 2025 has in store. 

Read the total report here. 

Be at liberty to send any suggestions, suggestions, story ideas and data to Ashley at ashley.capoot@nbcuni.com.