Will biotech mergers and acquisitions increase significantly in 2025?

Mergers and acquisitions (M&A) have long been considered essential in the biopharmaceutical industry, playing a crucial role in shaping success stories. However, the year 2024 saw a notable downturn in M&A activity, with the total value of transactions witnessing a significant decline from the previous year. This decline led many industry experts to view 2024 as a “reset” year, where companies opted for smaller strategic plays and bolt-on acquisitions rather than large-scale mergers. Nevertheless, there is widespread anticipation and optimism surrounding biotech M&A in 2025, with several key factors expected to drive a resurgence in activity.

Looking back at 2024, the year began with high hopes as the biopharmaceutical industry experienced a flurry of M&A deals. In the preceding quarter, six deals totaling at least $4 billion were finalized, with Bristol Myers Squibb (BMS) completing a $14 billion acquisition of Karuna Therapeutics, setting the stage for a year of robust dealmaking. Following this momentum, the first quarter of 2024 saw an additional four acquisitions valued at over $2.5 billion, including Novo Nordisk’s $16.5 billion purchase of Catalent, marking one of the most significant deals of the year.

However, the momentum of high-value M&A transactions waned as the year progressed, with companies shifting their focus towards early-stage and more innovative assets over larger acquisitions. This shift was highlighted in EY’s Firepower report, which characterized the trend in 2025 as a move towards “smaller, smarter deals” within the life sciences sector. Despite the decrease in high-value M&A deals, the increased emphasis on strategic acquisitions and innovative partnerships laid the groundwork for a potentially robust M&A landscape in the coming year.

Moreover, several factors are anticipated to drive a resurgence in biotech M&A activity in 2025. One key driver is the growing presence of innovative technologies and scientific advancements within the biopharmaceutical space, creating new opportunities for strategic collaborations and acquisitions. Additionally, the availability of venture capital funding and private equity investments is expected to fuel M&A activity, providing companies with the financial resources needed to pursue strategic growth opportunities.

Furthermore, the evolving regulatory landscape and changing market dynamics are also expected to influence M&A trends in 2025. As companies continue to adapt to new regulatory requirements and market demands, strategic M&A deals offer a pathway for growth, innovation, and competitive advantage within the biotech industry. Overall, the stage is set for a resurgence in biotech M&A activity in 2025, with industry experts and stakeholders eagerly anticipating a year of increased dealmaking and strategic partnerships.