Pharma M&A in 2026: Can the Industry Keep Up the Momentum?

As patent expirations and portfolio growth gaps move to the forefront of pharmaceutical strategy, major drugmakers across the industry are reassessing how to sustain revenue and remain competitive in an increasingly crowded deal landscape.

In this exclusive Q&A, Dan Chancellor, Norstella's vice president of thought leadership, shares his perspective on how the patent cliff and shifting market dynamics are influencing pharma M&A decisions.¹ While 2025 proved to be a landmark year for deal activity, the question now is whether that momentum can — or will — carry into 2026.

Access all three parts of our three-part video interview series with Chancellor:

1. Patent Cliff Pressure to Sustain Pharma M&A Momentum in 2026
2. Will Pharma M&A Slow Down This Year?
3. Patent Cliff Pressures to Drive Big Pharma M&A

PC: Given projections that up to $300 billion in annual drug sales could be exposed to loss of exclusivity by 2032, how do you expect the upcoming looming patent cliff to quantitatively influence pharma M&A deal volume and size in 2026, compared with 2025 levels?

Chancellor: The way I see it is that the deals that are being signed today are actually the deals that aren't going to be influencing ’26, but they're actually going to be influencing 2030 or 2032, or a three-to-five-year-plus timeframe. The reality, looming was the word you used to describe the patent cliff, it has been looming for a long time. It's very well known. It's not something that, if you're a pharma company that's trying to decide your portfolio strategy, you're not sleepwalking into it. It's something that you had a long, long, long time to prepare for.

Last year was interesting, because last year was actually a really strong M&A year. The narrative also was that last year was the year in which the patent cliff arrived, and you can draw the conclusion that suddenly, pharma isn't flowing to sign deals, but actually, the deals that pharma is signing were more a reflection of what their needs are going to be in three to five years time.

The fact that 2024 was really quiet in spite of what was coming in the next few years is interesting, but I think that's more of a reflection on the opportunities that are out there. There are many people employed in pharma to come up with the search and evaluation teams and to scour and to identify what could be a strong fit for their companies. I think it's probably a reflection of the maturity or what was out there. We know pharma is sitting on a lot of cash, is sitting on a lot of ability to do these deals. But if the fit isn't right, if the assets they're bringing in aren't right or they aren't better, they're not either first-in-class or best-in-class, those deals won't get signed.

Bringing that through to what do we expect in ‘26 versus what we saw in ’25, there is still a lot of pressure, a lot of need or demand for pharma to address not just the patent cliff, but more broadly, growth gaps they have. They're kind of the same, similar things. Patent cliff is obviously older drugs losing exclusivity, and generally sales declining. A growth gap can be caused by your portfolio being quite mature, but it can also be caused by just not having enough new drugs coming through.

We did an analysis with Evaluate, looking at the top 12 pharma companies and what the current consensus for their portfolios is, versus what the market average growth rates are. The market average growth rates are 7% according to our consensus database. The majority of large pharma aren't projected to grow at 7%; only Lily and Novo have higher than 7% CAGR.

The majority of pharma companies are facing a growth gap, if they actually are aspiring to grow at market average rates, which they should be doing. This growth gap still persists. It’s about $100 billion in revenues that are missing that they'd like to bring, that they'd like to find by the end of this decade.

The simplest way, or one way to do that, is through M&A. Of course, they can also reinvest through their existing drugs and run lifecycle management. But there is still a very strong need to M&A, in spite of the large number of deals that were signed last year. So ’26, it’s kind of a cop-out prediction, but more of the same. The deals that were signed last year were very interesting, but there wasn't enough to address the core growth gap that pharma companies are facing.

With more than $220 billion in total pharma deal value reported for 2025, what specific market indicators suggest whether 2026 is likely to exceed that total?

It’s going to be difficult for ‘26 to exceed ’25. I'm in two minds—'25 certainly was, are we going to look back and say this was an outlier year? I think there are some suggestions that it could be. I think there were something like five deals of more than $10 billion signed, 30 deals of more than $1 billion signed. There was a lot of bolt on activity of attractive biotech companies. The more deals that get signed, the fewer opportunities there are that remain. The pool in which you're fishing from is now is smaller.

I suspect there will be a lot of activity, but to quite say whether it's going to surpass, in spite of the need for pharma to replace this growth, and I feel this growth gap can only be seen with hindsight, if I was going out on a limb, I'd say probably it will come in lower, but we might actually see some larger deals.

So of the companies that are being rumored—Abivax, Revolution Medicines—these are going to be deals that will be very expensive if they are signed. We might see potentially even larger ones, but fewer of them. In terms of therapeutic areas that are driving, it's the areas in which pharma’s currently kind of mature. Certainly oncology, certainly immunology, certainly many companies are pivoting towards cardiometabolic, although, interestingly, the Metsera acquisition aside, most companies are entering cardiometabolic through licensing of, well, a mixture of strategies, so it's not necessary.

There isn't necessarily a single company out there that you can go away and buy and instantly have a competitive portfolio. Drug companies are generally building actually more for longer term, and making sure they're finding their own niche and their own differentiation. It was early this week that AstraZeneca was making more moves in cardiometabolic with a range of licensing options.

The therapeutic areas where we expect to see high-value deals are oncology, immunology, neurology, cardiometabolic, rare diseases, potentially. What drives high-deal valuation? One of the factors is competition and potentially having pharma companies bidding against each other, driving premiums up. Generally, these are the more mature therapy areas where pharma companies are facing competition, and it's unlikely, for example, to see a really high-value deal in somewhere like ophthalmology, where there's just less competitive intensity for example. If you're a biotech with a promising ophthalmology asset, there's only really a few companies you might be speaking with.

Are there any specific companies flying under the radar that you anticipate making a splash in the near future?

It's hard to say whether any company can really fly under the radar. We published an analysis of top 12 pharmas, and these companies are so big they can't fly under the radar. But if you look, the analysis was basically a company's exposure to the patent cliff versus their growth gap in revenues—the two kind of go hand-in-hand.

Generally, if you're more exposed to a patent cliff, you're going to have a bigger growth gap. Five of the six largest deals that were signed last year were done by companies that had the most exposure to patent cliff and the biggest growth gap. That’s a really strong indicator of the type of companies which are going to be more active when it comes to M&A.

Just bringing this back up again, J&J, Pfizer, Merck, these were three prominent dealmakers. The single biggest company that has the greatest patent cliff exposure and the greatest growth gap is Bristol Myers Squibb, and interestingly, BMS didn't sign any deal of note last year. I think the expectation, or what we'd be looking for, certainly, BMS needs to transform its portfolio is significant. I think that this will be one company that I'm sure is—not necessarily more on the lookout than anyone else—but the need to execute is greater than anyone else.

Reference

1. Cort R. Winning in the Age of Generics and Biosimilars—Strategies for Market Access and Growth. December 10, 2025. Trade & Channel Strategies, Philadelphia. https://informaconnect.com/trade-channel/