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EY Firepower report: life sciences dealmaking – trends in 2026
Dealmaking will continue to be driven not by market variations but by strategic fundamentals.
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Life Sciences Firepower M&A Report 2026
EY’s 2026 Firepower M&A report finds life sciences companies recognizing the need to accelerate their dealmaking strategies to succeed in an increasingly competitive environment. The industry has stepped up its dealmaking activity on multiple fronts:
- With US$240 billion of M&A deals signed in 2025, industry dealmaking has visibly picked up the pace after the cautious small-deal focus in 2024.
- Though deal volume is slightly down, average deal size has risen as companies prioritize best-in-class innovations that are ready or near-ready for launch.
- Companies are racing to capture assets through every channel, with alliance potential deal value also breaking all records in 2025.
While M&A soared in 2025, alliance “biobucks” broke all previous records, with the average deal size leaping 46%. However, since these deals involve only limited upfront investment (around 7% of the total potential alliance deal value in 2025), they involve relatively less risk and resource commitment for the dealmakers.
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Chapter 1
Why the industry is picking up the dealmaking pace
Major growth gaps loom, and the street doubts life sciences’ leaders ability to replace the revenues at risk.
Life sciences companies are bullish about their own prospects — but the street does not share their conviction. We see a growing disconnect when we compare the guidance issued to investors by companies’ management with analysts’ consensus on the industry future.
Nowhere is this disconnect more glaring than in the area of dealmaking and business development. Over 50% of street forecasts for the top 25 pharmaceutical companies take a neutral to negative stance on the pipeline updates that these leaders have published. More than 40% of analyst discussions skew negative on these companies’ strategic prospects in terms of M&A and partnerships.
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Chapter 2
Why China is disrupting the M&A agenda
China-based innovation has reached a tipping point in its importance to industry dealmaking strategy.
China-based innovation has reached a tipping point in its importance to industry dealmaking strategy. The total potential value of inbound China alliance investment has increased nearly eleven-fold in five years. In 2025, China captured 34% of the US and European Biopharma industry’s total alliance investment, accounting for more one in every three biobucks the industry spends, including 2025’s biggest-value alliance deal and five of the 10 highest-value alliance deals of the year overall.
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Chapter 3
Why companies need to improve their dealmaking efficiency
Dealmaking is critical to value for life sciences companies. But execution needs to keep pace with ambition.
The deals data shows two fundamental realities for life sciences dealmaking.
First, the industry is dependent on deals: companies that sign more deals enjoy higher returns on capital than their less active peers. Companies that are active on both sides of the dealmaking equation — both acquiring and divesting — are more successful than companies that are less engaged across the transactions space.
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Chapter 4
Why the industry should keep accelerating on deals in 2026
Life Sciences companies need deals — and the strategic capabilities, including AI — to achieve deal success.
With a record $2.1 trillion in available Firepower and abundant opportunities the life sciences industry has the capacity to keep accelerating the dealmaking process through 2026 and beyond, despite uncertainties. Companies will increasingly need to put AI at the heart of M&A, as a necessary enabling technology at the center of the process. The successful life sciences company of the future will ultimately emerge as a connector, catalyst, and co-creator, weaving together science, technology, operations, and commercial strategies into a new approach. The future of life sciences will be defined by those who can effectively "BioWeave" together resources and capabilities and survive and thrive in an accelerating life sciences landscape.
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