2026 biopharma M&A momentum continues, with Bernstein screening potential buyers and targets

Overview

This report is a collaborative research piece from Bernstein's U.S. pharma and biotech team on the 2026 M&A outlook. It analyzes potential deal opportunities across six dimensions: historical transactions, buyer demand, pipeline scarcity, patent-expiry exposure, financial feasibility, and biotech target supply, and attempts to match large pharma demand with potential biotech targets.

Core views

The core view is that after a weak 2024 for M&A, biopharma M&A rebounded sharply in 2025 and the momentum has continued in 2026. Large pharma face greater LOE and revenue growth pressure, but constraints differ by company: BMY and PFE need to fill revenue gaps yet are constrained by financial flexibility and data catalysts; MRK, JNJ, and LLY have stronger deal-making capacity; ABBV and GILD are more likely to balance risk and reward through incremental deals. On the supply side, oncology, immunology/inflammation, and rare disease remain the main directions, while CNS, metabolic, and obesity-related assets are also heating up.

Analysis framework

The report first reviews roughly 150 deals since 2016, identifying historical predictive variables such as deal size, therapeutic area, asset stage, valuation, and share-price performance. It then builds a demand-side score from large pharma's M&A/BD intent, LOE and revenue pressure, late-stage pipeline scarcity, and net debt/EBITDA financial capacity. Finally, it screens potential biotech targets using criteria such as valuation and revenue potential, stock performance, therapeutic area fit, and lack of existing partnerships.

Methodology notes

• Demand-side scoringLarge Pharma M&A Potential Scorecard

  Assess near-term M&A potential on a 1-5 scale

  The score incorporates management's stated M&A/BD priority, LOE and mid-term revenue growth pressure, late-stage pipeline scarcity, financial feasibility, and historical deal behavior to gauge FY26/27 prospective buyer activity.

• Supply-side screeningBiotech M&A mechanical screen

  Screen near-term revenue names and early-inflection names

  The screen uses valuation and revenue potential, relative share performance versus XBI, therapeutic-area focus, and whether the company lacks partners; the report says last year's screen achieved a 2.6x signal-to-noise ratio and a 25% hit rate among early-inflection companies.

• Historical deal analysisReview of the M&A sample since 2016

  Historical patterns across roughly 150 deals

  The report compares deal size, therapeutic area, asset stage, EV/R valuation, and relative share performance 3-12 months before the deal, concluding that Phase 3 or later assets account for about 55% of deal count and about 85% of deal value.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• MRK

  High-demand prospective buyer

  Strengths

  It faces significant LOE and revenue-trajectory pressure while still having strong deal-making firepower; it has recently acquired Verona, Cidara, Terns, and other assets.

  Weaknesses

  The need to reinforce the late-stage pipeline may force it to pay a higher premium.

  Comparison

  It ranks highest in the demand-side score, ahead of BMS, Novartis, and GSK.

  Risks

  If it chases competitive assets to fill the pipeline, there is a risk of overpaying and insufficient asset differentiation.

• LLY

  Active buyer and long-term pipeline builder

  Strengths

  It has strong financial capacity, prefers early-stage, capability-driven, and small deals, and also focuses on high-impact areas such as oncology, immunology, neuroscience, and Alzheimer's prevention.

  Weaknesses

  Its M&A demand does not come entirely from a near-term revenue gap, so potential deals are more dispersed and longer term in nature.

  Comparison

  Unlike revenue-gap buyers such as MRK and BMY, LLY is more of a persistent seeker of external innovation.

  Risks

  Early-stage programs carry higher uncertainty, and valuation as well as clinical-validation cycles may be prolonged.

• GILD

  Potential buyer

  Strengths

  It has no major product LOE until 2036 and can choose early- or late-stage deals in oncology and I&I.

  Weaknesses

  After a series of recent deals, the probability of another large transaction in the near term has declined.

  Comparison

  Compared with MRK and BMS, GILD faces less near-term revenue pressure.

  Risks

  Integration pace and capital-allocation discipline after recent deals may limit additional transactions.

• ABBV

  Potential buyer

  Strengths

  It has been active in deals over the past three years, with late-stage asset acquisitions concentrated in oncology and neuroscience; it can reinforce its portfolio through immunology, oncology, and CNS assets.

  Weaknesses

  Investors remain uneasy about whether the pipeline can withstand competition.

  Comparison

  It is more likely to pursue incremental deals to balance risk and return.

  Risks

  If new assets do not advance commercially or clinically, they will not alleviate long-term growth concerns.

• MIRM, BBIO, IPN, JAZZ, AXSM, ASND, LQDA

  Near-term revenue-type potential targets

  Strengths

  These names rank in the highest quartile of Bernstein's mechanical screen and have relatively visible near-term revenue or commercialization potential.

  Weaknesses

  Not all of these targets are perfectly matched to the therapeutic areas of the highest-demand buyers.

  Comparison

  Compared with early-inflection names, these targets are more about revenue visibility and commercialization certainty.

  Risks

  Valuation, competitive dynamics, partnership status, and buyer-strategy fit may all affect the actual probability of a deal.

• CGON, ERAS, CELC, DNTH, COGT, ABVX, ROIV, ORKA, TNGX, RVMD

  Early-inflection potential targets

  Strengths

  These names rank near the top among early-stage companies without significant near-term revenue and may benefit from data catalysts and strategic scarcity.

  Weaknesses

  Revenue visibility is low and they depend on clinical data and buyer risk appetite.

  Comparison

  Compared with near-term revenue names, these targets have greater upside potential but also higher uncertainty.

  Risks

  Clinical failure, insufficient differentiation, or buyers waiting for more mature data could all reduce the probability of a deal.

Key data

• 2025 transaction value growthabout +200% YoYThe report says cumulative biopharma transaction value in 2025 grew by nearly 200% versus 2024.
• 2025 number of deals above $10B3 dealsThere were zero in 2024, showing the return of large deals.
• Historical deal sampleabout 150 dealsThe sample covers M&A transactions since 2016.
• Sub-$5B deal shareabout 70% of deal count, about 25% of deal valueStatistics are based on deals above $1B.
• Phase 3 or later assetsabout 55% of deal count, about 85% of deal valueAlthough pharma management often says it prefers earlier-stage assets, historical value remains concentrated in later-stage assets.
• Average LOE exposure over the next 7 yearsabout 2.5x the previous 16 yearsThe report argues that the industry is entering a higher patent-expiry-exposure phase.
• Merck transaction value over the past 3 yearsabout $88BBD licensing and M&A were roughly split 50/50.
• Pfizer transaction value over the past 3 yearsabout $62BOf this, about $10B was BD licensing and about $52B was M&A.
• AbbVie transaction value over the past 3 yearsabout $40B36% was BD licensing and 64% was M&A.
• Lilly transaction value over the past 3 yearsabout $41BThe report says Lilly completes about one deal every 9 days, and many small deals fall below the market's attention threshold.

Impact & implications

For investors, the report frames M&A as a major theme for the U.S. pharma and biotech sector in 2026. The patent cliff and pipeline pressure among large pharma increase M&A demand, while biotech companies with clear revenue potential, strong relative share performance, matching therapeutic areas, and fewer existing partnerships are more likely to attract premium attention.

Risks

• M&A screening only captures historical correlations and strategic fit, and cannot guarantee that transactions will actually occur.
• Large pharma may delay deals because of deleveraging, integration of recent acquisitions, or waiting for key clinical data.
• Competitive M&A may lead buyers to overpay, weakening post-deal returns.
• Early-stage or inflection-stage biotech targets carry significant clinical, regulatory, and commercialization uncertainty.
• Therapeutic-area preferences can shift quickly, and hot areas such as oncology, I&I, CNS, and metabolic disease do not mean every name in those areas is a viable acquisition candidate.

What to watch

• BMS's key data readouts for Milvexian, Cobenfy, and other important programs in H2 2026 through 2027.
• Whether MRK continues to reinforce its late-stage pipeline around revenue and EPS trajectory.
• Whether LLY continues building its early-stage pipeline through frequent small deals.
• Whether GILD's appetite for additional M&A rebounds after its recent transactions.
• Biotech companies' 3- to 12-month share performance versus XBI and key clinical data catalysts.
• Whether China licensing transactions continue to increase and affect global pharma external innovation sources.