Is 2025 the big year for pharma M&A — or just more of the same?

After a sluggish 2024, many in the life sciences world hoped 2025 would usher in a revival for big-ticket biopharma mergers and acquisitions. But as the first quarter has closed, that hope remains largely unfulfilled. While a few notable deals have emerged, a confluence of political and economic uncertainties has kept the brakes on pharma M&A — at least for now.

According to BioPharma Dive data, only two acquisitions exceeding $1 billion up front were announced between January and March of this year: Johnson & Johnson’s $14.6 billion buyout of psychiatry-focused Intra-Cellular Therapies and GSK’s nearly $1.2 billion move for oncology specialist IDRx. While these figures aren’t insignificant, they fall short in comparison to the six billion-dollar-plus deals seen in the same period last year.

Not booming, but not bottoming out

Yet, context matters. This year’s early M&A volume isn’t far below the five-year average, suggesting 2024 may have been the outlier rather than 2025 being especially slow. Still, the industry has been operating in a risk-averse mode. The back half of 2024 saw just four major biotech buyouts, and none exceeded $5 billion — a first in at least seven years, according to deals tracked by BioPharma Dive.

Biotech acquisitions by total value paid upfront, 2018 to 2025 YTD

Fig. 1 – Values represent deal count. Acquisitions valued less than $50 million are not included. Source: BioPharma Dive

The M&A market’s hesitation appears to be rooted in policy uncertainty. Although some anticipated that changes in U.S. leadership might spark a deal-making boom, activity has instead slowed, at least for now. As a long-term strategic move, M&A typically relies on predictability — something many companies see as challenging in the current environment. Economic policy shifts, including broad tariffs and shakeups at federal agencies like HHS, have introduced new uncertainties, delaying deal timelines and tempering investor confidence. Sanofi is one major player signaling caution, with its CFO recently noting a financially disciplined approach to M&A in 2025.

Oncology dominates, even as deal volume falters

Still, dealmakers haven’t vanished entirely. In total, BioPharma Dive tracked 12 significant transactions in Q1 2025. In addition to the high-profile J&J and GSK deals, Jazz Pharmaceuticals acquired Chimerix for $935 million, while AstraZeneca and Bristol-Myers Squibb made smaller moves in the oncology space. Unsurprisingly, cancer remains the most active sector, which is a continuation of the industry’s long-standing focus on oncology.

Biotech acquisitions by therapeutic category, 2018 to 2025 YTD

Fig. 2 – Values represent deal count. Acquisitions valued less than $50 million are not included. Source: BioPharma Dive

FDA cuts could drive a wave of M&A

But some analysts see a potential shift on the horizon. Mass layoffs and funding cuts at federal agencies like the FDA and NIH could create ripple effects that actually push smaller biotechs toward M&A.

The FDA, already operating with lean resources, now faces deeper workforce reductions and mounting backlogs. That’s a dilemma for small biotechs relying on timely inspections or approvals to bring their products to market. When timelines stretch, so do burn rates, and many early-stage companies simply can’t afford long waits and regulatory disruptions. For those facing pressure, M&A may become a financing solution.

Some companies will feel the pressure more than others. Therapies that require coordination across multiple agencies, like those involving companion diagnostics, are especially exposed to regulatory slowdowns. The result is a pathway that’s not just slower, but harder to predict, which could complicate deal timing and make valuations harder to pin down. In this kind of environment, M&A isn’t just a growth lever — it could be a necessary lifeline.

A buyer’s market in the making?

Activist investors are expected to push underperforming biotechs to explore strategic alternatives, and private equity firms sitting on undeployed capital are keeping a close eye on potential targets. For big pharma, it could be a rare moment to buy innovative science at discounted prices.

In short, while economic headwinds and regulatory uncertainty may be holding big pharma back from aggressive expansion, the same forces could push smaller biotech firms into the arms of larger partners.

So, is 2025 the big year for pharma M&A?

The answer might depend on what lens you’re using. If you’re expecting a blockbuster year filled with megadeals, the first quarter says “not yet.” But if you’re watching for a slow-burning shift where necessity drives consolidation, particularly among smaller players, the fuse may already be lit.

With eight months to go, there’s still time for 2025 to deliver. Just don’t expect fireworks, at least not yet.

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