How pharma is reinventing its growth strategy through M&A

Not long ago, life science companies were flush with cash and eager to ink deals. Now, they’re taking a more calculated approach to growth. With patent cliffs looming, high interest rates holding steady, and ongoing policy shifts in the U.S. healthcare sector, the dealmaking landscape has become a high-stakes arena. Today, we’re seeing fewer, but larger, transactions as companies aim to select targets that can deliver transformative growth.

The challenge ahead lies in striking the right balance between bold bets on high-potential assets and cautious investment in a climate of uncertainty. Here’s a look at how companies are increasing the depth of their portfolios without taking on the heavy costs of in-house development.

Biotech acquisitions by year and total value paid upfront, 2020 – 2025 YTD

Table 1. Values represent deal count as of August 7, 2025. Data is limited to deals valued at $50 million or more upfront. Total consideration can reflect both cash and equity offered upfront in exchange for the acquired company’s shares. Source: Biopharma Dive.

Focusing on high-potential therapy areas to drive growth

With revenue pressures mounting, drugmakers are turning to alliances to find their next blockbuster and set themselves apart from the crowd. By zeroing in on strategic therapeutic areas, companies can make their spending count.

Cancer remains the most pursued category, with nine deals already this year, continuing its run as a top target for strategic growth. Immune-related acquisitions, which spiked dramatically in 2024, have cooled in 2025, suggesting last year’s surge may have been opportunistic or front-loaded. Rare diseases also saw a drop-off in deal activity, signaling a possible shift in priority or a wait-and-see approach among buyers.

Overall, deal activity in 2025 YTD points to a return to targeted investments rather than broad-based buying, suggesting that companies are doubling down on core bets and looking for high-impact opportunities in an increasingly cautious market.

The table below highlights biotech mergers and acquisitions (M&As) by therapeutic category since 2020.

Biotech acquisitions by therapeutic category and year, 2020 – 2025 YTD

Table 2. Values represent deal count as of August 7, 2025. Data is limited to deals valued at $50 million or more upfront. Source: Biopharma Dive.

In one of the year’s biggest deals, Johnson & Johnson acquired Intra-Cellular Therapies for $14.6 billion, expanding its neuroscience portfolio with Caplyta, the only FDA-approved treatment for bipolar I and II depression as both monotherapy and adjunctive therapy. The move suggests renewed investor and industry confidence in psychiatric indications, which have long faced development hurdles but are now gaining traction amid significant unmet patient needs.

In the oncology space, German drugmaker Merck KGaA acquired SpringWorks Therapeutics for $3.9 billion. The deal expands Merck’s presence in the U.S. and adds rare cancer therapies to its portfolio ahead of expected revenue losses linked to expiring patents. Around the same time, BioNTech announced it is acquiring CureVac in a $1.25 billion all-stock deal, strengthening its research and manufacturing capabilities in mRNA-based cancer immunotherapies.

Meanwhile, Sanofi made a significant move with its $9.1 billion acquisition of Blueprint Medicines Corporation. This deal adds a commercialized therapy and a promising pipeline focused on rare immunological and KIT-driven diseases, underscoring Sanofi’s commitment to tackling complex, targeted therapeutic areas with high unmet needs.

Strategic dealmaking in a shifting landscape

Despite ongoing merger and acquisition activity, uncertainty continues to cloud the life sciences sector and stall some life science deals.

Heightened regulatory uncertainty—including impacts from recent executive orders, layoffs at the FDA that are slowing drug development, and ongoing debates about drug pricing—has weighed on dealmakers’ confidence. These factors have complicated revenue forecasting and valuation, prompting companies to more carefully reassess pipeline strategies and acquisition targets.

Compounding these challenges are cuts in U.S. federal government funding for academic research and shifting tariff policies, both of which have added layers of complexity to global operations. Companies are adopting targeted mitigation strategies such as leveraging trade agreements like USMCA and revisiting supply chain footprints to maintain agility amid changing international landscapes.

Despite growing headwinds, the immediate outlook for M&A remains relatively strong, supported by scientific momentum, upcoming drug approvals, and deep cash reserves. But with dealmaking under greater scrutiny, companies are under pressure to be more deliberate.

Accelerating innovation in biotech through M&As

While the current environment demands more cautious and selective dealmaking, strategic M&As can be a powerful driver of innovation in the pharmaceutical industry. As companies seek to strengthen their pipelines and offset R&D risk, these partnerships are still a key path forward.

For smaller biotech firms, teaming up with a big pharma company can provide crucial funding and resources needed to push novel drugs and technologies forward—something that might be tough to achieve alone due to the high costs and risks involved in the development and commercialization of drugs. For pharma companies, acquiring a biotech can be a more cost-effective way to access innovative therapies without the extensive time and expense required to develop new drugs from scratch

From the cancer drug Keytruda to the autoimmune disease medication Humira, many of today’s top-selling drugs trace their success to M&As that accelerated their research, development, and market entry. As pharma companies actively seek to expand their pipelines, biotechs that align with their priorities become increasingly attractive targets or strategic partners. Even as dealmaking becomes more selective, the collaboration between pharma and biotech remains crucial for bringing new, life-saving therapies to patients.

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A changing regulatory environment and ongoing geopolitical uncertainty mean that success hinges on sharper diligence, tighter focus, and the ability to move with precision in an uncertain environment. In this landscape, having the right data and insights is more critical than ever. To learn more about how Definitive Healthcare helps biotech, biopharma, and pharma organizations drive success from drug discovery to commercialization, sign up for a demo today.