According to the latest EY M&A Firepower report, which tracks global M&A investment in life sciences, deal volume decreased by 12% overall, with biopharma falling 19% and MedTech rising 6%. However, average deal size rose dramatically, with mean per-deal investment reaching $2.1 billion - a 107% increase on 2024.
"Overall industry fundamentals remain strong, driven by the loss of exclusivity and availability of Firepower for Biopharma companies," says Subin Baral, EY-Parthenon Global Life Sciences Deals Leader. "Dealmaking remains essential for growth, and despite headwinds including regulatory and geopolitical uncertainty, high valuations, and capital-allocation tradeoffs, we anticipate a strong 2026."
The report highlights a projected growth gap of $100 billion by 2028, expanding to $370 billion by 2032 as blockbuster products lose market exclusivity. Over 50% of analyst forecasts for the top 25 pharmaceutical companies are neutral to negative on pipeline updates, with more than 40% negative on M&A prospects.
China has emerged as a central player in biopharma alliances, capturing 34% of total alliance investment from US and European Biopharma industry in 2025, compared with 4% in 2020. Five of this year's 10 highest-value alliance deals were with China-based companies. Meanwhile, AI continues transforming the dealmaking landscape, with a 256% increase in the potential value of life sciences deals aimed at accessing AI technology platforms. With a record $2.1 trillion in available Firepower, the life sciences industry is positioned to accelerate dealmaking into 2026.
