The pharmaceutical industry is experiencing intense competition for mergers and acquisitions, with experts saying on Mar. 11 that a shrinking pool of late-stage biopharma assets is driving aggressive dealmaking and public bidding wars.
This trend matters because it signals a shift in how companies pursue growth and innovation, potentially affecting drug development pipelines and investor strategies. As fewer advanced biotech firms remain available for acquisition, both buyers and sellers are adapting their approaches to secure the best possible terms.
Jake Henry, senior partner at McKinsey and coleader of its M&A team, compared the situation to a social dynamic: “The handsome guy at the dance is defined the moment that one of the handsome ladies at the dance walks up to him. Then everyone’s like, ‘Oh, well, if she’s talking to him, then he must be handsome.’” Henry said this herd mentality leads to overpaying for assets as companies compete fiercely for limited opportunities.
Brett Reinke, partner at Stradling advising on private life sciences transactions, described how sellers benefit from multiple serious inquiries: “That’s the ultimate goal, is to create a competitive environment, because you’re going to eventually get better terms.” Kevin Cooper of Cooley’s M&A team added that deal processes now resemble auctions more than bilateral negotiations: “Targets have leverage. They’re able to say, this is a competitive process. You really have to put your best foot forward on price and deal terms.”
Experts noted that unsolicited bids—sometimes called deal jumping—are rare but becoming more common in today’s market. Recent high-profile examples include Pfizer and Novo Nordisk’s contest over Metsera and Lundbeck’s attempt to acquire Avadel Pharmaceuticals after Alkermes had already announced a deal. These public battles attract attention beyond pharma circles; Cooper said even his non-M&A friends ask about them.
Termination fees can make rival bids costly; in Metsera’s case, Novo would have owed Pfizer $190 million if it had succeeded in acquiring the company after an initial agreement was reached. Despite these hurdles, experts expect such bidding wars could continue as long as market conditions favor sellers.
Looking ahead, Henry predicted that Big Pharma may need to target earlier-stage companies as most Phase 3 asset holders have already been acquired: “The supply of ready-to-go assets with on-market products and clear Phase 3 pipelines dwindles more and more every day.”
