Large pharmaceutical companies are facing significant gaps in their drug development pipelines, according to a March 18 report. While major players like Eli Lilly have reached new heights, others are under pressure to innovate and maintain revenue as they approach patent expirations and navigate changing drug pricing policies.
This environment has led to speculation about the possibility of large-scale mergers or acquisitions. Despite having over a trillion dollars available for acquisitions, many big pharmaceutical firms continue to focus on acquiring mid-sized biopharmaceutical companies rather than pursuing mergers with other large pharma firms. Ben Zercher, senior biotech and pharma analyst at PitchBook, said, “Pipeline replenishments remain the focus rather than large-scale integration and its associated R&D disruption baggage.”
Jake Henry of McKinsey believes that conditions are right for a major deal but notes that there is a limited supply of biotech companies with late-stage or validated assets in the desired price range. He said recent regulatory changes have altered how companies value assets both internally and externally: “The shakeup of the way that biopharma companies have to look at assets and the value of them, both in their pipeline and then externally, has gone through turmoil over the last five to seven years with these major regulatory shifts.”
Historically, several high-value deals have occurred when companies faced similar challenges. Notable examples include Bristol Myers Squibb’s $74 billion acquisition of Celgene in 2019, Takeda Pharmaceuticals’ $62 billion purchase of Shire in 2018, AbbVie’s $63 billion deal for Allergan in 2019, AstraZeneca’s $39 billion acquisition of Alexion in 2020, and Pfizer’s $43 billion tie-up with Seagen in 2023. More recently, Johnson & Johnson acquired Intra-Cellular for $14.6 billion in January 2025.
Henry said new drug pricing legislation such as the Inflation Reduction Act has changed incentives by affecting patent longevity. He questioned whether these changes might prompt another round of industry consolidation: “If you can’t replace your revenue and the [loss of exclusivity] cliff that you’re facing with assets that you can purchase externally... what do you do? That’s where you start to wonder if some of these consolidations will actually transpire.”
Artificial intelligence is also playing an increasing role in facilitating mergers. Pfizer CEO Albert Bourla noted that AI helped streamline the company’s integration with Seagen by identifying synergies more efficiently. Zercher added that AI is making post-acquisition integration easier even for mid-cap deals.
Some analysts believe now may be the time for larger transactions. Leerink Partners wrote in an October 2025 outlook report: “Companies facing revenue declines in 2025–2030 may need to pursue larger deals that provide immediate revenue contribution,” citing Bristol Myers Squibb, Amgen, and Pfizer as potential candidates.
As pharmaceutical firms continue to face market headwinds—including direct-to-consumer marketing trends and biosimilar competition—industry observers will be watching closely to see if a new wave of mega-deals emerges.
