Big Pharma race to snap up biotech assets as $170 billion patent cliff looms

A. Multiple factors are coming together to create a massive boom in biotechnology mergers and acquisitions.

High-profile bidding war between them Pfizer and Novo Nordisk’s influence on Metsera and its leading weight-loss drug candidate shows how competitive parts of the industry have become at a time when Big Pharma is working frantically to fill the looming revenue gap.

Some of the world’s best-selling medicines face loss of exclusivity in key jurisdictions, what the industry calls the “patent cliff.” By 2032, the loss of exclusivity for top-selling brands will be worth at least $173.9 billion in annual sales, according to CNBC calculations. Estimates vary on the total amount of revenue at risk when accounting for smaller brands; some analysts say the figure is between $200 billion and $350 billion.

This poses a real threat to manufacturers’ top lines unless they manage to innovate their production lines with new, revenue-generating innovations.

The pharmaceutical industry’s need to complete its pipelines coincides with the broader biotech sector coming back to life after years of low valuations following a boom in healthcare investment during the Covid-19 pandemic.

Mergers and acquisitions in the industry increased dramatically in September and October 2025 after a poor start to the year. The removal of obstacles created by Trump’s war on high drug prices for Americans and the threat of triple-digit tariffs on the pharmaceutical industry, as well as the beginning of a rate-cutting cycle, have further encouraged deal-making.

Companies now face a situation where they must fill their pipelines while navigating the competitive landscape for the best assets.

Filling the income gap

The biopharma industry is unique in that companies face loss of patents on lead assets every decade. This lifecycle of assets requires companies to continually innovate or acquire those that do.

“Biotechnology, the innovation engine of healthcare, is where pharmaceutical companies have historically come to build their biopharma businesses,” Linden Thomson, senior portfolio manager at Candriam, told CNBC.

Pharmaceutical companies, many of which started as chemical companies, often build their businesses on simpler, small-molecule drugs, while biotechnology uses living organisms to make drugs such as antibodies and mRNA. Over time, the distinction between the two has blurred because the pharmaceutical industry has invested heavily in biotechnology and most of the drugs on the market today were discovered by biotechnology companies or are related to biotechnology production, Thomson said.

Impending patent cliff, including loss of exclusivity Bristol Myers Squibb Eliquis, Merck’s Keytruda and Novo Nordisk’s Ozempic are a driving force behind mergers and acquisitions and a key part of the business strategy of many large pharmaceutical companies.

Nearly half of the blockbuster drugs approved between 2014 and 2023 were acquired rather than developed in-house, according to analysis by healthcare market researcher and consultant Joanna Sadowska. The two most successful drug manufacturers in terms of number of blockbuster drugs approved in those years were: Eli Lilly And AstraZenecaHe purchased eight and five drugs out of a total of 13, respectively.

European heavyweights GSK And Novartis are among those clear about the need to add to pipelines through agreements. Both are seeking what they call “bolted deals” that align with their core areas of therapy and technology.

At an investor event in London in November, Novartis CEO Vasant Narasimhan highlighted the company’s “strong cash generation that really allows us to invest in the business.”

While Novartis does not put a size on these instant deals, as it has made deals worth up to $12 billion, GSK is more specific.

Chris Sheldon, GSK’s head of global business development, calls this the “sweet spot”: pursuing approved biologics in mid-stage development, typically in the $1 billion to $2 billion range, when the outcome of a drug candidate is not yet clear. Acquiring most late-stage assets becomes a math problem, especially if it’s a publicly traded company that’s reached fair value, Sheldon told CNBC.

“B.D. [Business development] I always describe it as a contact sport. “If an asset is good enough, there will be more than one suitor,” he added.

Deals can range from partnerships to licensing and royalty agreements to outright purchases.

“If we could, we would do licensing every day of the week over M&A because you can manage risk and reward the partner as value is unlocked and risk is removed,” Sheldon said.

However, an upfront purchase with a large price tag can sometimes be the only option, and it can have some attractive benefits., such as taking full control of development plans and gaining abilities as well as molecules. “The reality is that most of the time the seller orders this, a lot of people don’t realize it,” Sheldon said.

A competitive environment

As biotech mergers and acquisitions heat up again, in November came arguably the industry’s most dramatic event of the year: a public bidding war between Pfizer and Novo Nordisk for clinical-stage weight-loss drug maker Metsera, eventually won by Pfizer in a deal worth up to $10 billion.

Oppenheimer managing director Stefan Loren said it was rare for tenders to be held in public. “Chasing a company is a very public thing, and so you have to worry about damage to your reputation: A: if you lose; B: if you get too enthusiastic and go buy it,” he told CNBC.

“This certainly says something about the biotech market and the companies looking to catch up,” Loren added. “They’re responding to what their situation is, their situation is that they’re about to go off patent on a lot of things.”

Typically, a drug shopping spree lasts up to a year and a half before tapering off, Loren added.

The GLP-1 weight loss drugs market has become one of the most competitive segments of the global pharmaceutical industry at a time when major players are racing to secure next-generation assets through both in-house development and acquisitions, PitchBook researchers noted in their 2026 Healthcare outlook published in early December. They added that more than 120 metabolic assets are currently being developed across 60 companies, creating a deep pool of potential M&A targets.

“The high-profile battle between Pfizer and Novo Nordisk for Metsera underscores the growing strategic urgency in this area,” they said. “We expect competition to intensify as windows for differentiation narrow and policy headwinds expand reimbursement and regulatory support.”

While the field of obesity is apt to explain current competitive dynamics, the boom in biotechnology is not limited to a single therapeutic area. Neurology, oncology, immunology and inflammation are other important areas of activity.

“What’s popular at any given point is idiosyncratic,” Loren said. “Them [companies] “We’re after what can fill the pipelines as quickly as possible.”

A boom, a crash and another boom

Biotechnology has been at the top of investors’ wish lists during the Covid-19 pandemic. Amid increased interest, investor optimism, and low interest rates, the industry has flourished, valuations have soared, and many biotech companies have gone public or been acquired by larger peers.

Because the biopharma industry is a cost-intensive research business, raising money for drug discovery is critical. Early-stage biotechs operate with high risks, often exposing them to early losses in a risk-averse market like the one in the wake of the pandemic surge.

For much of 2025, the Trump administration has also clouded the biopharmaceutical industry’s outlook with threats of high industry tariffs, cuts to federal healthcare agencies and lower drug prices. But two major hurdles for the industry have been removed after companies struck deals with Trump on pricing and the President made clear they would be exempt from additional taxes if they invested in U.S. manufacturing.

Good data readings also boost biotech valuations, Loren said. Just a year ago, he said, even good data sent stocks crashing. “People were using everything as an event to get out.”

Towards the end of spring, the market started to change and now investors are taking good data and running with it. “There comes a point where these things become so diminished that at the end of the day, what is the risk?” said Loren. “And now, as we see mergers and acquisitions accelerating, the good news is that this game has become very real.”

More opportunities in 2026

Analysts say that deals may increase even more in 2026.

“We see 2026 as one of the best investment opportunities we’ve seen in decades,” PitchBook analysts said, as U.S. health policy setbacks fade and additional interest rate cuts encourage more speculative investment stances.

Rajesh Kumar, head of European life sciences and healthcare equity research at HSBC, expects a similarly “huge increase in deal flows” next year as the noise around drug pricing fades.

“Beyond market margin expectations [2026] It may be a little more optimistic than it should be, but still companies are deploying capital in the U.S., manufacturing is happening, there’s clarity, and it’s really a great environment for doing biotech deals and early-stage biotech financing,” he told CNBC’s “Squawk Box Europe.”

Other developments in the pharmaceutical industry could lead to another year of significant headwinds and potentially increase the urgency for drugmakers to make deals.

Prices for some best-selling drugs will begin to fall in 2026 under the US Inflation Mitigation Act, which treats drugs’ active ingredients as the same by the same manufacturer and in some cases limits lifecycle management options, HSBC analysts said. It may also become easier to launch biosimilars in the US if the Food and Drug Administration passes a new regulation. draft guide is applied.

“All these factors may mean that moving across the patent divide, especially for biologics, may be more aggressive than in the past,” the analysts said.