Biotech IPO window is open but big pharma M&A sets the pace: Bankers
Public markets are beginning to reopen for biotech companies after several years of muted activity.
But the strongest companies may be more likely to sell themselves to Big Pharma rather than test investor appetite in an IPO, according to leading healthcare dealmakers at JPMorgan.
The IPO window for high-quality biotech companies has reopened, but investors are being much more selective than they were during the pandemic-era boom; Juha Anjala and Roy Wouters JPMorgan’s EMEA healthcare investment banking told CNBC.
The current market is also encouraging many biotech companies to follow a two-pronged process: preparing for an IPO while also engaging with potential buyers.
In some cases, companies were ready to list but were acquired by large pharmaceutical groups before reaching the public markets, Wouters said, adding that they had advised on several such deals recently.
The trend reflects a broader recovery in healthcare deals, particularly in biopharma, where drugmakers are under pressure to complete production lines ahead of major patents expiring later this decade and the early 2030s.
Big pharma buyers are well-financed and increasingly willing to take bigger bets, bankers said. Anjala said strategic buyers are “looking to deploy capital” to deepen pipelines, while shareholders are increasingly supporting mergers and acquisitions as a way to boost growth.
“We’re seeing people taking a more cautious view and trying to support only the company that is going to be best-in-class, first-in-class.”
Roy Wouters
Co-Head of EMEA Healthcare Investment Banking at JPMorgan
The result is a more competitive market for top-quality biotechnology assets, especially those with differentiated technology or exposure to broad therapeutic areas such as oncology, metabolic diseases, and infectious diseases.
For biotech founders and investors, this creates a stronger exit market than it was a year or two ago; But this is not necessarily a simple market. As the IPO window opens, Big Pharma’s quest for growth is expected to continue setting the pace.
Competition and bifurcation
Still, Anjala and Wouters cautioned that the recovery is not necessarily broad-based. Boards of directors and investment committees are intensely vetting transactions before signing them, and private equity is becoming even more concentrated.
“We’re seeing people taking a more cautious view and just trying to support the company that’s going to be best in class, first in its class,” Wouters said.
He added that the current environment “gives these companies a set of options on the IPO side or the M&A side that they didn’t even have one to two years ago.”
This marks a shift from the easy money period of 2020 and 2021, when investors were willing to back multiple companies pursuing similar goals or technologies. Today, capital flows more selectively to businesses that are seen as category leaders.
EY said in a report published last week that 38% of new drug approvals in 2025 are for first-in-class products. The company also stated that the biotechnology sector is gaining momentum despite negativities such as cost pressures and impending patent cliffs.
According to EY, these pressures are pushing companies towards new financing models, including franchise agreements and other innovative contract structures for pre-market assets.
greater opportunities
Deal values and down payments have also increased, Wouters said. This reflects confidence in the target market, the quality of the asset, and the level of competition among buyers.
“People are willing to risk more capital in terms of down payments [payment] “Because they have to because of the competition around these assets,” he said.
There were seven biopharma deals worth between $5 billion and $15 billion in 2025, according to JPMorgan. Nearly halfway through 2026, six deals have already been made in this span. This year’s run rate may surpass last year’s.
The fact that many of the industry’s most commercially successful drugs have come from acquisitions or licensing agreements rather than in-house research and development underscores why pharmaceutical companies continue to use mergers and acquisitions to bolster their portfolios.
Shareholders are pushing management teams to make more deals as cash flows remain strong and mergers and acquisitions are seen as a proven way to create value, Anjala said. He added that the tailwind for strategic acquisitions that could deepen pipelines or create synergies is particularly strong.
Including major pharmaceutical groups GSK And Novartishas long emphasized so-called snap deals, which are acquisitions in the low single-digit billion-dollar range that complement existing portfolios without transforming the entire business.
However, some recent transactions indicate an appetite for priority assets to move higher. GSK recently agreed to acquire US oncology biotech Nuvalent for $10.6 billion; It’s a deal that marks a major advance for cancer treatments and a departure from the smaller bolt-on operations that are more typical.
China is also becoming a more important force in global biotechnology. While EY stated that Chinese companies now represent a real alternative to biotechnology hubs in the US and Europe, Wouters said innovation and capital flows in China continue to accelerate.
“The last few years it’s always been ‘the signs are good, there’s grass, next year is going to be a great year,'” Wouters told CNBC. “Actually, this year looks like it’s going to be a great year.”
