<p>The life sciences sector has experienced a notable increase in mergers and acquisitions (M&amp;A) over the past year, with significant activity in the pharmaceutical and medical technology (medtech) industries. A combination of strategic imperatives, market dynamics, and the pursuit of innovation and profitability for businesses drives this trend. As we progress into 2025, industry stakeholders need to understand the factors driving these deals and their implications for the life sciences sector, particularly regarding the supply of skilled talent.</p>
<h2>Recent M&amp;A Trends in Life Sciences</h2>
<p>After a peak in 2021, life science M&amp;A activity experienced a downturn during the pandemic and fell to its <a href="https://www.reuters.com/markets/deals/dealmakers-see-rebound-after-global-ma-volumes-hit-decade-low-2023-12-21/">lowest level in 10 years</a> in 2023 due to higher interest rates and economic uncertainty. This drop-off also extended into 2024 due to the decreased volume of megadeals (deals exceeding $5bn) in the sector, with 10 megadeals in 2023, down to two in 2024, according to <a href="https://www.pwc.com/gx/en/services/deals/trends/health-industries.html">PwC</a>.</p>
<p>However, since this dip, the M&amp;A market, especially in the science sector, has been recovering, particularly in the last two quarters of 2024. This new surge in activity is mainly due to the number of pharmaceutical companies acquiring pre-commercial biotech assets to accelerate research and development (R&amp;D), reducing the projected timeline for assets in the pipeline by an average of <a href="https://www.mckinsey.com/capabilities/m-and-a/our-insights/life-sciences-m-and-a-shows-new-signs-of-life">at least 30%.</a> MedTech companies are also proactively enhancing their portfolios to improve profitability.</p>
<p><a href="https://www.pharmaceutical-technology.com/data-insights/global-ma-activity-pharmaceutical-industry/?cf-view">GlobalData&rsquo;s Deals Database</a> indicated that in Q3 2024, 420 M&amp;A deals were announced in the global pharmaceutical industry, totaling a value of $32.4bn. Healthcare-related deals comprised 34% of the total, an increase of 2% compared to Q2. Additionally, as mentioned at the J.P Morgan Health Conference 2025, 2024 saw <a href="https://www.forbes.com/sites/juergeneckhardt/2025/01/16/5-insights-from-the-2025-jp-morgan-healthcare-conference/">106 biotech venture deals exceeding $100 million</a>, indicating another uptick in activity.</p>
<h3>Major deals in the past few years include:</h3>
<ul>
<li><strong>Pfizer acquired Seagen </strong>for approximately $43bn in early 2023 to improve its oncology pipeline, which has doubled since the acquisition, with <a href="https://www.pfizer.com/news/press-release/press-release-detail/pfizer-completes-acquisition-seagen">60 programs covering multiple modalities</a>.</li>
<li><strong>Novo Holdings A/S acquired Catalent, Inc</strong>., for $16.5bn in Q1 2024 to improve its portfolio of life sciences services and address supply chain challenges in drug manufacturing.</li>
<li><strong>Gilead Sciences&rsquo; acquisition of CymaBay Therapeutics </strong>for approximately $4.3bn in February 2024 to reinforce its liver portfolio with a promising drug candidate.</li>
<li><strong>Eli Lilly and Co. acquisition of Morphic Holding </strong>for $3.2bn to explore Morphic&rsquo;s pipeline of oral therapies to treat immunologic diseases such as IBD. This was the largest pharmaceutical disclosed deal in mid-2024.</li>
<li><strong>Johnson &amp; Johnson agreed to acquire Intra-Cellular Therapies</strong> in January 2025 for $14.6bn to strengthen its neuroscience portfolio.</li>
</ul>
<p>These transactions reflect a broader trend of consolidation aimed at increasing market share and utilizing complementary technologies to more effectively address unmet medical needs.</p>
<h2>The Main Drivers of M&amp;A Activity</h2>
<h3>Patent Cliffs and Pipeline Gaps</h3>
<p>Big Pharma companies continue looking for M&amp;A opportunities to tackle patent expirations (&lsquo;<a href="https://www.investopedia.com/terms/p/patent-cliff.asp">patent cliffs</a>&rsquo;) and potential delays/gaps in drug development pipelines. Research conducted by <a href="https://www.statista.com/statistics/309404/global-total-prescription-drug-revenue-at-risk-from-patent-expiration/">Statista</a> highlights that the global prescription drug revenue will face significant risks due to patent expirations between 2024 and 2030, with the highest risk occurring in 2028, affecting approximately $100 billion worth of drugs. Once patents expire, competing companies can produce cheaper alternatives, increasing competition. This trend is particularly evident in the pharmaceutical industry, where generic drug manufacturers can capture a significant market share. To address this challenge, more companies are focusing on research and development (R&amp;D) and acquiring assets to strengthen their product pipelines.</p>
<h3>Portfolio Optimization</h3>
<p>Medtech companies actively manage their portfolios by selling off non-core assets and acquiring businesses aligning with their strategic goals. This approach aims to improve profitability and concentrate on high-growth areas within the sector. Companies are increasingly making strategic acquisitions that focus on specific products and innovations to address gaps in their pipelines or strengthen their growth profiles.</p>
<h3>Market Consolidation</h3>
<p>The healthcare sector is experiencing consolidation as companies seek economies of scale and expanded market research. This trend is evident in pharmaceutical and medtech industries, where acquisitions strengthen market position. The U.S. remains a hotspot for M&amp;A activity due to its mature market, while Asia is gaining traction as companies pursue lower costs and high growth potential (<a href="https://www.gep.com/blog/strategy/medical-mergers-and-acquisitions-in-pharmaceutical-industry">GEP</a>).</p>
<h3>Private Equity (PE) Involvement</h3>
<p>Private equity firms increasingly participate in life sciences M&amp;A, attracted by the sector&rsquo;s growth potential. PE continues to have significant capital available for investment and a rising number of potential divestiture options as funds near the conclusion of their holding periods. There&rsquo;s an interest from the private equity sector in medtech and digital health companies. A clear example of this trend is <a href="https://www.pwc.com/gx/en/services/deals/trends/health-industries.html">KKR's recent acquisition of a 50% stake in Cotiviti</a>. This investment adds more capital and offers strategic support, which will likely enhance deal activity in the sector.</p>
<h2>Outlook for 2025</h2>
<p>The momentum in life sciences M&amp;A is expected to continue into 2025, driven by the need to stay competitive and capitalize on emerging opportunities within the sector. <a href="https://www.pwc.com/gx/en/ceo-survey/2025/28th-ceo-survey.pdf">PwC&rsquo;s 28<sup>th</sup> Annual Global CEO Survey</a> highlights that 86% of health industry CEOs plan to make one or more acquisitions in the next three years.</p>
<p>However, challenges such as high asset valuations necessitate a prudent approach to dealmaking. Companies must carefully assess potential M&amp;As to ensure alignment with their objectives and value-creation goals. Several trends we expect to see are:</p>
<ul>
<li><strong>Focus on Therapeutics &ndash; </strong>The oncology market will remain a dominant therapeutic area, as evidenced by explorations and success in previous years. In 2023, M&amp;A deals in <a href="https://www.ey.com/en_gl/newsroom/2024/01/deals-are-back-surge-in-life-sciences-m-a-fueled-by-sector-s-capital-reserves-and-quest-for-new-revenue-growth">oncology assets reached $65.2bn,</a> with the US dominating activity.</li>
<li><strong>Growth of GLP-1&mdash;</strong>Similar to the oncology sector, the GLP-1 market is also expected to remain strong in M&amp;A activity. GLP-1 drugs for obesity and diabetes treatments continue to soar, with key players such as Novo Holdings and Eli Lilly.</li>
<li><strong>Digital Transformation&mdash;</strong>Companies will likely seek acquisitions that improve their digital capabilities, particularly those that utilize AI and data analytics for drug discovery and patient engagement.</li>
<li><strong>Sustainability &ndash;</strong> Environmental sustainability is becoming a priority across industries, including life sciences. Firms may pursue M&amp;A opportunities that improve their Environmental, Social, and Governance (ESG) profile.</li>
</ul>
<h2>What This Means for Consulting Services in Life Sciences</h2>
<p>The surge in M&amp;A deals across the life science industry has profound implications for skilled professionals, creating a competitive environment for finding the right resourcing solutions. As companies face complex integration, workforce restructuring often becomes a central focus. With companies focusing on consolidating expertise and expanding their capabilities, there&rsquo;s a heightened risk of attrition and displacements during transitions. During M&amp;A changeovers, employees often face uncertainty regarding their roles, responsibilities, and job security, increasing turnover rates. According to <a href="https://www.aon.com/en/insights/articles/managing-human-capital-to-drive-innovation-in-life-sciences">Aon&rsquo;s 2024 report</a>, attracting and retaining talent ranks as the second-largest challenge within the life sciences industry, emphasizing the need for effective resourcing strategies during periods of organizational change. This situation requires a strategic approach to workforce management, making it advantageous to partner with a consultancy firm for assistance.</p>
<h2>Life Science Consulting Leaders &ndash; Partner with Us</h2>
<p>Redbock is a leading <a href="https://redbock.com/about-us/">life science consulting firm</a> providing FSP and contract resourcing solutions that help businesses bridge the gap during M&amp;A transitions. We align customized solutions to your business post-merger, ensuring that our solutions help you onboard and retain your most valuable assets &ndash; skilled professionals &ndash; and position you to thrive in an increasingly competitive market.</p>
<p>Are you looking for highly skilled consultants to support your business during a period of change? <a href="https://redbock.com/contact/">Contact us today</a> and navigate complex transitions with confidence.</p>

Life Sciences M&A Outlook: What’s Driving Deals in 2025?

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Life Sciences M&A Outlook: What’s Driving Deals in 2025?

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