M&A Acceleration: Q&A with Subin Baral

EY released its 14^th annual M&A Firepower POV report, which details dealmaking in the life sciences industry. According to the report, M&A activity increased by over 80% in 2025 and dealmakers are positioned to go even further in 2026. Subin Baral, global life sciences deals leader at EY, spoke with Pharmaceutical Executive about the report and the overall trends that she sees in life sciences M&A.

Pharmaceutical Executive: What are the current trends you’re seeing in global life sciences M&A activity?
Subin Baral: M&A investment saw a significant acceleration in 2025, with total spending increasing by 81%, to $240 billion compared to 2024, despite a 12% decline in deal volume. Companies are actively seeking de-risked in- or near-market assets and are willing to pay high premiums as the average deal sizes, which grew by 107%. Competition for these assets is intense, particularly in high-demand areas such as GLP-1 and anti-obesity treatments, oncology and CNS. Notably, Medtech dealmaking outpaced biopharma, with a year-on-year investment growth of 116% compared to 65%. The top three deals of the year were all in the Medtech sector, highlighting a strong focus on high-growth opportunities across the life sciences industry.

PE: What elements are putting pressures on pipelines?
Baral: The industry is currently facing a wave of patent expiries, which means revenues need replacing. Research carried out by EY indicates that industry-leading companies don’t have the pipeline assets to achieve that revenue replacement as yet. EY’s analysis of the top biopharma companies suggests they face a collective “growth gap” exceeding US$370 billion by 2032, meaning their projected growth lags behind industry projected growth overall, indicating insufficient pipeline and growth drivers. Additionally, analysts are skeptical about the quality of industry pipelines and execution capabilities, suggesting inherent softness in current management growth guidance. These factors are pushing companies towards M&A––but in the dealmaking space itself they face another pressure: there are relatively few high-quality, low-risk assets available, competition is therefore intense and expensive.

PE: What role is China playing in biopharma innovation?
Baral: China is becoming an integral source of biopharma innovation. The availability of high-quality R&D in China, coupled with the potential for expedited data and shorter approval timelines, has driven a surge of investment into “in China, for Global” partnerships between multinational biopharma companies and domestic Chinese biotechs. In 2025, these partnerships accounted for over one-third of "biobucks" spent on alliances by US and European pharma players, a remarkable increase from less than 1% a decade ago. This shift has made alliances a bigger source of investment than ever before, with about US$234 billion total potential spend on alliance deals. Alliances not only facilitate engagement with China but also offer companies a lower-upfront-cost option for investing in novel technologies, from next-generation oncology therapies through to AI.

PE: How do you see M&A evolving in the coming years?
Baral: Given the existing growth gaps and the ongoing innovation across various therapeutic areas and technologies, including AI, we anticipate continued M&A momentum. EY analysis indicates two key trends very clearly. Firstly, life sciences companies are heavily dependent on dealmaking. When we look at the portfolios of the leading biopharmas, up to two-thirds of the portfolio by revenue size is derived from dealmaking. Our analysis shows that companies engaging in deals and outperform companies that are less active, and the more varied the dealmaking the higher the return on capital (so, companies which both acquire and divest outperform those that only acquire or only divest). This gives a strong structural reason for M&A to continue, alongside alliances and other dealmaking strategies. Secondly, while dealmaking is essential, it remains challenging, with up to 68% of deals failing to meet projected growth. As a result, we anticipate shift toward flawless execution, with companies likely leveraging AI to identify and validate potential acquisition targets and streamline integration processes.

PE: What’s causing the industry to hold a record $2.1 trillion in firepower?
Baral: The industry holds a substantial firepower, with biopharma accounting for $1.6 trillion, and Medtech the remainder. This indicates a strong capacity for the industry to raise and deploy capital towards strategic initiatives, and the overall industry balance sheet remains strong.However, it is important to note that the firepower is not evenly distributed, with some companies holding substantial reserves while others have comparatively lower dealmaking capacity. Since our definition of firepower includes market capitalization as a component, we ought to notice that some companies have seen surging market caps in recent years, for example following the investor excitement around GLP-1 drugs. In summary, while the overall availability of $2.1 trillion is noteworthy, it does not imply that all companies are equally equipped for dealmaking in 2026. However, for those with both substantial firepower and significant growth gaps, dealmaking activity is likely on the horizon.