With cash to burn and patent cliffs looming, pharma giants are buying more biotechs

Big Pharma has been on a shopping spree. Acquisitions have picked up significantly since the start of the year, and while they aren’t the only sign of a healthy business environment, they signal to investors that there are exit opportunities—and thus returns on their investments.

“It’s good news all around,” says Ranu Carroll, EY-Parthenon’s Americas life sciences sector leader. “There’s cautious optimism that the market is back and here to stay.”

Carroll’s team has tallied 14 biopharma acquisitions of more than $500 million each in the first quarter of 2026. That’s nearly half the total number in the sector in 2025, which topped out at 32.

Notably, several of the first-quarter transactions were multibillion-dollar deals, continuing a trend that began toward the end of 2025 after the US Federal Reserve System dropped interest rates. Some industry watchers believed at the time that dealmaking activity would slow, but money is evidently still moving.

The largest acquisition of the quarter was Gilead Sciences’ agreement to buy Arcellx for $7.8 billion. Gilead makes most of its money from HIV products and is looking to diversify. In addition to Arcellx, which is developing cell therapies for cancer and the rare autoimmune disease myasthenia gravis, Gilead recently agreed to buy autoimmune disease–focused Ouro Medicines for $1.7 million up front and Tubulis, which makes antibody-drug conjugates (ADCs) for cancer, for $3.2 billion up front. (The Tubulis acquisition was announced a few days into the second quarter.)

“As a group, these acquisitions bring potential best-in-disease and first-in-class blockbusters in addition to broader research and development platforms,” Gilead CEO Daniel O’Day told investors on a conference call discussing the transactions. “The fact that three acquisitions are expected to close in the second quarter did not reflect any change in the confidence we have in our existing clinical pipeline nor any change in our philosophy regarding M&A. Rather, it simply reflects the fact that three companies met our high bar in quick succession.”

That kind of thinking echoes a pattern that KPMG Americas life sciences sector leader Kristin Ciriello Pothier is seeing across pharmaceutical firms. “For investors, this is a disciplined market,” she says in an email to C&EN. “Capital is not chasing deal volume; it is flowing toward specific capabilities that shorten the path from clinical proof to commercial impact.”

Eli Lilly and Company has also struck multiple deals since the start of the year: a $1.2 billion agreement to buy inflammatory disease start-up Ventyx Biosciences and a much larger—$6.3 billion—agreement to buy narcolepsy drug developer Centessa Pharmaceuticals.

Lilly has cash to burn. The company brought in $65.2 billion in 2025, about half of which came from sales of Mounjaro and Zepbound, its glucagon-like peptide 1 (GLP-1) receptor agonists for weight loss and type 2 diabetes. Lilly expects to make between $80 billion and $83 billion this year, in large part because of the launch of its weight-loss pill, orforglipron, which the US Food and Drug Administration approved just last week.

“Across our nonobesity work, which is of course oncology, neuroscience, and immunology, we have our thumb on the scale for investment decisions,” Lilly’s chief scientific and product officer, Dan Skovronsky, told investors on a recent earnings call. “We see lots of good opportunities in those areas, and we’re reinvesting some of the proceeds from the obesity opportunity to make sure we can further accelerate growth in those promising areas.”

The second-largest deal of 2026’s first quarter belonged to Merck & Co., which agreed to buy Terns Pharmaceuticals, a maker of small molecules for cancer as well as weight-loss drugs, for $6.7 billion. The two firms initially met during the J.P. Morgan Healthcare Conference in January, where Merck had set up a de facto satellite office at the InterContinental Hotel in San Francisco’s South of Market district. George Addona, Merck’s head of discovery, preclinical development, and translational medicine, told C&EN at the time that oncology was “a strong area of interest.”

Merck is driven not solely by opportunity but by the impending loss of a key patent for Keytruda, its blockbuster cancer drug, in just 2 years. In the past year, Merck has also paid $9.2 billion to acquire flu preventive maker Cidara Therapeutics and about $10 billion to buy chronic obstructive pulmonary disease drugmaker Verona Pharma.

Merck is not alone in that motivation. Between now and 2032, pharmaceutical firms are collectively slated to lose about $370 billion as patents expire and generic medicines begin to compete with brand-name drugs, says Carroll at EY-Parthenon. She expects to see more midrange acquisitions in the coming months because of this.

“If you are losing—let’s say for an individual company—$20 billion in sales, there’s not one big company you can buy that’s giving you $15 billion in sales,” Carroll says. Instead, she says, you’re buying a “string of pearls”—a handful of companies with drug candidates that could reach a few hundred million dollars each.

Ciriello Pothier adds that the “strategic urgency” for companies facing patent cliffs is what is driving current M&A activity. This means that “buyers are prioritizing assets that can materially move the needle, pushing deal sizes higher,” she says.