US Pharma Deals Midyear Outlook 2026: Why Dealmakers Are Leaning Into Growth

Welcome to PwC's Next in Health. I'm Glenn Hunzinger, PWC's U.S. Health Industries Leader.

Today we're talking about pharmaceutical and life science deal making. And one thing is pretty clear the market has gotten a lot more active. What's interesting is this isn't happening in a stable environment. Companies are still dealing with pricing pressure, policy uncertainty, and questions about the future regulatory landscape and what that may look like.

But rather than slowing down, organizations seem to be moving faster. Large farmer is under pressure to replace pipelines. Investors are chasing differentiated science. They're always trying to follow the science.

And new technologies are changing how companies think about creating value. But the real question is so what's really driving the market? What are buyers placing their bets on? What should leaders be paying attention to when they think about growth, partnership acquisitions?

Joining me today is Rule Vandenacker, PwC's U.S. Farm and Life Science Deals Leader. Rule, welcome back.

Glenn, it's great to be here and look forward to our discussion. All right, so let's jump right in. Rule, tell me about the first half. Has it been active and what's been driving the boom?

Yeah, Glenn, I think you said it in your preamble there. Very active deals market, five plus months into the year. And it's great to see, it's keeping us very busy and we're very excited about this. Both from a volume and a value perspective, we've seen a very active market.

And I think we kind of predicted this going into the year, Glenn. We spoke before around the turn of the year and JP Morgan, and we were predicting an active year. We're seeing it play out. If you look at a last 12-month basis through the first quarter, we have a deal market that both from a volume and a volume perspective is close to approaching 22 and 23 levels, which were very active years.

If you are extrapolating the first quarter of this year for the full year, you probably get a record year for biopharma MA. What I think is interesting to see is that the trend that we were seeing before towards smaller transactions is continuing. Like we see people playing in the 1 to 10 billion or 5 to 15 billion range. I think through the end of May, we were counting over 20 transactions north of a billion dollar announce.

So people definitely have their foot on the gas. What I think is really feeding this is kind of what you said in the preamble. Generally, optimism from a macroeconomic perspective, strong balance sheets for biopharma to lean into. And I think fantastic strides in science in various different therapeutic areas that are making people enthusiastic to lean into MA.

So it's absolutely been a very active market here for the first five and a half months. And we do expect that that trend will continue here, Glenn, as we go through the rest of the year. No, it's great. We always spoke about how hard it is to invest and do MA in this space, right?

Binary outcomes, hard to balance sort of risk and opportunity there. And in the past, we've certainly seen a lot of discipline as far as investing. And now, I think to your point, as the great science comes out, people are really starting to place their bets because they're seeing that great science in front of them. Maybe just talk a little bit about rule, like where are they placing the bets?

What type of assets are you seeing? And sort of where is some of this capital being deployed? Yeah, it's a great question, Glenn. I think the areas where we've seen activity before, we continue to see activity, right?

So oncology continues to be a very attractive therapeutic area where people are leaning into new levels of innovation. What I would also say is I think what I've started to see take post, and I think others in the industry have talked about this, for a long time our industry has been focused on kind of rare indications, rare disease with large price points. And I think this is starting to be turned on its head a little bit where people are increasingly leaning into larger categories with bigger temps and understanding that with average price points, there's a lot of fantastic things that companies can do there.

I think we've seen this on the back of sort of the GLP one wave, the Increding class. And as that kind of started as a duopoly, now perhaps with three major players, you know, in very large patient populations where people have realized that even with lower price points and favorable reimbursement dynamics, you can really drive shareholder returns if the innovation is there. And I think we're starting to see that model being stretched in the class to different modalities or indications, or starting to replicate that into larger markets.

So I've paid a lot of close attention to some scientific developments in vaccines. I think we've seen some people leaning into CNS more broadly, indications like sleep and wake disease or narcolepsy, where people are just extending things out, which I think are increasingly pointing to what you were discussing, right? Like active market and really thinking through where they can make an impact and deliver the returns. And probably, you know, I wouldn't say away because oncology is such a large class.

There's so much unmet medical need. And I think even throughout ESCO a couple of weeks ago, we've again seen fantastic clinical studies. But I think the model is starting to get stretched a little bit to large attempts, right? Like sleep wake, like addiction categories and whatnot.

And I think we see MA kind of follow that. So that's something, Glenn, that that I'm monitoring. And I think there's more innings to that playbook here in the next six and 12 months. Yeah, I mean, it's pretty incredible to see, you know, everyone says follow the science, but where the science has taken us around new cures, new therapies, things that we thought were maybe unattainable years ago.

It's great to see that kind of breakthrough. So, Rule, as we think about innovation and certainly the types of deals, can't be a conversation today without talking about China and the innovation in China. Maybe talk a little about what you've seen sort of in the first half. How is that compared to previous and kind of where you see that going?

Yeah, I mean, you said it rightfully so. China is a topic on all deal makers' minds, right? And we've talked about it on prior podcasts. You know, the market has clearly evolved from a low-cost manufacturing destination to an innovation hub that nobody in our industry can ignore.

And executives and industry participants have spoken about this over the recent weeks and quarters. I think we're definitely in a new chapter there in that journey. I think Western MNCs have started to in-license molecules over the last 18 months or so, because we've been talking about this for a while. What I think we're starting to see now is even bigger development deals being signed between Western biopharmers and Chinese-based pharma companies that significant upfronts, and it's effectively the old school cocoa deals where you're co-developing and even co-commercializing certain compounds and certain indications.

So the innovation base in China is exceptionally fast, and that's something that's here to stay in the industry. And USMNCs are increasingly looking there for fantastic new science. I think the base of innovation, the base of the regulator there, particularly in the preclinical and early clinical development stages, is a fair bit faster than it currently is in the United States. And that's something that the industry over here needs to look to address.

And I think there's conversations on the hill and in our ecosystem broadly to kind of address that. But I think from an MA perspective, you're seeing companies here in the United States and also Western Europe leaning into those deals. So I think this trend is here to stay. China will increasingly be a source of innovation for the globe.

And I do think as participants in this ecosystem in this industry, we're all passionate about bringing innovation to US-based patients. We should all welcome this trend and see what it can bring from a therapy perspective to patients. So there's more to come, but it's absolutely a topic that is here to stake, Len, from my perspective, and should be on every deal maker's mind. Yeah, iron sharpens iron.

And there's no doubt it'll just continue to enhance the pace of innovation and ultimately better outcomes for patients. So, Rule, you kind of hit a little bit on the innovation and the technology and AI side. Can't be a conversation unless we talk about AI for a bit. So obviously it affects all aspects of sort of the value chain for pharma from a development side to otherwise.

But talk about from a deals framework. How are people deploying capital in AI around the deal side, around partnerships, and how is that driving some of that MA value creation mindset? Yeah, great question. I mean, listen, it will have a profound impact to our industry, and I think it already is shaping our industry.

Two main areas where I think I see most of the value case, particularly in commercial, and then I think most importantly in RD, right? What it can do to clinical development. I think as it relates to MA, Glenn, deals that are driven solely by AI so far are few and far between, right? There are one or two or three that I can think of, but I don't think AI is a primary driver of MA and biopharma.

What I do think is companies that are living on the edges of this debate are increasingly mesmerized by the potential that it can have and are scouting sort of our ecosystem where progress is being made and are aggressively licensing technologies and creating partnerships with AI-driven companies to kind of really speed up clinical development. So, you know, I do think the vast majority of alliance and licensing activity in our sector is drug development, but increasingly we're seeing AI licensing activity with companies in the ecosystem that's driven to that end taking shape as well.

So, like that is only going to ramp up. I do think we're going to have to move to impact here shortly, but I do think we're pretty close to getting there. Yeah, no, that's great. I think there's no doubt it's helping the competitive landscape and helping evaluate, move with pace and speed on transactions, which is obviously critical here to creating value.

So, Rule, as we transition from what we're seeing in the market, where people are focusing, how they're deploying capital and leveraging technology to really expedite and create value. What's your view on you know what should deal makers being doing when you when you're advising CEOs and head to strategy and corporate development? What are the conversations you're having and kind of where are you focused over the next six months? Yeah, I mean, listen, I it's a great question.

I'm very optimistic for continued momentum over the next six months, a couple of reasons, right? I think our CEO survey has sort of generally guided that CEOs in our sector are still fairly optimistic about the general state of play. I mean, it's a complex operating environment we're in geopolitically, economically still, but despite that, I think CEOs are executing and MA continues to feature prominently on the agenda. We've talked extensively about the LOE wall.

People are leaning into it. The promise of AI is strong and there's fantastic innovation in China. We've talked about that. I'm also sort of quite optimistic.

I do think, and I get this question quite a bit, Glenn, is IPO markets for biotech and sort of the general sentiment in the industry. I know our sector has trailed the broader SP for a long time. I think that gap is sort of closing over the first six months. I think the sentiment in biotech is a lot better than it was 12 months ago.

I think we've seen some positive signs in the biotech IPO markets over the last couple of weeks with some pretty promising IPOs, which raised significant amounts of capital, which then create trickle-down economics, if you will, throughout our ecosystem, back into the crossover rounds, back into the venture rounds. We've seen some of the investors in our space make some good exits with some of the 2025 MA that was announced, with some of the larger deals, which I think is replenishing capital throughout the ecosystem.

You know, what I think is important to note for industry that, and again, I always pay attention to this, the 10-year risk-free rate is kind of in the high fours at the moment, which is not ideal, right, for a risk-taking environment and a long-duration industry that biotech is. But despite all of that, do you think that the general sentiment is quite optimistic, which, you know, is kind of keenly on CEOs and deal makers' minds, and I think sets us up quite nicely for continued activity throughout the rest of the year?

Yeah, I think you captured it well, the word sentiment. It's clear that science is progressing, capital is being deployed, transactions have always been a fabric of the industry, whether it's wholesale acquisitions or, as you've mentioned, licensing, co-promotion agreements, et cetera. But it's clear that the activities here, the market is moving at pace, and people are kind of pushing themselves day in, day out to sort of that next level sort of edge of where we are. Listen, it's going to be exciting to see how it plays out for the second year.

Rule, thanks for setting the scene of optimism grounded in great fundamentals and good insights that you have here. So thanks for your time, Rule. I'm sure it's a great listening for our audience and appreciate you spending time. Always a pleasure to be on, Glenn.

Thank you for having me. To learn more, check out our former and Life Sciences Deals Mid Year 2026 Outlook Report, now available linked in the show notes. And thank you all for tuning in to PwC's Next in Health. For more on these topics and other insights across health industries, please subscribe to our podcast at pwc.

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