By Peter Loftus and Xavier Martinez
Big drugmakers on the deal hunt aren't opening their wallets as wide as they used to.
The industry's latest acquisitions, well below $10 billion, reflect a more tightfisted approach to dealmaking than previous periods, when big companies regularly spent tens of billions.
On Tuesday, Eli Lilly agreed to buy sleep drugmaker Centessa Pharmaceuticals for an initial $6.3 billion, while Biogen agreed to buy rare- and immune-disease drugmaker Apellis for $5.6 billion upfront.
The deals are part of a run of small and midsize pharma acquisitions -- a range that has become a sweet spot for companies seeking to bolster the work of their own labs or lineups.
"If you do a lot of these little bolt-on deals, you can kind of craft your own portfolio that could totally complement something that you have going on internally," said Karen Anderson, director of healthcare equity research at Morningstar.
Deals between $1 billion and $10 billion have accounted for 76% of pharmaceutical transactions by value this year to date, up from 34% during the same period in 2025 and 42% in the first three months of 2024.
Dealmaking is a fundamental part of big drugmakers' business. The companies have their own labs, but the difficulty and riskiness of drug discovery has sent companies looking for help outside their walls, too.
Their need to restock is high. Several companies face the loss of patent protection on top-selling medicines in the next several years, threatening the loss of tens of billions of dollars in sales apiece.
"M&A in biotech and biopharma is kind of the lifeblood of the way that the industry works," said Evan Seigerman, head of healthcare research at BMO Capital Markets.
At the start of the year, industry officials and advisers predicted a robust year for dealmaking given the need, as well as a perception that the Trump administration wouldn't stand in the way of large combinations.
So far this year, biotech and pharma companies have announced 365 acquisitions worth a combined $68.6 billion, according to LSEG.
Last week, Novartis agreed to buy allergy drugmaker Excellergy for up to $2 billion. Earlier, Novartis struck a deal to acquire a breast-cancer drug from Synnovation Therapeutics for $2 billion upfront, while Merck acquired the cancer biotech Terns Pharmaceuticals for $5.7 billion.
The volume of deals has picked up since a drop several years ago, analysts said. Yet so far there haven't been the kind of big tie-ups seen in years past.
In 2023, for example, Pfizer paid $43 billion for cancer-drug biotech Seagen, while Amgen spent $27.8 billion on Horizon Therapeutics and its stable of rare-disease drugs.
This year, by contrast, Merck talked to cancer-drug biotech Revolution Medicines about a deal that could have reached around $30 billion, but The Wall Street Journal reported that the talks cooled.
"Looking in the area up to $15 billion is our sweet spot," Merck CEO Robert Davis said during a February earnings call.
For companies, the smaller deals are less risky than huge outlays that can saddle acquirers with big debt loads. The acquirers can also more easily tuck in a smaller acquisition, avoiding the stomach aches that come with digesting a bigger organization.
"The idea of buying a running business has a lot of cons to it," Lilly Chief Executive David Ricks said in an interview in January. "It is distracting. Often you're just buying the problems of the thing that was there."
To offset lower upfront payments, many smaller deals are coming with contingent payments, like contingent-value rights or milestones, that could eventually raise the value while protecting buyers from overpaying.
Lilly's agreement with Centessa comes with an additional $1.5 billion in these incentive payments, while Apellis investors' contingent right is worth up to $4 a share.
Lilly and Biogen arrived at similar deal sizes from significantly different places. Biogen ended 2025 with roughly $3.8 billion in cash and short-term investments -- enough to anchor the Apellis deal, but well short of what a larger blockbuster acquisition would require.
Lilly, by contrast, is flush with cash from its blockbuster obesity and diabetes drugs and is choosing to stay focused on small deals.
"We're not in a position where we need to buy revenue," Ricks said in January. "We like buying things early, because you can add value to the program."
The Centessa deal extends Lilly's strategy of making modest, early-stage bets to diversify its pipeline beyond its obesity and diabetes franchises. The Apellis acquisition helps Biogen build out its portfolio of rare-disease and immune-disease drugs.
Write to Peter Loftus at Peter.Loftus@wsj.com and Xavier Martinez at xavier.martinez@wsj.com
(END) Dow Jones Newswires
March 31, 2026 17:46 ET (21:46 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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