Pharmaceutical executives are heading to San Francisco for the upcoming J.P. Morgan Healthcare Conference with a significantly more relaxed outlook compared to 2025. A year ago, they were mired in confusion over the policy direction of U.S. President Donald Trump; today, much of the uncertainty that loomed large has substantially dissipated. The worst fears regarding drug pricing policies and potentially profit-eroding tariffs have not materialized, leading to a marked easing of industry anxiety. "We are exiting 2025 with a pretty strong tailwind," stated Chris Garabedian, a venture fund manager at biotech investment firm Perceptive Advisors, adding, "Most of the concerns and uncertainties are in the rearview mirror." Jared Holz of Mizuho Securities further noted, "I don't recall Wall Street ever being this optimistic about biotech heading into a new year."
Biopharmaceutical deal-making more than doubled over the past year. The subsequent stock price increases for acquiring companies upon deal announcements signaled strong investor approval and a desire for continued activity. Some dealmakers anticipate that 2026 will surpass last year's performance. "It feels like we are at full speed," remarked Chris Rupp, Head of Americas M&A at Jefferies Financial Group. Annually, thousands of biopharma executives and investors flock to this conference to network, make announcements, and lay the groundwork for future acquisitions. This 44th iteration of the event serves as a key venue for visibility and sets the tone for the year ahead.
As numerous executives arrive in San Francisco for the J.P. Morgan Healthcare Conference, they do so on the heels of an agreement reached with the White House aimed at lowering drug prices and circumventing tariffs. Although the specific terms of the deal have not been publicly disclosed, the market has reacted positively—primarily because the involved companies did not significantly adjust their financial forecasts as a result, thereby stabilizing market expectations. "The improved macro sentiment is giving people more confidence and conviction to act," said Jeremy Meilman, Global Head of Healthcare Investment Banking at J.P. Morgan.
Data reveals that pharmaceutical companies struck deals totaling $130 billion in 2025, a staggering 124% increase from the previous year. This included approximately 30 transactions valued over $1 billion, a record high; seven deals exceeded $5 billion, compared to none the year before. "When it comes to bringing innovation in from the outside, people are willing to do larger deals," commented Peter van der Goes, Co-Head of Global Healthcare Investment Banking at Goldman Sachs.
Another factor is compelling companies to aggressively acquire innovative assets: giants like Merck & Co. (MRK.US), Pfizer (PFE.US), and Bristol Myers Squibb (BMY.US) face intense pressure to replenish their product pipelines. Patents for their blockbuster drugs are set to expire within the next five years, threatening over $300 billion in sales. "When stock prices are at all-time highs, CEOs feel more emboldened to pursue M&A," explained Chuck Adams, Global Head of Healthcare, Consumer, and Retail Investment Banking at Citigroup.
Last year witnessed a series of public bidding wars, underscoring the urgency among CEOs to acquire biotechnology firms developing potential blockbuster drugs. Pfizer outbid Novo Nordisk (NVO.US) for obesity drug startup Metsera; H. Lundbeck and Alkermes (ALKS.US) engaged in a fierce contest for Avadel Pharmaceuticals (AVDL.US), ultimately won by Alkermes. Behind-the-scenes competition was equally intense: Cidara Therapeutics, which is developing influenza therapies, received multiple offers before being acquired by Merck for over $9 billion in November. Mid-sized pharma companies like BioMarin Pharmaceutical (BMRN.US) and Denmark's Genmab (GMAB.US) have also been active, acquiring early-stage biotech firms.
François Maisonrouge, Chairman of Evercore's Global Health Care Group, believes this trend will persist. "For years they waited to be acquired, now they are thinking, 'We've grown up, it's time to do the acquiring ourselves'," he said. However, bankers caution that continuously rising valuations could deter potential buyers. "This could create a logjam for M&A," pointed out Siddharth Nahata, Global Head of Healthcare Investment Banking at Morgan Stanley.
Policy risks under the Trump administration remain a variable. Its top health official, Robert F. Kennedy Jr., has already disrupted the vaccine industry and leads a Food and Drug Administration (FDA) that is often unpredictable and politicized. Furthermore, leadership turmoil at the U.S. FDA continues: since January 2025, its core drug approval department, the Center for Drug Evaluation and Research (CDER), has seen five changes in leadership, an unusually high rate of personnel fluctuation in the agency's history.
Concurrently, the FDA has recently rejected multiple applications for rare disease drugs in succession, a series of anomalous decisions that have surprised and deeply frustrated both investors and patient advocacy groups. Until the FDA's policy direction becomes entirely clear, the industry widely expects some pharmaceutical companies to adopt a more cautious stance toward major M&A transactions.
Many investors anticipate a wave of initial public offerings (IPOs) from private biotech companies this year. According to BioSpace data, only 8 biotech companies completed IPOs last year, down from 19 in 2024. Perceptive Advisors' fund manager Garabedian noted that venture capital is increasingly directed towards later-stage companies, betting on a further opening of the IPO window in 2026. If this trend continues, venture capital firms will gain more diversified exit path options; but it also implies that as private companies lean towards public listings rather than acquisitions for capitalization, large-scale acquisition activity in the coming year may contract.
