Deals are Back. Discipline is too.
- Jeremy Cohen
- Oct 24
- 3 min read
As we close out 2025 and head into the holiday season, a pattern has emerged that feels a bit more festive: deal momentum has emerged, but on fundamentally different terms than the capital abundance of 2020-2021.
M&A activity strengthened through Q3, with 35 biopharma transactions totaling $30.8 billion, pushing 2025's deal value past that of all of 2024. Merck's $10 billion acquisition of Verona and Genmab's $8 billion bid for Merus anchored the quarter. The XBI closed crossed $110 earlier this week, up over 20% year-to-date after recovering from April lows.
Yet underneath these headlines, capital is concentrating. Venture funding showed mixed signals, with dollars flowing primarily to later-stage programs and experienced teams. Mega-rounds of $100 million or more increased by 70% in 2024, but reached fewer companies overall. For BD leaders, this means diligence cycles are shorter, and narrative discipline matters more than the science alone.
The structural drivers remain unchanged: big pharma faces a $300 billion revenue cliff by 2028 as patents expire, and clinical-stage assets continue trading at depressed valuations. The question for 2026 isn't whether deals will happen, it's whether your organization is positioned to compete for them.
The question for 2026 isn't whether deals will happen, it's whether your organization is positioned to compete for them.
The Commercial Clarity Problem
Here's what's changed: acquirers and investors now demand commercial clarity earlier in clinical development Phase 2 readouts that once secured financing now require accompanying evidence of market access strategy, competitive positioning, and launch economics.
Commercial clarity early on is table stakes. Three capabilities separate companies commanding premium valuations from those stuck in capital-constrained limbo:
Define your patient archetype early and precisely. The question isn't how many potential patients there are, but which patients represent your beachhead, what their treatment journey looks like today, and where your asset creates discontinuous value.
Quantify what delay costs you. If your asset could launch 18 months earlier with partnership support, what would that time be worth in terms of market share and pricing leverage? Sophisticated acquirers model these opportunity costs explicitly.
Anchor your market access story in payer economics. Engage health economists during Phase 2 to model budget impact and comparative value across multiple reimbursement scenarios. This work becomes a competitive differentiation in M&A processes.
The Window for Strategic Moves
Q3's six public all-cash deals over $1 billion returned $22 billion in capital, underscoring the opportunity for companies with balance sheet capacity. This shift toward earlier-stage acquisitions reflects big pharma's recognition that waiting until Phase 3 means paying peak valuations.
For private biotechs, the calculus is straightforward: if your asset aligns with patent cliff priorities in oncology, neuroscience, or metabolic disease, M&A may deliver better risk-adjusted returns than extended capital campaigns.
AI-driven discovery compounds the urgency. Development timelines are compressing faster than most commercial organizations can keep up with. If competitive assets reach market 18 months ahead of traditional cycles, clinical differentiation alone won't overcome structural positioning disadvantages.
Clinical differentiation alone won't overcome structural positioning disadvantages.
Policy uncertainty, including most–favored–nation pricing proposals, tariff implications, and FDA approval timelines, creates multiple risk vectors entering 2026. Leadership teams that build scenario flexibility into their strategic plans will navigate volatility more effectively than those anchored to single-outcome assumptions.
Leadership teams that build scenario flexibility into their strategic plans will navigate volatility more effectively than those anchored to single-outcome assumptions.
The View from the Crow’s Nest
In recent months, we’ve watched buyers and investors tighten their focus. Science still matters, but it’s the commercial story that determines who gets attention. The question isn’t whether the market is improving; it’s whether your narrative meets the new threshold for conviction. The next phase favors teams who can connect science to commercial logic, quantify value with rigor, and communicate readiness with credibility.
At Spinnaker, we’re helping leadership teams translate selective momentum into competitive advantage by sharpening narratives, modeling competitive dynamics, and aligning stakeholders around what truly drives valuation in this market.
