M&A Firepower Report 2025 (EY)

Summary

• Life sciences M&A deal value fell 41% in 2024 to US$130b as biopharma integrated prior large acquisitions.p.4
• Overall deal volume remained stable with a +1% growth vs. 2023, driven by a 17% increase in biopharma deals.p.4
• Top biopharma players hold US$1.3t in available M&A Firepower entering 2025.p.5
• Patent expiries are projected to create a US$240b growth gap for top 25 biopharma companies by 2030.p.5
• Products acquired via M&A generated 45% of top 25 biopharma revenues in 2023.p.15
• AI life sciences M&A and alliance deal value reached US$60b over the past six years.p.7

Key insights

1. In 2024, life sciences companies pivoted toward smaller, earlier-stage acquisitions, partnerships, and bolt-on deals.p.3
2. Average deal size dropped 42% vs. 2023 down to US$1b as acquirers avoided large-scale de-risked assets.p.4
3. Acquirers paid a median premium of 75% for targets in 2024, significantly above historical pre-2023 levels.p.5
4. Venture capital funding for biotechs grew 27% in 2024, providing companies more flexibility to remain independent.p.5
5. Acquisitions increasingly target early-stage assets, with Phase 2 representing 36% and Preclinical/Phase 1 representing 30% of targets.p.6
6. R&D accounts for 87% of total life sciences AI spend.p.7
7. Recursion Pharmaceuticals acquired Exscientia for US$712m in August 2024, making it the largest life sciences AI M&A deal to date.p.7
8. Approximately 85% of out-licensing deals originating from China are focused on oncology.p.11