Newsletter · · Ashutosh Agarwal

Mid-Sized Buyers Now Drive More Than Half of Pharma Deal Spending - Biotech M&A and Drug Pricing - Week of September 11, 2026

Biotech M&A and Drug Pricing for the week of September 11, 2026: EY data showed big pharma's share of deal spending falling to 45% from 69% as mid-sized buyers crowd in, BioCentury counted 221 deals across the top 21 drugmakers with Lilly far ahead of every peer, Novartis erased more than $40 billion after three trial failures including one from its $12 billion Avidity buyout, and drug tariffs of up to 100% are set for September 29.

Biotech M&A and Drug Pricing

Week of September 11, 2026: Mid-Sized Buyers Now Drive More Than Half of Pharma Deal Spending

Two stories ran side by side this week, and they rhyme. The first: the drug-industry buying spree is no longer just a big-pharma game, mid-sized companies have crashed the party, and the raw number of deals is climbing again. The second: Novartis, one of the most admired names in the business, lost more than $40 billion of market value in about a week after three separate drugs failed, including one it had just paid roughly $12 billion to acquire.

Put those together and you get this week's lesson. Buying your way out of a patent cliff is easier than ever to start and as hard as ever to get right. Here is what the podcasts were actually saying.

TL;DR

  • The buyer pool is widening. Big pharma made up just 45% of industry deal spending in the first half of 2026, down from 69% for all of 2025, mid-sized specialty and biotech companies are now doing deals too. Most deals are small ($1 to 10 billion); only five topped $10 billion all half.
  • A hard reminder that pipelines aren't safe. Novartis shed $40 billion and more in a week on three trial failures, one of them a drug from its roughly $12 billion Avidity Biosciences takeout, a live example of the integration and clinical risk bulls tend to wave away.
  • The pricing clock is ticking. New U.S. tariffs of up to 100% on certain drugs are set for September 29, the stick pushing companies toward "most favored nation" pricing deals. Vertex, Biogen and Alnylam are so far refusing to sign.

What's new

1) The most useful framing of the week: everyone's a buyer now.

The single freshest data point came from Subin Baral, who leads life-sciences deals at the consulting firm EY, on BioTalk with Rich Bendis ("Life Sciences Deals, Growth, and the New M&A Market"). Baral advises on deals for a living, so treat this as an informed insider's read of the plumbing, not a stock call.

His headline number: in the first half of 2026, big pharma accounted for just 45% of all the money spent buying drugs and drugmakers, down from 69% in full-year 2025. In plain terms, the giants used to do roughly two-thirds of the buying; now they do less than half. The rest is mid-sized specialty pharma and biotech companies stepping in "either to scale, either to access into different markets or access to differentiated technologies."

"A large majority of the deals that happened in the first half were between $1 and $10 billion... there were only five deals that actually were in excess of $10 billion in value in the first half."

So the shape of the market is lots of medium-sized bets, not a handful of blockbuster mergers. And the bar to get bought is high: Baral said "me-too" drugs, copycats of something that already exists, "are no longer as attractive." Buyers want genuinely differentiated science with real data behind it. The hot areas are still cancer above all, then immune-system and brain diseases, plus newer technologies like cell and gene therapy and antibody-drug conjugates (an antibody that carries a toxic payload straight to a tumor).

2) The deal count is climbing again, and one company towers over the rest.

The trade-press analysts at BioCentury This Week ("Ep. 386 - Novartis misses, pharma deals analysis, MFN carve-outs") ran their annual tally of who's buying what. Lauren Martz, who runs their biopharma-intelligence team, counted 221 deals across the 21 biggest drug companies over the past year, activity up on the prior year and nearly back to its earlier peak.

Her read on what they're chasing lines up with EY's: more appetite for risk than during the recent bear market, and a clear tilt toward disruptive new technologies, bispecific antibodies (drugs engineered to grab two targets at once), in-vivo CAR-T (reprogramming a patient's immune cells inside the body rather than in a lab), and gene-silencing drugs called siRNA. Tellingly, she noted the year's deal list contained essentially no "antisense" deals, an older gene-targeting approach, a sign the industry is voting with its wallet for the newer method.

And one buyer dominated: Eli Lilly, which signed far more deals than anyone else, "more than doubles the deals by its top peers, GSK, Novartis, Sanofi," which tied for a distant second.

3) Novartis just showed everyone the downside, with a drug it paid billions for.

Here is the cautionary tale the bulls usually gloss over. Over roughly one week, Novartis lost more than $40 billion in market value after three separate setbacks, per BioCentury:

  • Three patient deaths in a trial of an experimental cell therapy for autoimmune disease;
  • A big Phase 3 failure for pelacarsen, its heart drug aimed at lowering Lp(a) (a genetically-set, cholesterol-like particle tied to heart-attack risk), the study everyone had been waiting on;
  • And a Phase 3 failure in a muscle-wasting disease called myotonic dystrophy, from a drug Novartis had acquired through its roughly $12 billion buyout of Avidity Biosciences earlier this year.

That last one is the point. This is exactly the kind of "buy your way to growth" deal the whole M&A story rests on, and it just flopped in late-stage testing. As BioCentury's Simone Fishburn put it, cardiovascular biology "for so long has been hounded by markers" that look right in theory but don't translate into patients living longer.

The pain spread. On the Lp(a) read-across, Amgen fell about 9% (roughly $21 billion) and Eli Lilly about 2% (roughly $25 billion) the same day, because both have rival drugs against the same target. Separately, Novo Nordisk halted two more heart-disease trials of its own anti-inflammatory drug. A rough week for the whole "treat heart disease with fancy new biology" thesis.

4) A rare hard number on the patent cliff: Keytruda is basically half of Merck.

Most patent-cliff talk stays vague. This week the retail-investor hosts of The Canadian Investor ("Data Center Revolt and the Best Ways to Invest in Pharma & Biotech") put a real figure on it, and while this is retail opinion, the arithmetic is worth keeping.

Their point: Merck's cancer immunotherapy Keytruda is "just shy of 50%" of the entire company's revenue, about $32 to 33 billion of Merck's roughly $66 billion. For a company worth around $364 billion, having half your sales ride on one drug that eventually loses patent protection is the concentration risk in a nutshell. (They noted Merck's stock recently rose on news that pairing a Moderna vaccine with Keytruda might extend the drug's useful life, a hint at how hard these companies will fight to defend a franchise this big.)

Zoom out and the scale is enormous. On Health:Further ("206 - From Epic & OpenAI to Patent Cliffs, Global Aging, and the Fed's Outlook"), the hosts, generalist health-tech commentators walking through a Wall Street Journal analysis, cited more than $500 billion of annual drug sales facing patent expirations in the coming years, with about $440 billion at risk over a five-year stretch. The Journal's table ranked the exposure: Eli Lilly loses the least (around 25% of its revenue), Novo Nordisk the most (around 75%), with Pfizer in the middle (around 50%). The hosts' blunt summary: the cupboards are "looking more and more bare, particularly Novo, Merck, Bristol-Myers Squibb."

5) The pricing squeeze has a deadline: September 29.

The heaviest policy news came from BioCentury's Washington editor Steve Usdin, on the same episode. The Trump administration is pushing drugmakers into "most favored nation" (MFN) pricing deals, agreements that the U.S. won't pay more for a medicine than other rich countries do. The stick: tariffs of up to 100% on certain drugs, scheduled to hit September 29. Usdin expects "more companies with tariff exposure announcing MFN deals in the coming weeks before September 29."

A few specifics worth filing away:

  • The holdouts. "Companies like Vertex, Biogen and Alnylam are under pressure to do MFN deals," Usdin said, and "so far, there's no indication that they're going to succumb to that pressure."
  • The carve-outs are where the value hides. BridgeBio, whose whole pipeline is rare-disease ("orphan") drugs, secured a "forward-looking exclusion" for those medicines. Incyte quietly signed a narrower deal (state Medicaid access to its blood-cancer drug Jakafi at an international price) but avoided committing future launches. When these deals eventually become public, and Usdin thinks a change in control of Congress at the midterms could force them into the open via subpoena, "we're going to see what the kind of exclusions are that each company managed to negotiate."
  • Two Medicare programs loom behind it all. Mandatory pricing models nicknamed GLOBE (for Medicare Part B) and GUARD (Part D) were meant to start soon; GLOBE has already slipped past its October 1 date, with both now expected around January 1, and near-certain lawsuits to follow.

Separately, Health:Further noted the administration has now struck MFN deals with nine companies including Teva, Astellas and BridgeBio.

The debate

The classic argument here is M&A supercycle versus the risks: antitrust, sky-high valuations, and the danger that acquired drugs don't pan out. This week the tape leaned heavily to one side, so each deserves an honest steel-manning.

The bull case (the buying has to continue, and it's broadening) was well-voiced. The math is unforgiving: half a trillion dollars of sales rolling off patent, and internal labs can't refill that fast. The deal count is rising (221 across the top 21 firms), and, the new wrinkle, the buyer base is widening beyond big pharma to mid-caps, which should keep deal flow alive even if the giants pause. EY's Baral called the market "really bullish for the right assets."

The caution case this week came less from valuation and more from execution risk, and it came with a fresh, concrete example. Novartis just demonstrated that a multi-billion-dollar acquisition can fail in late-stage testing and vaporize $40 billion of value in days. That is the risk in buying "differentiated but unproven" science, which is exactly what everyone is bidding on. Layer on the pricing overhang, a hard September 29 tariff deadline and two Medicare pricing programs waiting in the wings, and the backdrop is getting heavier, not lighter.

One side stayed quiet, and it's worth naming. The antitrust leg of the bear case, the fear that regulators block deals, went essentially unvoiced again this week. (The only real regulator-blocks-a-deal story was about a hospital merger in Ohio, not drugs.) With most deals now in the $1 to 10 billion range and buyers spreading out, antitrust simply isn't the thing the smart voices are worried about right now. Pricing and clinical risk are.

The names in play

  • Novartis, the week's dominant name, for the wrong reasons: a triple trial failure and a $40 billion drop, with a freshly-acquired ($12B Avidity) drug among the casualties.
  • Eli Lilly (LLY), again the most active acquirer by a wide margin, more than doubling its nearest peers; also flagged as the big-pharma name least exposed to the patent cliff (around 25% of revenue).
  • Merck (MRK), the poster child for concentration risk, with Keytruda at nearly half of company revenue.
  • Vertex (VRTX), Biogen, Alnylam, the trio publicly resisting pricing deals despite White House pressure. (Vertex also drew a retail-investor buy call as a profitable, revenue-generating "core" biotech holding.)
  • Amgen (AMGN), collateral damage from Novartis's heart-drug miss, as investors reassessed its rival Lp(a) program.

Read-throughs

  • Biotech may hinge on the Fed on September 16. The retail hosts of Strategy Sunday w/ Armando Pantoja ("XRP, AI Power and Biotech: Where Money Goes Next") made the simplest bull case going: biotech has been "starved for capital for years" as money chased AI and crypto, and a Fed rate cut next week could reverse that, cheaper money flowing back into a beaten-down sector, echoing the pre-pandemic boom. Retail opinion, but a clean framing of why the rate decision matters here.
  • How to own the space without picking a winner. The Canadian Investor hosts argued most people shouldn't buy individual small biotechs, "scratch-off tickets" that mostly go to zero, and should instead use a diversified ETF or Royalty Pharma (RPRX), which spreads bets across many drugs. They also floated healthcare as an "overlooked" way to play AI, though one that could take a decade to pay off.
  • China keeps growing as a source of deals, but not as a target. Both BioCentury and EY flagged the same shift: licensing drugs from Chinese biotechs has surged (EY put China at roughly 54% of U.S. and European partnering deals in the first half, up from 34% in 2025), yet there were essentially zero outright acquisitions of Chinese companies. As BioCentury's James Wong put it, buying a China-based company is "too much of a headache." Cheap, high-quality molecules to license, but not to own.
  • Biosimilars, bankers and CROs: still no specific call. As with recent weeks, no podcast named an investable beneficiary among the copycat-drug makers, deal advisors or contract research firms, even though the rising deal count clearly helps the advisors.

What changed

Last week the story was RBC's big-picture scorecard: $400 billion of revenue at risk, $180 billion of dry powder, and a call that the M&A cycle was in its "later innings" because the obvious buyers had tapped out and valuations had run too hot.

This week the lens shifted from how much is left to spend to who is doing the spending, and the answer is new: the buyer base is broadening from big pharma to mid-caps (big pharma down to 45% of spend from 69%), which cuts against last week's "the natural buyers are done" worry. The deal count is actually rising, not fading.

But the freshest change is on the risk side. Last week's caution was about price, deals too expensive to pay up for. This week we got a live demonstration of a different, scarier risk: Novartis's $12 billion Avidity purchase failing in the clinic and helping erase $40 billion of value. And the policy overhang sharpened from a vague "MFN is expanding" to a dated one: tariffs on the calendar for September 29. The boom is still on, and now more democratic than ever; the bill for getting a deal wrong just got a very public price tag.