Reviving Deal Activity in Life Sciences: A 2025 Outlook for Pharma and MedTech

As the global economy continues to stabilize post-pandemic, life sciences mergers and acquisitions (M&A) activity has witnessed a remarkable revival. In 2024, the pharmaceutical (pharma) and medical technology (medtech) sectors experienced significant deal flow, with pharma companies pursuing growth through pre-commercial biotech acquisitions, while medtech companies focused on driving profitability through portfolio optimization. These trends are expected to accelerate in 2025, providing an optimistic outlook for life sciences dealmaking. 

 

2024: A Strong Year for Life Sciences M&A 

After a few years of market uncertainty, the life sciences sector experienced a resurgence in 2024. Deal value across both pharma and medtech increased notably, continuing the recovery that began in 2023. As pharmaceutical companies ramped up their acquisition of promising biotech assets to strengthen their pipelines, and medtech firms prioritized margin improvements, M&A activity bounced back to pre-pandemic levels—exceeding expectations in some cases. 

In 2024, life sciences deal value exceeded $500 billion, reflecting a strong rebound from the pandemic-induced slowdown. Out of the 800+ transactions completed, a significant majority were smaller deals, with 90% of transactions valued under $1 billion. Despite the volume of smaller deals, large pharma deals continued to make headlines, signaling the growing interest in pre-commercial biotech assets. 

 

Pharma’s Continued Pursuit of Biotech Assets 

Pharmaceutical companies remain deeply invested in acquiring biotech assets to fuel future growth. With biotech valuations still below their peak, pharma firms see an opportunity to invest in early-stage technologies that align with their long-term R&D goals. These acquisitions offer several benefits: 

• Accelerating R&D and Clinical Development: Pharma companies are leveraging the biotech acquisitions to speed up their research and development efforts, often reducing clinical trial timelines by up to 30%. These acquisitions can provide a shortcut to vital product candidates, expanding the company’s pipeline and improving their chances of securing new treatments in the market. 

• Commercial Scaling: Once biotech assets are acquired, pharma companies utilize their global infrastructure to scale products quickly. With vast commercialization capabilities, pharma firms can introduce new biotech drugs to markets with speed, ensuring a rapid return on investment. 

However, integrating a small biotech into a large pharma company requires delicate handling, particularly with regard to cultural differences. Small biotech firms are often innovative and agile, relying on a distinctive entrepreneurial culture that pharma firms must nurture to preserve the assets’ value. 

 

MedTech’s Strategic Focus on Profitability and Digital Transformation 

In contrast to pharma’s emphasis on growth through biotech, medtech companies in 2024 have sharpened their focus on enhancing profitability. Rising interest rates and investor demands for higher returns have prompted many medtech firms to refine their portfolio strategies and streamline operations. 

The key goals for medtech companies in 2024 are: 

• Portfolio Reshaping: Many medtech companies have divested slow-growing non-core assets and focused on acquiring technologies that complement their existing product lines and improve profitability. These acquisitions aim to fill specific gaps in product categories and generate higher growth potential. 

• Digital Health Integration: Medtech companies are expanding their digital footprints, using acquisitions to integrate digital health solutions into their offerings. By connecting devices, data, and applications, medtech firms are creating digital health ecosystems that enhance patient care while driving operational efficiencies. These digital platforms are also integral to lowering healthcare costs, a key driver of investor interest. 

Many medtech companies are now acquiring software developers to accelerate the creation of digital platforms, allowing them to offer integrated solutions that go beyond the capabilities of standalone medical devices. 

 

The Ongoing Value of Programmatic Dealmaking 

A key takeaway from the 2024 M&A landscape is the increasing reliance on programmatic dealmaking. Both pharma and medtech companies are opting for a steady flow of small, strategic transactions, rather than engaging in large, riskier acquisitions. 

This programmatic approach to M&A allows companies to: 

• Target Specific Gaps: In pharma, for example, small biotech acquisitions enable companies to access novel technologies, enter new therapeutic areas, or address unmet market needs. Similarly, medtech firms focus on acquiring products or innovations that enhance their existing offerings, whether through improved functionality or new digital features. 

• Achieve Long-Term Value: Companies that take a strategic, programmatic approach to M&A typically see higher total shareholder returns (TSR) over time. By executing smaller, high-value transactions, these companies maintain focus and flexibility while minimizing risk. 

Programmatic dealmaking has proven successful in pharma, where consistent, focused acquisitions enable large firms to maintain a broad pipeline of innovative treatments. For medtech, this strategy ensures that companies remain nimble while pursuing strategic growth opportunities without overwhelming their resources. 

 

What to Expect in 2025: Strong Deal Activity Ahead 

The outlook for 2025 in the life sciences M&A market is highly promising. Pharma companies will continue to aggressively acquire biotech assets, especially in the wake of growing interest in targeted therapies and specialized treatments. Meanwhile, medtech firms will stay focused on profitability through targeted acquisitions, portfolio optimization, and an emphasis on digital health solutions. 

With the evolving nature of healthcare and advancements in technology, M&A activity in life sciences will remain robust throughout 2025. Companies that remain agile, strategic, and open to new, innovative deal structures will be best positioned to thrive in this dynamic environment. 

 

BioBoston Consulting: Your Partner in Life Sciences M&A Strategy 

Navigating the complexities of mergers and acquisitions in the life sciences sector requires expert insight, strategic acumen, and a deep understanding of both market conditions and organizational dynamics. At BioBoston Consulting, we specialize in guiding life sciences companies through the entire M&A process, from identifying acquisition targets to executing successful integrations and unlocking long-term value. 

Whether your company is a pharmaceutical giant seeking to acquire biotech assets or a medtech firm looking to optimize your portfolio and expand into digital health, BioBoston Consulting provides the strategic guidance you need to make the most of today’s evolving M&A opportunities. 

Contact BioBoston Consulting today to explore how we can help you navigate the exciting M&A landscape of 2025 and beyond.