In the evolving landscape of biotechnology, the sector is showcasing a robust capacity for mergers and acquisitions (M&A), despite the overshadowing presence of technology giants in the AI sector. While biotech startups may not secure the same astronomical valuations, they are forging a path marked by significant M&A transactions that stand tall against historical standards.
A Surge in Acquisition Activity
Over the past two years, the biotech industry has witnessed notable M&A activity, with acquirers investing over $38 billion to acquire venture-backed companies. As we enter 2026, this upward trajectory continues, highlighted by Eli Lilly’s recent agreement to acquire Orna Therapeutics for up to $2.4 billion. Orna is innovating in the realm of immune cell engineering, demonstrating the ongoing interest in biotech ventures that push the boundaries of treatment possibilities.
Record-Breaking Years for M&A
The years 2024 and 2025 have emerged as standout periods for biotech M&A, witnessing some of the highest deal flows on record. Although these figures remain below the peak levels of 2021, they signify a rebound from previous lows. This resurgence is reflected in the number of U.S. biotech companies that have completed acquisitions valued at over $1 billion, with at least nine such transactions reported since last year.
Major Transactions Shaping the Industry
The largest transaction to date was Johnson & Johnson’s acquisition of Halda Therapeutics for $3.05 billion. This strategic move aims to enhance Johnson & Johnson’s portfolio with Halda’s targeted oral therapies for solid tumors.
Following closely behind are Eli Lilly’s acquisition of Orna and AbbVie’s agreement to purchase Capstan Therapeutics for up to $2.1 billion. Capstan specializes in RNA technologies to treat autoimmune diseases and has previously secured $340 million in venture funding. These acquisitions underline the industry’s focus on in vivo therapeutics, which leverage the body’s own systems to combat diseases.
Funding Trends in Biotech
Despite the successes in M&A, the broader funding landscape for biotech presents a more subdued picture. In the previous year, biotech startups received less than 9% of all U.S. startup funding, marking the lowest share in years. This decline is attributed to a notable shift in investor interest towards sectors like generative AI, which have attracted substantial capital.
Stability Amidst Challenges
While the overall funding share for biotech has decreased, total funding figures remain relatively stable. In 2025, U.S. biotech startups attracted just over $25 billion, showing consistency year over year. However, the initial public offering (IPO) activity has faltered, with only 21 biotech, pharma, or medical device companies going public last year—the lowest number observed in several years.
This year, the trend continues with only four biotech IPOs, the most recent being Eikon Therapeutics, valued at around $900 million. Such figures indicate that while the sector is far from booming, it is not in a prolonged slump either.
The Viability of the Biotech Sector
The data surrounding biotech funding and exits illustrates a sector that is navigating a complex environment. The challenges posed by competition from other industries and a sluggish IPO market do not detract from the potential for sustained growth and innovation. This steadiness may not generate headlines, but it establishes a solid foundation for long-term viability.
Takeaways
- Biotech M&A activity has surpassed $38 billion over the past two years, with major players like Eli Lilly and Johnson & Johnson leading the charge.
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The years 2024 and 2025 have recorded some of the strongest M&A deals in biotech history.
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Despite a decline in funding share, total investment in biotech remains steady at over $25 billion in 2025.
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IPO activity has decreased significantly, with only a handful of biotech companies going public recently.
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The overall biotech landscape indicates resilience, with ongoing opportunities for innovation and successful exits.
In conclusion, while the biotech sector may not capture the same headlines as its tech counterparts, it is forging a path characterized by strategic acquisitions and steady investment. This landscape, though quiet, harbors the potential for significant advancements and continued growth in the years to come. The ongoing commitment to innovation within biotech underlines its importance in the broader healthcare ecosystem.
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