The tide of M&A in biopharma is clearly turning.

On March 31, two industry giants unveiled deals almost simultaneously: Eli Lilly announced the acquisition of sleep-disorder-focused Centessa Pharmaceuticals for up to $7.8 billion, while Biogen agreed to acquire Apellis Pharmaceuticals — a company specializing in immunology and rare disease therapies — for $5.6 billion.

And if we look back just a few more days, the list grows longer — Merck & Co., Gilead, Novartis. Pharmaceutical companies are gripped by FOMO (fear of missing out), urgently hunting for the next blockbuster.

What is particularly interesting is that Chinese assets are once again appearing in M&A deals, hinting at a shift in offensive and defensive dynamics.

BMO Capital Markets noted that these deals mark the return of large-scale M&A activity. Scrip, an intelligence and news service platform, believes the booming transaction activity over the past three months signals that 2026 may become another big year for M&A.

Where will the opportunities for China lie in all of this?

一、Hitting "New Highs"

According to Evaluate, in the first quarter of 2026, the global biopharmaceutical industry announced a total of 41 M&A transactions, tying with the second quarter of 2025 and marking the highest level since the first quarter of 2024, which recorded 54 transactions.

Meanwhile, the total value of M&A over the past three months reached approximately $54.88 billion, representing a 19% increase from the $46.15 billion recorded in the fourth quarter of 2025, and surpassing the previous record of $52.2 billion set in the fourth quarter of 2023.

Behind these numbers lies an increasingly clear industry trend: the M&A market is accelerating its recovery.

However, if we zoom in on the timeline, a more interesting rhythm emerges. The first two months were essentially a "warm-up," while March saw the true explosion. January had a decent number of transactions but relatively low values; February recorded only 7 M&A deals; yet in March, the value of a single week exceeded the total of the previous two months combined.

In terms of deal value distribution, a structural shift toward "fewer mega-deals" is particularly noteworthy.

According to the London Stock Exchange Group (LSEG), so far this year, transactions valued between $1 billion and $10 billion account for 76% of the total value of pharmaceutical deals, compared to just 34% during the same period in 2025 and 42% in 2024.

In other words, buyers — including multinational pharmaceutical companies — are replacing past "billion-dollar mega-bets" with "mid-sized transactions."

This is not because large pharma lacks cash. Eli Lilly has accumulated substantial cash reserves thanks to its obesity and diabetes drugs, while Biogen has approximately $3.8 billion in cash and short-term investments on its books. The driving factor behind this shift lies in risk perception.

"We don't need M&A to buy revenue," Eli Lilly CEO David Ricks said in an interview in January. He noted that he prefers to acquire assets at early stages, where value can be added to the project. Acquiring a company that is already operating assets comes with many drawbacks, as it can be a distraction. "Typically, you're just buying the problems of the assets at that time."

To mitigate risk, many mid-sized deals employ an "upfront payment plus milestone payments" structure. This approach allows buyers to control upfront expenditures while retaining incentives for high-quality assets.

In Eli Lilly's acquisition of Centessa, for example, in addition to the $6.3 billion upfront payment, the deal included up to $1.5 billion in Contingent Value Rights (CVRs) tied to the timing of FDA approval for the drug. Biogen's acquisition of Apellis similarly included CVRs of up to $4 per share linked to sales milestones for Syfovre.

In terms of deal volume, Eli Lilly leads among MNCs with three acquisitions.

In January, Lilly acquired Ventyx Biosciences for $1.2 billion, further expanding its inflammation treatment portfolio. In February, it announced the acquisition of Orna Therapeutics for up to $2.4 billion, officially entering the CAR-T therapy space. In March, the giant paid a total consideration of $7.8 billion to acquire Centessa Pharmaceuticals and its narcolepsy drug.

Following closely behind is Gilead, which announced two deals.

At the end of February, Gilead acquired cell therapy partner Arcellx for up to $7.8 billion — excluding CVRs, this deal was the largest of the quarter by size. In March, Gilead also acquired Ouro Medicines and its T-cell engager for $2.175 billion.

Novartis and GSK also each contributed two M&A deals, spending several billion dollars respectively.

BioSpace commented that Merck & Co., which made only one acquisition, may have secured the best bargain. Terns Pharma, acquired for $6.7 billion, had been a popular acquisition target among analysts for years, with its pipeline candidate positioned to compete against Novartis's blockbuster drug Scemblix.

二、Domestic Players Stand Out

In the first quarter of this year, Chinese assets once again took the spotlight.

Terns Pharmaceuticals, which caught Merck & Co.'s eye, was founded in 2017 by Chinese scientist Zhong Weidong together with other industry veterans, with headquarters established in both California, USA, and Shanghai, China.

Just two days before Merck's acquisition announcement — on March 23 — Gilead acquired Ouro Medicines for $1.675 billion upfront and up to $500 million in milestone payments. Ouro is a NewCo founded less than two years ago with significant Chinese asset involvement.

In November 2024, ConnoMed licensed the global (ex-China) rights to its BCMA/CD3 bispecific TCE antibody CM336 to Ouro, receiving a $16 million upfront payment and an equity stake. As a shareholder holding approximately 15%, ConnoMed is set to receive about $250 million in upfront payments from Gilead's acquisition, plus up to approximately $70 million in milestone payments, bringing its total potential revenue to around $320 million.

This marks the first time a NewCo established with participation from a Chinese pharmaceutical company has been wholly acquired by a multinational pharmaceutical giant. In less than two years, ConnoMed has validated a new pathway for Chinese assets to go global — from NewCo licensing to M&A by a multinational.

Behind ConnoMed's "successful landing" lies an even broader landscape of value realization.

In March, Kailera Therapeutics (formerly Hercules), a NewCo established with participation from Hengrui Medicine through the NewCo model, initiated Nasdaq listing procedures. In May 2024, Hengrui licensed out a package of assets: the oral small molecule GLP-1 receptor agonist HRS-7535, the GLP-1/GIP dual agonist HRS-9531, and the next-generation incretin product HRS-4729.

This deal directly ignited the NewCo model. Hengrui Medicine not only stands to receive $110 million in upfront and near-term milestone payments, with a potential total transaction value of approximately $6 billion, but also holds a 19.9% equity stake in Kailera.

In terms of clinical progress, Kailera's most advanced pipeline asset is HRS9531. Phase III clinical trial data released in November 2025 showed a mean weight loss of 19.2% in the 6mg group. Previous Phase II clinical trial results demonstrated a mean weight loss of 23.6% in the 8mg group.

Hengrui Medicine has submitted a New Drug Application (NDA) for HRS9531 in China; Kailera has initiated global Phase III clinical trials to evaluate additional doses, including 8mg.

In February of this year, Hengrui announced positive topline data from a Phase II clinical trial of HRS9531. At week 26 of treatment, participants experienced a mean weight loss from baseline of up to 12.1%.

Additionally, HRS7535 has entered Phase III clinical trials in China, with primary results expected to be announced this year.

Coincidentally, earlier in March, Nasdaq-listed Rallybio entered into a merger agreement with Candid Therapeutics. Candid was founded in 2024, and its core assets are all sourced from Chinese biotechnology companies.

After its establishment, Candid successively acquired two NewCos — Vignette Bio and TRC 2004 — thereby obtaining CND106 (EMB-06) from EpimAb Biotherapeutics and CND261 (GB261) from Genor Biopharma. Through these two transactions, EpimAb and Genor each hold equity stakes in Candid.

Consulting firm Alvarez & Marsal noted that the volume of M&A transactions in the biopharmaceutical industry nearly doubled in 2025, and M&A activity may remain strong in 2026, as an increasing number of biotech companies choose to sell rather than wait for a complete reversal in IPO market conditions.

For multinational pharmaceutical companies, there is no shortage of incentives to participate in transactions.

Many pharmaceutical giants face blockbuster drug patent expirations in the coming years. Compared to biotech companies, large pharmaceutical companies also have weaker near-term earnings growth expectations. According to FactSet forecasts, pharmaceutical companies' first-quarter earnings are expected to decline 30% year-over-year, while biotech companies' earnings growth expectations stand at 13%.

Therefore, rather than betting on the uncertainty of internal R&D, it makes more sense to search globally for the highest-quality assets. And Chinese innovative drugs are being vigorously pursued.

A consensus is gradually forming within the industry that a merger and acquisition boom is underway.

A KPMG survey shows that 67% of investors expect transaction volumes to increase further in 2026, with 36% anticipating growth of at least 10%. Meanwhile, McKinsey's analysis suggests that the 2026 M&A cycle will reward "precision" — precise bets on assets with differentiated scientific advantages, platform strengths, and the ability to significantly impact growth trajectories.

From the perspective of asset types, nuclear drugs are expected to become an important battlefield for future mergers and acquisitions in 2026.

At present, there are fewer authorized transaction records in the field of nuclear drugs compared to other fields, and the targeted delivery of nuclear drugs highly relies on peptide ligands, making it difficult to find reliable peptide ligands. Even if the authorization is completed, the buyer still needs a radiation safety license and nuclide synthesis method to ensure global supply chain security.

This means that the layout of nuclear drug assets is likely to shift from "authorization" to "mergers and acquisitions".

In March, AstraZeneca, which had previously acquired Fusion Pharmaceuticals, announced the construction of an RDC production and supply base in Guangzhou, introducing the heavyweight product FPI-2265 to Guangzhou and achieving localized production. This also confirms the warming of the nuclear drug race track.

In TCE dual antibody ADC、 In the field of small nucleic acid and other areas, there is still a lot of potential for Chinese assets that have not yet been priced. Chinese biotech, which has emerged from target homogenization competition, is becoming a scarce commodity in the eyes of MNCs through its core pipeline.

However, challenges cannot be ignored either.

Cross border mergers and acquisitions of Chinese biotech companies still face limitations in transaction structure. Most of the acquired companies are registered in the United States or the Cayman Islands, which provides convenience in terms of transaction structure.

Industry insiders analyze that the core reason why there are few cross-border acquisitions of Chinese biotech after 2025 is that most of the "low hanging fruits" have been harvested, and the remaining assets are overvalued. Especially in 2025, the "18A" sector will skyrocket, and the popularity of the secondary market will drive up the valuation of the primary market.

Geopolitical factors cannot be avoided either. With the increasing uncertainty of US policy direction, multinational pharmaceutical companies must carefully assess potential policy risks when acquiring Chinese assets at high prices.

If we examine these challenges in a larger context, we will find that they are more like the inevitable pains for China's innovative drugs to mature.

After years of development, China's innovative pharmaceutical industry has formed a closed-loop structure of "upstream basic support - midstream research and development production - downstream commercialization and monetization". According to the predictions of Forward Industry Research Institute and Frost Sullivan, the size of China's innovative drug market is expected to exceed 300 billion US dollars by 2030, and its global market share will further increase.

Dongwu Securities pointed out that BD revenue has become an important source of funding for innovative pharmaceutical companies in China. Currently, the overall funding situation in the domestic pharmaceutical sector is abundant, and the vast majority of companies still maintain R&D funding coverage for more than one year.

More importantly, China's innovative drugs are undergoing a transformation from a "global follower" to a "global top tier" identity. Among the top ten global pharmaceutical authorization transactions by 2025, 7 are from Chinese companies, all of which cooperate with multinational pharmaceutical companies. Research and development are focused on fields such as oncology, hematological diseases, and immune diseases, with ADC and dual antibody showing the fastest growth rate.

It can be foreseen that global pharmaceutical giants will continue to use speed and determination to seize high-quality assets that can fill pipeline gaps. In this battle, Chinese innovative drugs are shifting from being "optional" to "mandatory".

At the end of 2023 to the beginning of 2024, China's biotech industry has experienced a rare wave of cross-border acquisitions: five biotech companies, namely Genxi Biotech, Sinopharm, Baoyuan Pharmaceutical, Pufang Biotech, and Pumis Biotech, have been acquired by overseas pharmaceutical companies. In 2026, the time for mergers and acquisitions of Chinese assets may come again.