Biotech IPO Window Reopens, But M&A Remains Dominant

Public markets are beginning to reopen for biotech companies after several years of muted activity.

But the strongest companies may still be more likely to sell themselves to Big Pharma rather than testing investor appetite in an IPO, according to JPMorgan's top healthcare dealmakers.

The IPO window has reopened for high-quality biotech companies, but investors are far more selective than they were during the pandemic-era boom, Juha Anjala and Roy Wouters, co-heads of JPMorgan's EMEA healthcare investment banking, told CNBC.

The current market is also prompting many biotech companies to pursue a dual-track process: preparing for an IPO while simultaneously engaging with potential acquirers.

In some cases, companies are ready to list, only to be bought by large pharmaceutical groups before reaching the public markets, Wouters said, adding that they've advised on several such deals recently.

The trend reflects a broader recovery in healthcare dealmaking, especially in biopharma, where drugmakers are under pressure to top up their pipelines ahead of major patent expirations later this decade and into the early 2030s.

Big Pharma buyers are well funded and increasingly willing to take larger bets, the bankers said. Strategic buyers are "out there looking to deploy capital" to deepen their pipelines, while shareholders are increasingly supportive of M&A as a way to drive growth, said Anjala.

"We're seeing people take a more considered view, and only really looking to back the company that's going to be best in class, first in class."

Roy Wouters

Co-head of EMEA Healthcare Investment Banking at JPMorgan

The result is a more competitive market for the highest-quality biotech assets, particularly those with differentiated technology or exposure to large therapeutic areas such as oncology, metabolic diseases, and infectious diseases.

For biotech founders and investors, that creates a stronger exit market than existed a year or two ago – but not necessarily a simple one. As the IPO window opens, Big Pharma's hunt for growth is expected to continue to set the pace.

Competition and bifurcation

Still, Anjala and Wouters cautioned that the rebound isn't necessarily broad-based. Boards and investment committees are heavily scrutinizing transactions before signing off on them, and private capital is becoming more concentrated.

"We're seeing people take a more considered view, and only really looking to back the company that's going to be best in class, first in class," said Wouters.

The current environment is "providing these companies with a set of options, which they just didn't have on the IPO side, or necessarily on the M&A side, even a year to two years ago," he added.

That marks a shift from the easy-money period of 2020 and 2021, when investors were willing to back multiple companies pursuing similar targets or technologies. Today, capital is flowing more selectively to businesses viewed as category leaders.

In a report released last week, EY said 38% of new drug approvals in 2025 were for first-in-class products. The firm also said the biotech sector is regaining momentum despite headwinds like cost pressures and looming patent cliffs.

Those pressures are pushing companies toward new financing models, including royalty agreements for pre-market assets and other innovative contracting structures, according to EY.

Bigger deals

Deal values and upfront payments are also getting bigger, Wouters said. That reflects confidence in the target market, the quality of the asset, and the level of competition among buyers.

"People are just willing to put more capital at risk in terms of the upfront [payment] because they have to, because of the competition around those assets," he said.

In 2025, there were seven biopharma deals valued between $5 billion and $15 billion, according to JPMorgan. Nearly halfway through 2026, there have already been six deals in that range, suggesting this year's run rate could outpace last year.

Many of the industry's most commercially successful drugs have come from acquisitions or licensing deals rather than internal research and development, highlighting why pharma companies continue to use M&A to supplement their portfolios.

Shareholders are also challenging management teams to do more deals, Anjala said, as cash flows remain strong and M&A is seen as a proven way to create value. The tailwind for strategic acquisitions that can deepen pipelines or bring synergies is especially strong, he added.

Large pharmaceutical groups, including GSK and Novartis , have long emphasized a preference for so-called bolt-on deals – acquisitions in the low single-digit billion dollar range that complement existing portfolios without transforming the whole business.

But some recent transactions show the willingness to go higher for priority assets. GSK recently agreed to buy U.S. oncology biotech Nuvalent for $10.6 billion, a deal that marks a major push into cancer treatments and a departure from its more typical smaller bolt-on transactions.

China is also becoming a more important force in global biotech. EY noted that Chinese companies now represent a genuine alternative to U.S. and European biotech hubs, while Wouters said innovation and capital flows in China continue to accelerate.

"For the last few years, it's always been 'the signs are good, the grass shoots are there, next year is going to be a great year," Wouters told CNBC. "It actually looks like this year might be a great year."