As part of our quarterly pharmaceutical industry review, we are pleased to share an update on merger and acquisition activity to help our clients understand the market dynamics impacting pharmaceutical manufacturers, service providers, and their supplier relationships.
Key M&A highlights in Q1 2026
- ✓ Q1 delivered a powerful start to the year with a late-March surge that produced seven $1 billion-plus deals in the final twelve days of the quarter, totaling roughly $29 billion. The breadth of activity, including four $5 billion-plus transactions, signals that the strong fourth-quarter 2025 momentum has carried firmly into 2026.
- ✓ Big Pharma continues to address looming patent cliffs through aggressive pipeline replenishment. Merck, Eli Lilly, Biogen, and Gilead each closed major transactions during the quarter as companies position themselves ahead of significant loss-of-exclusivity events expected over the next several years.
- ✓ Oncology remains the dominant therapeutic focus, anchored by Merck’s $6.7 billion acquisition of Terns Pharmaceuticals for its chronic myeloid leukemia candidate and Gilead’s $7.8 billion buyout of longtime CAR-T partner Arcellx. Novartis added a $3 billion deal for Pikavation Therapeutics to strengthen its breast cancer pipeline.
- ✓ Neuroscience and sleep medicine emerge as a high-value therapeutic category, with Eli Lilly committing up to $7.8 billion for Centessa Pharmaceuticals to enter the orexin agonist space, putting it in direct competition with Takeda in a market analysts size at $15 to $20 billion.
- ✓ Immunology and rare kidney disease take center stage at Biogen, which announced a $5.6 billion acquisition of Apellis Pharmaceuticals to add two commercial-stage complement therapies and accelerate its expansion into nephrology.
- ✓ Contingent value rights have become a defining feature of Q1 transactions, with Lilly, Biogen, Gilead, and Novartis all structuring deals that include CVR components to bridge valuation gaps and align long-term performance incentives.
- ✓ Private equity continues to drive consolidation across pharma services, with the year opening on the heels of 2025’s record-setting pharma services investment activity. Sponsors remain focused on platform CDMOs, clinical trial site networks, and specialty service categories.
- ✓ Cross-border activity, particularly involving China-origin assets, has become a core element of corporate strategy as Western pharma companies use structured licensing and acquisition models to access innovation while managing IP, data security, and supply chain considerations.
2026 Q1 Activity Highlights
In the first quarter of 2026, pharmaceutical industry M&A activity opened with measured pace before accelerating into a late-March deal blitz that reframed expectations for the full year. Across the markets we monitor for our clients, the following significant deals were announced or completed:
1. Gilead Sciences to acquire Arcellx for $7.8 billion (February 2026)
Gilead Sciences announced on February 23, 2026 a definitive agreement to acquire Arcellx, its longtime cell therapy partner, for $115 per share in cash plus a contingent value right of $5 per share, representing an implied equity value of approximately $7.8 billion. The transaction closed in late April 2026.
The acquisition gives Gilead full control of anito-cel, an investigational CAR-T therapy for relapsed or refractory multiple myeloma whose Biologics License Application has been accepted by the FDA. Gilead and Arcellx had been co-developing the asset since 2022, and the buyout eliminates profit-share, milestone, and royalty obligations Gilead would have owed under the original collaboration. Gilead already owned approximately 11.5% of Arcellx’s outstanding shares prior to the transaction.
The CVR entitles former Arcellx shareholders to an additional $5 per share if cumulative global net sales of anito-cel reach at least $6 billion from launch through year-end 2029. The deal represents Gilead’s largest acquisition since 2020 and positions the company for direct competition with Johnson & Johnson and Bristol Myers Squibb in the multiple myeloma cell therapy market.
2. Novartis to acquire Pikavation Therapeutics for up to $3 billion (March 2026)
Novartis announced on March 20, 2026 an agreement to acquire Pikavation Therapeutics, a wholly-owned subsidiary of privately-held Synnovation Therapeutics, for $2 billion upfront and up to $1 billion in development, regulatory, and commercial milestone payments. The transaction is expected to close in the first half of 2026, subject to customary closing conditions including regulatory approvals.
The acquisition centers on SNV4818, a pan-mutant-selective PI3Kα inhibitor currently in Phase 1/2 clinical development for hormone receptor-positive, HER2-negative metastatic breast cancer and other solid tumors. Approximately 40% of HR+/HER2- breast cancer patients carry PIK3CA mutations associated with worse disease prognosis, defining a substantial target population.
SNV4818 is designed to selectively target mutant PI3Kα while sparing the wild-type version, an approach intended to deliver improved tolerability versus existing pan-isoform inhibitors. The asset complements Novartis’s established breast cancer franchise and is positioned for combination use with CDK inhibitors and endocrine therapies. Synnovation will retain its other research and development subsidiaries and continue advancing its broader pipeline independently.
3. Merck to acquire Terns Pharmaceuticals for $6.7 billion (March 2026)
Merck announced on March 25, 2026 a definitive agreement to acquire Terns Pharmaceuticals, a clinical-stage oncology company, for $53.00 per share in cash for an approximate equity value of $6.7 billion. The transaction closed on May 5, 2026 following a successful tender offer in which approximately 86% of Terns shares were tendered. The price represented a premium of approximately 31% to the 60-day and 42% to the 90-day volume-weighted average stock price.
The acquisition centers on TERN-701, a novel investigational oral allosteric BCR::ABL1 tyrosine kinase inhibitor designed to bind the ABL myristoyl pocket. The candidate recently received Breakthrough Therapy Designation from the FDA for adults with Philadelphia chromosome-positive chronic phase chronic myeloid leukemia who lack the T315I mutation and have previously received two or more tyrosine kinase inhibitors.
This acquisition represents Merck’s third multibillion-dollar transaction over the past year and aligns with the company’s ongoing strategy to diversify revenue ahead of Keytruda’s patent expirations beginning in 2028. It follows the $10 billion acquisition of Verona Pharma and the $9.2 billion acquisition of Cidara Therapeutics completed in 2025. Merck CEO Robert Davis described TERN-701 as a potential significant driver of growth in the next decade and signaled the company remains opportunistic across oncology, immunology, cardiometabolic health, vaccines, and ophthalmology.
4. Eli Lilly to acquire Centessa Pharmaceuticals for up to $7.8 billion (March 2026)
Eli Lilly announced on March 31, 2026 a definitive agreement to acquire Centessa Pharmaceuticals for $38 per share in cash, representing aggregate equity value of approximately $6.3 billion, plus a non-transferable contingent value right potentially worth an additional $9 per share, bringing total potential consideration to up to $7.8 billion. The transaction is expected to close in the third quarter of 2026, subject to Centessa shareholder approval, court sanction under English law, and customary regulatory conditions.
The acquisition centers on cleminorexton (formerly ORX750), an oral orexin receptor 2 (OX2R) agonist that has demonstrated potential best-in-class profile in Phase 2a clinical studies across narcolepsy type 1, narcolepsy type 2, and idiopathic hypersomnia. The CVR is structured around three milestones, including U.S. FDA approvals for cleminorexton and ORX142 within specified timeframes.
This deal marks Lilly’s strategic entry into sleep medicine, an area analysts estimate could represent a $15 to $20 billion market opportunity as orexin biology better defines the treatment landscape for excessive daytime sleepiness. The acquisition positions Lilly in direct competition with Takeda, which is further along in development with its OX2R agonist oveporexton. The transaction reflects Lilly’s broader pattern of deploying its GLP-1 generated cash flow into adjacent neuroscience opportunities.
5. Biogen to acquire Apellis Pharmaceuticals for $5.6 billion (March 2026)
Biogen announced on March 31, 2026 a definitive agreement to acquire Apellis Pharmaceuticals for $41 per share in cash, representing upfront equity consideration of approximately $5.6 billion plus a contingent value right of up to $4 per share tied to global net sales thresholds for SYFOVRE. The deal carries an 86% premium to Apellis’s 90-day volume-weighted average stock price and is expected to close in the second quarter of 2026.
The acquisition adds two commercial-stage complement therapies to Biogen’s portfolio: SYFOVRE (pegcetacoplan injection), the first FDA-approved treatment for geographic atrophy secondary to age-related macular degeneration, and EMPAVELI (pegcetacoplan), approved for paroxysmal nocturnal hemoglobinuria, C3 glomerulopathy, and primary IC-MPGN. The two products generated combined 2025 net product revenue of $689 million and are expected to grow at a mid-to-high teens rate at least through 2028.
Beyond the immediate revenue contribution, the transaction provides Biogen with established U.S. nephrology infrastructure that is expected to accelerate commercial readiness for felzartamab, currently in Phase 3 development for three rare kidney diseases. The CVR provides for $2 per share if SYFOVRE achieves $1.5 billion in annual global net sales in any year between 2027 and 2030, plus an additional $2 per share if it reaches $2 billion. Biogen plans to fund the transaction through approximately $3.6 billion of cash and marketable securities supplemented by approximately $2.0 billion in bank loans.
6. Additional late-March transactions extend the deal blitz
The final two weeks of March produced multiple additional transactions that contributed to the quarter’s $29 billion late-quarter total:
- Novartis announced a second large transaction in early April with the acquisition of Excellergy and its allergy candidate Exl-111 for a headline value of $2 billion, following the Pikavation deal by less than two weeks.
- Gilead followed its Arcellx acquisition with a $2.2 billion buyout of Ouro Medicines and its autoimmune asset gamgertamig, a T-cell engager candidate in Phase 1/2 development for autoimmune cytopenias. Ouro is set to receive $1.675 billion upfront plus up to $500 million in milestone payments.
- Otsuka completed a $1.2 billion acquisition of Transcend Therapeutics and its potential post-traumatic stress disorder treatment TSND-201, expanding its CNS portfolio.
These transactions, combined with the four $5 billion-plus deals, brought the quarter’s tracked $500 million-plus deal count to 14, compared to 32 such deals in all of 2025. At the current pace, full-year 2026 deal value could reach approximately $172 billion, up substantially from $111 billion in 2025.
7. Continued private equity consolidation in pharma services
While Q1 did not produce a single defining services transaction on the scale of 2025’s $10 billion PCI Pharma Services deal, sponsor activity continued across multiple service categories: