After years of slow activity, the public market for biotech companies is starting to reopen.
But the strongest companies may still be more likely to sell themselves to big drug companies rather than test investor appetite with 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, say co-chairs Juha Anjala and Roy Wouters. JP Morgan’s EMEA Healthcare Investment Banking told CNBC.
Additionally, the current market has led many biotech companies to pursue a dual-track process of preparing for an IPO while simultaneously negotiating with potential acquirers.
In some cases, a company is ready to go public but is acquired by a large pharmaceutical group before it can hit the public markets, Wouters said, adding that he has recently advised on several such deals.
The trend reflects a broader recovery in medical deals, particularly biopharmaceutical deals, with drug companies under pressure to replenish their pipelines ahead of major patent expirations from late this decade to the early 2030s.
Bankers say big drug buyers are deep-pocketed and more willing to take bigger bets. Anjala said strategic buyers are “looking to deploy capital” to deepen the pipeline, while shareholders are increasingly supporting M&A as a means to drive growth.
“We’re seeing people take a more cautious view and really only support companies that are best in class and will be first in class.”
roy wooters
Co-Head of EMEA Healthcare Investment Banking at JPMorgan
As a result, the market is becoming increasingly competitive for the highest quality biotech assets, particularly those with differentiated technologies or exposure to large therapeutic areas such as oncology, metabolic diseases, and infectious diseases.
For biotech founders and investors, this creates a stronger exit market than a year or two ago, but it’s not necessarily a straightforward one. Big pharma’s pursuit of growth is expected to continue to gain pace as the IPO window opens.
competition and divergence
Still, Anjala and Wouters cautioned that the rebound won’t necessarily be widespread. Boards of directors and investment committees scrutinize deals before approving them, and private capital is becoming more concentrated.
“People are taking a more cautious view and only want to support companies that are truly best-in-class and will be first-in-class,” Mr. Waters said.
The current environment “offers these companies a set of options that a year or two ago didn’t have on the IPO side, or necessarily on the M&A side,” he added.
This marks a change from the easy money period of 2020 and 2021, when investors tended to actively back multiple companies pursuing similar goals and technologies. Capital is now flowing more selectively to companies seen as category leaders.
In a report released last week, EY said 38% of new drug approvals in 2025 will be first-in-class products. The company also said the biotechnology sector is regaining momentum despite headwinds such as cost pressures and the looming patent cliff.
According to EY, these pressures are driving companies toward new financing models, such as pre-market asset royalty agreements and other innovative contract structures.
bigger deal
Waters said transaction values and upfront payments are also higher. This reflects confidence in the target market, the quality of the asset and the level of competition among buyers.
“People are willing to risk more capital in terms of upfront (payments), but that’s because they have to because of the competition for assets,” he said.
According to JPMorgan, there were seven biopharmaceutical deals worth between $5 billion and $15 billion in 2025. At about halfway through 2026, there are already six trades in this range, suggesting this year’s run rate could be higher than last year.
Many of the industry’s most commercially successful drugs have resulted from acquisitions and licensing deals rather than internal R&D, highlighting why pharmaceutical companies continue to use M&A to complement their portfolios.
Anjala said shareholders are pushing management to do more deals because cash flow remains strong and M&A is seen as a proven way to create value. Tailwinds from pipeline deepening and strategic acquisitions that bring synergies are particularly strong, he added.
Large pharmaceutical groups including GSK and Novartishas long emphasized that it prefers so-called bolt-on deals, acquisitions in the low single-digit range that complement an existing portfolio without transforming the entire business.
However, some recent transactions have shown a willingness to increase the price of preferred assets. GSK recently agreed to acquire US oncology biotech Nuvalent for $10.6 billion, a deal that marks a major push into cancer treatment and a departure from typical small bolt-on deals.
China is also becoming a more important force in global biotechnology. EY noted that Chinese companies are now a genuine alternative to biotech hubs in the US and Europe, and Wouters said innovation and capital flows in China continue to accelerate.
“The last few years it’s always been, ‘The signs are good, the grass is starting to sprout, next year is going to be a great year,'” Wouters told CNBC. “It actually looks like it’s going to be a great year.”
