Pharmaceutical companies are on a massive acquisition spree, spending nearly $150 billion on mergers and acquisitions (M&A) so far in 2025. This represents a 43% increase over all of 2024, despite the number of deals actually decreasing by 26%. The average deal size has more than doubled, hitting $1.9 billion – indicating a shift towards acquiring established, market-ready assets rather than early-stage research.
Key Deals Driving the Trend
Recent high-profile acquisitions include:
- Merck’s $9.2 billion purchase of Cidara Therapeutics for its antiviral drug in late-stage trials.
- Merck’s earlier $10 billion deal for Verona Pharma’s respiratory drugs.
- Pfizer’s $10 billion acquisition of Metsera after a bidding war with Novo Nordisk and Johnson & Johnson for weight-loss drugs.
- Johnson & Johnson’s $3 billion agreement to buy Halda Therapeutics for cancer therapies.
The surge in M&A activity reflects the industry’s need for growth amid patent expirations, increasing competition, and high research and development costs. Companies are prioritizing proven assets rather than risky, long-term development projects.
AI-Driven Drug Development Faces Scrutiny
Recursion Pharmaceuticals, a company heavily reliant on artificial intelligence (AI) for drug discovery, is under pressure to deliver results. Despite promises of developing 100 drugs in a decade, Recursion has yet to bring a single product to market. The company’s stock has plummeted 86% since its 2021 IPO, and losses have ballooned to $716 million. Najat Khan, the incoming CEO, acknowledges the challenges but remains optimistic about AI’s potential.
“Changing the rules about how medicine is made is really hard… but it is so worth a try.”
— Najat Khan, incoming CEO of Recursion Pharmaceuticals
Infant Formula Botulism Outbreak Raises Safety Concerns
A botulism outbreak linked to ByHeart organic infant formula has sickened at least 23 babies across 13 states. The FDA investigation revealed significant safety violations at ByHeart’s Pennsylvania plant, including mold, a leaking roof, and insect infestations. The company has issued a nationwide recall, and multiple lawsuits have been filed. This incident highlights ongoing risks in the infant formula supply chain, despite efforts to improve quality control.
AI-Powered Protein Design Attracts Major Funding
Profluent, a startup using AI to design novel proteins, has secured $106 million in new venture funding led by Jeff Bezos’s Bezos Expeditions and Altimeter Capital. The company’s technology allows scientists to specify desired protein properties (like stability or manufacturability) in plain language, and the AI generates the corresponding DNA sequence. Profluent’s valuation is now approaching $1 billion, reflecting the growing investor interest in AI-driven biotechnology.
Other Notable Developments
- A $2.6 billion deal with Eli Lilly made the founder of South Korean biotech ABL Bio a billionaire.
- Novartis’s new malaria drug showed over 99% effectiveness in clinical trials.
- Cheaper alternatives to Botox threaten AbbVie’s $2.7 billion treatment.
- One in six Americans now uses AI chatbots for medical advice.
- Apple was ordered to pay Masimo $634 million for patent infringement related to pulse oximetry technology.
Conclusion: The pharmaceutical industry is undergoing a period of rapid consolidation driven by financial pressures and the search for stable growth. AI continues to be a major focus, though its practical applications remain unproven in many areas. Safety concerns in critical sectors like infant formula underscore the need for stricter regulation and quality control.
