How Life Sciences Can Build Business Resilience in Today’s Active M&A Landscape

How Life Sciences Can Build Business Resilience in Today’s Active M&A Landscape
September 21, 2026 12 mins

How Life Sciences Can Build Business Resilience in Today’s Active M&A Landscape

How Life Sciences Can Build Business Resilience in Today’s Active M&A Landscape

Realizing deal value in life sciences M&A depends on factors beyond traditional financial diligence. Scientific talent, IP, regulatory pathways, speed-to-market and operational complexity can influence transaction outcomes, making early planning for risk, tax, IP and workforce strategies essential.

Key Takeaways
  1. Treat people, IP, operational and transactional risk as value drivers to capture the full potential of M&A opportunities.
  2. Take action to protect against risk early in the deal life cycle by procuring RWI, IPL and tax insurance, assessing human capital programs and using HR advisory to preserve critical talent.
  3. Incorporate deal strategy into people-related support to facilitate robust post-deal integration/harmonization or separation.

The Key to Unlocking Long-Lasting M&A Value: Comprehensive Risk, Tax and Human Capital Expertise

Today’s life sciences M&A landscape is maintaining strong momentum. Global healthcare and life sciences M&A activity reached $269.3 billion in 2025, nearly double 2024 levels.1 That activity has continued into 2026, with 305 healthcare and life sciences transactions generating $194.1 billion in announced deal value during the first half of the year.2

In an active environment, accelerating realized value in life sciences M&A depends on engaging risk, tax and human capital expertise under one proposition early in the deal life cycle. Companies that treat people, intellectual property (IP) and operational and transactional risk as value drivers — not afterthoughts — are better positioned to capture the full potential of their deals. The key is decisive, early action pre-deal.

An Opportunity-Filled Life Sciences M&A Landscape

Ongoing stock market volatility is changing behaviors, with VC-backed private companies choosing M&A over IPOs. For instance, in the U.S., just $1.6 billion was raised by nine biopharma organizations going public in 2025, the lowest IPO capital raise in five years.3

While life sciences organizations may favor M&A over public listings in this environment, greater diligence is being applied to current deals, with more focus on talent, tax liability, location and revenue concentration. Larger pharmaceutical companies also continue to hold considerable capital reserves, helping them pursue strategic acquisitions.

As a result, life sciences M&A activity is expected to remain active in the year ahead. For buyers, due diligence is expanding beyond traditional financial measures as IP, scientific talent, regulatory pathways and operational resilience play a greater role in valuation. Organizations that assess these factors early, are better positioned to realize deal value.

The Substantial Patent Cliff

Today’s global patent cliff is substantial, with over $300 billion of revenue-losing exclusivity over the next five years.4 Under these conditions, organizations want to get to market and revenue at speed with more mature pipeline acquisitions and smaller single-therapy biotechs.

Much of the M&A activity at the beginning of 2026 involved large biotechs buying late-stage biotechs to enable these faster revenue streams, while acquiring de-risked, commercialized therapeutic products. However, through these deals, organizations are not only acquiring products; they are acquiring future revenue streams, regulatory pathways and scientific capabilities. Smaller biotechs often have unique business operations, compensation structures, cultures and risk profiles, leading to an imbalance between buyers and sellers. Broader risk, talent and IP considerations must be actioned early in the deal life cycle to preserve deal value and support successful post-close integration.

$84B

The Q1 2026 biotech M&A deal value, up from $44.4B a year earlier.

Source: Big Pharma M&A set for mega year as patent expiries drive deal urgency, Reuters.

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A Need for Human Capital Investment

Many life sciences organizations have unsuccessfully attempted to develop obesity drugs internally, due in part to a lack of existing talent. In response, many are turning to M&A.

Value creation now extends beyond traditional financial considerations. Often, transactions are driven by access to specialized talent, including scientific expertise and innovative capabilities. Successful “acquihires” are motivated by a desire for critical talent, with less focus on the target’s business or assets. Ultimately, these types of deals facilitate more consequential R&D. With acquihires, buyers must focus less on standard balance-sheet value and treat specialized human capital as the primary deal asset, with post-merger retention a key consideration.

Consistent Geopolitical and Economic Volatility

Life sciences organizations are reassessing supply chain resilience strategies due to global instability — driven in part by sourcing challenges in both the manufacturing process and pharmaceutical ingredients, European and Middle Eastern conflicts, and regulatory uncertainty. As a result, contingency planning has become standard in corporate strategy and increasingly factored into deal valuations.

The tariffs in 2025 greatly affected U.S. medical device companies, with the impact on earnings reaching anywhere from $200 million to $500 million.5 Today’s life sciences CFOs are doing their best to manage these numbers, and optimizing M&A strategies will continue to play an essential role. Despite international pharmaceutical deals now being made between the UK and U.S.,6 global tariffs will likely continue to impact the life sciences M&A environment in the near future. As organizations respond to supply chain disruption, geographic uncertainty and tariff exposure, considerations around resilience and geographic diversification are increasingly influencing valuation, target selection and deal structure within life sciences M&A.

Stringent Regulatory Approval

The U.S. Food and Drug Administration’s (FDA's) drug approval process is creating uncertainty for those doing business in the U.S.,7 including the reclassification of peptides and artificial intelligence’s (AI’s) evolution, which are fundamental to this sense of volatility. Even so, questions remain around how this will change R&D and facilitate a quicker turnaround for drug therapies, pipelines and FDA approval.

Life sciences organizations are now pursuing more mature, smaller single-therapy biotechs with less risk, partly to gain quicker FDA approval. Later-stage assets carry more risk and lead to larger pharmaceutical companies prioritizing late-stage acquisitions, paying premium valuations for assets closer to FDA approval and gaining more predictable revenue streams.

Regulatory uncertainty is a global issue. In a deeply connected international market, other M&A markets outside of the U.S. are inevitably influenced by these FDA approval issues through altered valuations, supply chain strategies and global expansions. For instance, the European regulatory environment is evolving with 2026’s reformed pharmaceutical legislation8 and the proposed EU Biotech Act.9 While designed to drive innovation in the life sciences sector, a volatile regulatory environment is inevitably creating uncertainty across the global M&A landscape. Regulatory developments across jurisdictions are influencing valuation assumptions, shaping diligence priorities and affecting integration planning for cross-border transactions.

The Rise of Artificial Intelligence

Pharmaceutical organizations and AI companies are increasingly forming R&D partnerships, with certain M&A deals structured specifically to leverage AI. The technology is accelerating new drug developments, while shortening the life cycle and lowering costs. Deeper cost savings may also be on the horizon through the use of decades of stored data.

AI could either increase or decrease the total cost of risk in life sciences M&A, depending upon the scope of transaction due diligence. For example, Aon’s AI Risk Diagnostic can evaluate AI risk management governance maturity in clinical trials (e.g., HIPAA privacy compliance), IP ownership and licensing validity, and supply chain/contract management. Today’s AI investments can be expensive, accelerating acquisition strategies as organizations seek greater capabilities, talent or distressed assets. As organizations increasingly use M&A to acquire AI capabilities and specialized talent, diligence around data, IP, regulatory and cyber risks can materially influence valuation, integration success and long-term return on invested capital.

$1T

The expected value of the healthcare AI market by 2034, growing at 45.3% per year from 2025.

Source: AI in Healthcare Market Expected to Reach US$ 1078.42 Billion by 2034 at CAGR of 45.3% | The Insight Partners

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How to Embrace M&A Opportunities Throughout the Deal Life Cycle

In today’s life sciences environment, leaders must act differently. Risk, tax, IP and people considerations should be addressed early and collectively as part of the deal strategy, not after signing.

The life sciences M&A landscape offers significant opportunity. Securing appropriate insurance coverage, leveraging specialized tax advisory support, mitigating IP risks and implementing strategic human capital solutions all work together to strengthen business resilience and maintain an efficient and effective approach to the deal strategy from the outset.

Preserve Deal Value with RWI Protection

Risk allocation in M&A transactions is vital for preserving the target’s value under buyer ownership. Representations and warranty insurance (RWI) covers unknown breaches of representations made by the seller and transfers these unknown risks away from the deal to the insurance market. RWI may not be a replacement for full due diligence — across financial, regulatory and compliance, IP, tax, HR and other areas — but it is an essential tool in mitigating the unknown. By effectively and efficiently de-risking unknown exposures, value can be protected throughout the deal life cycle.

Use Tax Advisory Support for Complex Global Transactions

With deep tax expertise and support, buyers can achieve greater closing certainty, decision-making confidence and cash flow resilience. These benefits are vital in an international life sciences market subject to multiple tax regimes and risks, with increasingly complex tax structures. Without support, tax rulings on pharmaceuticals, equipment, IP and more can disrupt deal success. While RWI may address some of these unknown tax risks, known tax risks need their own solutions.

An unexpected adverse tax ruling can result in a loss of expected benefits, failed transaction or even eroded cash flow and earnings. Tax insurance helps protect against these risks and shield buyers against unwanted consequences. These policies help address material exposures in transactions and tax planning, especially where traditional opinions may be subject to limitations.

Mitigate Known and Unknown IP Risks

Intellectual property is a key source of value in many life sciences transactions. With the right support, expertise and tools, buyers can address both known and unknown IP exposures, protecting valuation, increasing speed-to-close and elevating post-close confidence. However, traditional RWI policies often exclude known IP issues identified during transactions.

Intellectual Property Liability (IPL) Insurance fills this gap by providing annual claims-made coverage for buyers against unknown future (pre-litigation) IP risk. This includes contractual or IP indemnity obligations, as well as demand letters, licensing requests or cease and desist notices related to third-party IP infringement.

While IPL Insurance looks forward by supplying coverage post-close, IP representations generally look backward to confirm ownership, clean titles, valid licenses, no known infringement or disputes, and reasonable protection of trade secrets. Mitigating risk with both of these solutions adds another layer of certainty and security to the M&A deal life cycle.

Retain Critical Talent

With much of today’s deal value heavily dependent on leadership, talent and culture, HR advisory plays a crucial role in life sciences M&A by aligning post-close talent needs. Effective planning begins well before close. Some of the most important focus areas that can help preserve the value underpinning life sciences acquisitions include:

  • Assessing workforce risks
  • Evaluating leadership capabilities
  • Identifying critical talent that is particularly important when transactions are driven by access to specialized scientific, R&D or commercial expertise (such as clinical leaders, regulatory experts, commercial teams and key scientists), and developing retention strategies
  • Assessing differences in cultures such as decision making, innovation, risk tolerance and collaboration

When risk, workforce, leadership readiness, retention and value realization are integrated under one proposition, the deal life cycle has a higher chance of success. A structured HR approach enables organizations to achieve transaction objectives, while efficiently navigating unexpected people costs and liabilities, talent loss and productivity dips, delays on day one and integration/separation milestones.

At the start of the deal process, leaders should ask themselves: Who are the critical talent populations? What retention risks exist? What benefits or compensation gaps could disrupt integration? Which workforce assumptions underpin the deal thesis? Through data-driven analysis of compensation, benefits and workforce structures, organizations can make informed decisions in response to these core questions on integration/harmonization or separation planning.

Aon's compensation and benefits data assets help organizations model workforce scenarios, estimate deal synergies and support successful day one and post-close outcomes. By incorporating human capital considerations throughout the deal life cycle, from pre-deal strategy and due diligence to execution of integration/separation plans, organizations can lower disruption, keep key talent and accelerate value realization.

Conclusion

A patent cliff, continued AI evolution and healthy international activity are driving expectations for a sustained period of M&A momentum in the life sciences sector.

In this landscape, completing a transaction and realizing its intended value are distinct challenges. Organizations that integrate risk, tax, IP and workforce considerations early are better positioned to preserve deal value, accelerate integration and build resilience for long-term growth.

Aon’s Thought Leaders
  • Steve Schell
    Global Life Sciences Industry Leader
  • Meg Doyle
    Partner, Transaction Strategy, North America
  • Kevin Kalinich
    Intangible Assets Global Collaboration Leader
  • Josh Kancherlapalli
    Assistant Vice President, IP Risk and Structured Solutions
  • Vipul Patel
    Managing Director, Aon M&A and Transaction Solutions

1 Global Healthcare and Life Sciences M&A – 2025 Review, DealForma.
2 Global Healthcare and Life Sciences Q2 2026 Review, DealForma.
3 From Volatility to Vitality: How 2025 Reset the Life Sciences Market and What’s Next for 2026, Ropes & Gray.
4 Big Pharma M&A set for mega year as patent expiries drive deal urgency, Reuters.
5 One year in: How medtech companies are coping with tariff challenges, Healthcare Dive.
6 Landmark UK-US pharmaceuticals deal to safeguard medicines access and drive vital investment for UK patients and businesses, UK government.
7 New FDA Approach to Drug Prices Adds Uncertainty to Drug Approval Process, Skadden.
8 Reform of the EU pharmaceutical legislation, European Medicines Agency.
9 European Biotech Act, European Parliament.

General Disclaimer

This document is not intended to address any specific situation or to provide legal, regulatory, financial, or other advice. While care has been taken in the production of this document, Aon does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose of the document or any part of it and can accept no liability for any loss incurred in any way by any person who may rely on it. Any recipient shall be responsible for the use to which it puts this document. This document has been compiled using information available to us up to its date of publication and is subject to any qualifications made in the document.

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