After reaching a multiyear low in 2022, deal activity in the life sciences sector continued to slow in 2023 as challenging headwinds persisted, deterring companies from signing M&A, licensing and collaborative R&D deals over the course of the year. M&A activity continued its decline from 2022 to 2023 as the fragile macroeconomic environment and enhanced antitrust scrutiny kept deal volumes down. Nevertheless, aggregate spending on M&A rose 37% to US$198 B with the help of the first mega-merger announced since 2019 which accounted for 21% of this total.

Licensing deal flow for life science companies remained below pre-pandemic levels in 2023 as licensees were selective in the types of assets they in-licensed as they reprioritized their portfolios. After a shift to earlier stage dealmaking in 2022, clinical stage deals accounted for a greater proportion of therapeutic licensing activity in 2023 as risk averse companies looked to invest in more established products. While the aggregate licensing deal spend was somewhat maintained from 2022 to 2023, average deal values increased thanks to a handful of high-valued multi-program licensing deals. In a stark contrast to 2022, average upfront payments soared in 2023 as companies were more willing to commit large sums of biodollars to promising or de-risked late-stage assets, suggesting a return to blockbuster license fees in the sector.

Merck & Co. was the leading pharmaceutical dealmaker in terms of deal volume while Pfizer committed to the highest total deal spend. In terms of deal volume, oncology was again the leading therapeutic area for partnering deals, but deal making in nearly all therapy areas was suppressed relative to 2022. Despite the need to drive long-term growth, collaborative R&D activity plummeted in 2023 as key players in the life sciences sector narrowed their therapeutic areas of focus, seeking only innovative therapies and technologies that complemented their existing portfolios.