Baker Tilly’s Investment Monitor: Life Sciences examines the data and market forces behind these shifts and what they could mean for investors, executives and other industry stakeholders.

After several years of market recalibration, life sciences investment is gaining momentum. But the recovery looks different from the last cycle.

Capital is concentrating around fewer, larger transactions. Venture investors are increasingly favoring later-stage, clinically validated companies. Strategic buyers are pursuing acquisitions to strengthen pipelines ahead of looming patent cliffs. And new dynamics—from AI-enabled drug discovery to cross-border licensing and the reshoring of R&D and manufacturing—are influencing where opportunities emerge.

Life sciences VC is increasingly concentrated in larger, later-stage investments as investors favor scaled, clinically validated companies. AI-integrated life sciences companies are also attracting significant capital as the technology moves from early hype toward execution.

PE activity remains relatively steady, while large transactions continue to have an outsized impact on overall deal value. Opportunities are also emerging in areas such as drug delivery, driven by GLP-1 demand and continued growth in capsule manufacturing.

Life sciences M&A has rebounded sharply, driven largely by strategic buyers seeking scale and clinically validated assets ahead of looming patent expirations. M&A value reached a record $218.3 billion in 2025, with another $156.6 billion recorded in the first half of 2026.

S. life sciences companies, while China’s influence is increasingly being expressed through licensing rather than inbound M&A. S. and European pharmaceutical companies.

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