Ernst & Young projected biotech revenues will rise at least 12% in 2026, marking a third straight year of expansion in its 36th annual Biotech Beyond Borders report. The firm tracked roughly $100 billion in M&A capital deployed in 2025 and another $36 billion spent in the first quarter of 2026 as deal flow accelerated. Despite ongoing volatility, cost pressures, patent expirations, uncertain regulation, EY described confidence as solid, supported by renewed IPO activity and a surge in venture capital. In 2025, a record 72 biotech companies surpassed $500 million in revenue even as the total number of active firms dropped from 977 five years ago to 750. China represented about 40% of U.S. “biobucks” commitments that year, underscoring its emergence as a serious innovation source in antibody-drug conjugates, bispecifics, and other advanced modalities.
EY’s snapshot paints a sector both consolidating and maturing. Data from the report shows that the liquidity trap affecting early-stage biotechs is filtering out weaker players while concentrating funding in companies with validated platforms or late-stage pipelines. The outcome points to more balance-sheet-driven dealmaking, as global pharma moves to secure growth before major patent expirations hit. If current deal velocity sustains through 2026, large-cap acquirers will likely continue shaping an innovation landscape increasingly centered around them. That pattern carries a measure of resilience, and a warning for investors banking on small-cap upside that may simply not return soon.
For payers and PBMs, the result looks less like disruption and more like pipeline triage. Fewer biotechs are moving forward, but those that do are choosing programs with clearer commercial paths. Integration of China-sourced antibody-drug conjugates into global portfolios is worth close attention. Success there could turn today’s ad-hoc collaborations into enduring partnerships. And if that happens? Expect the center of biotech gravity to shift again. For context on drug pricing and cost-containment forces shaping this round of consolidation, see RxInfo.ai.
