Skip to content Skip to footer

Loading Results

Pharmaceutical & life sciences deals insights: 2021 outlook

Start adding items to your reading lists:
Save this item to:
This item has been saved to your reading list.

2021 poised for deals rebound

We are optimistic that 2021 will be a return to normal for the pharmaceutical and life sciences (PLS) sector with around $250B-$275B in deal activity. Innovation and the need for scale will drive activity due to pandemic headwinds and the uncertainty of regulatory, tax and drug pricing policies. 

As we had predicted, 2020 was a down year for deal making in the PLS sector compared to 2019 which included many transformational deals such as the acquisitions of Celgene and Allergan as well as the divestitures and spin-offs from large pharma companies.  Compounding this was the impact of COVID-19 in 2020, which put a hold on many deals during the early stages of the pandemic and also significantly impacted the medical device sub-sector. These factors, among others, resulted in approximately $184B in deals for the sector, which was one of the lowest years in deal making in almost a decade. 

Playback of this video is not currently available


Challenges and opportunities for deals in 2021

PwC's Deals Sector Leader John Potter discusses the trends driving deals and outlook for 2021.

PwC's Deals Sector Leader John Potter discusses the trends driving deals and outlook for 2021.  Explore national deals trends.

Pharmaceutical & life sciences deals outlook

The return to a normal level of deal making will be driven by activity across all sub-sectors. Large pharma will continue to use M&A to achieve scale as companies look to invest for the long-term in key therapeutic categories such as oncology and cell and gene therapy.  We see the potential for deal activity across all transaction sizes in 2021: several mega-merger and larger transactions ($50B+ size); many medium sized ($25B-$50B); and a flurry of the smaller bolt-on ($5B-$15B) transactions, similar to 2020.

Sub-sector outlook


This sub-sector has the potential for at least one transformational deal, similar to 2019, along with biotech deals of various sizes.  Some of these may be larger ($30B-$40B) along with the continued flurry of smaller deals ($5-$15B) in the oncology and cell and gene therapy space.  New and larger players in specialty pharma, such as Organon and Viatris, will likely do more bolt-on deals focused in traditional therapeutic areas in 2021, creating large upside potential for further M&A.


Biotech will continue to see significant interest from large pharma, with $5-$15B sized deals, as they continue to execute on investing in innovation.  Funding from both VCs and the public markets will continue to keep premiums for M&A high, despite some headwinds from potential drug pricing reform.  With the significant amount of investment in oncology recently yielding an extremely competitive market, we see 2021 as a year where some companies may re-evaluate their ability to compete and either look to divest, partner or sell. 

Medical device

The COVID-19 overhang will likely have some impact on M&A in the sector in the first half of the year. However, we believe this overhang combined with the continued pricing pressure may result in one large transformational deal.  We see continued investments around robotics, wearables, genomics, and the diagnostics sub-sector as key innovative areas.  This may be balanced by some M&A headwinds from strength in the IPO market and increased availability in venture capital for innovative medical device companies.


There will likely be further consolidation within the CRO space as companies seek scale as a competitive advantage.  The contract development and manufacturing organizations will look for bolt-on acquisitions to expand their capabilities to align with the market demands.  Living a healthier lifestyle will provide the tailwinds to drive opportunities in the over-the-counter space, particularly for vitamin and supplement producers.  Finally we see animal health companies continuing the push towards technology and transactions that go beyond the traditional drug offerings.

“We are optimistic that 2021 will return to normal for deal making in PLS driven by the continued need for scale and innovation. Larger transformational pharma and medical device deals, combined with a flurry of biotech deals, will be the driver.”

Sky Milch, US PLS Deals Leader

Key deal drivers

New ways of being

PLS companies are looking for a return on their digital investments with a focus on driving productivity and a better connection with patients. Key focus areas include creating a frictionless experience for engaging physicians and patients to drive better outcomes and virtual clinical trials.  Lastly, digital therapies appear to be a potential alternative to traditional medicine.  An example includes Akili’s EndeavorRx™, the first-and-only prescription treatment for ADHD delivered through a video game. 

Changing political landscape

Regardless of the political landscape, it appears clear that the focus on drug pricing is here to stay.  The current administration’s announcement around potentially aligning the most costly therapies with most favored nation pricing for the government programs, appears to be a step toward enhanced regulation for at least some portion of the market.  More to come on how this all plays out.  Also, the potential for increasing US corporate tax rates could impact the US PLS companies as there may be less cash flow to invest in M&A.

Opportunities in innovation

COVID-19 accelerated existing sector trends including investment in digital tools and data analytics to improve the patient experience, increased retention in clinical trials by making trial participation more convenient and relevant, and shortening the time from discovery to market.  This will be a differentiator for companies that can continue to build on the momentum and figure out how to make it a value creating competency.  Also look for the next wave of growth in medical devices to be driven by innovation around AI and technology enabled products and robotics.

Pivot to a multi-nodal world

After a long push towards globalization, the recent trend toward protectionism, driven by trade tension, and the pandemic has put more focus on the global supply chain.  We see ‘made at home’ as a growing potential to diversify the risk and take advantage of broader, growing consumer sentiment.  Longer term, we could see a situation where there may be consolidation of PLS companies to certain regions or countries which would result in a less diverse geographic base.

Future of capital

Liquidity in the PLS sector is expected to remain strong.  Large pharma continues to have robust balance sheets and significant ability to borrow.  Biotech funding from VCs and the capital markets is still trending well.  Medical device is the one subsector where capital may not be as accessible due to the impact of deferred surgeries. This could both drive M&A (e.g. consolidation for scale and liquidity) and delay M&A (less excess capital for growth).  The IPO markets, which saw $21.1B in PLS investments in 2020, have yielded returns above other sectors which provide some funding tailwinds

Contact us

Sky Milch

US Pharmaceutical & Life Sciences Deals Leader, PwC US

Brian Geiger

Principal, Deals, PwC US

Follow us

Required fields are marked with an asterisk(*)

By submitting your email address, you acknowledge that you have read the Privacy Statement and that you consent to our processing data in accordance with the Privacy Statement (including international transfers). If you change your mind at any time about wishing to receive the information from us, you can send us an email message using the Contact Us page.