The New Playbook for Competitive Life Sciences M&A — How Buyers Can Differentiate Beyond Price Through Structure and Strategy

The life sciences M&A market is reemerging in 2026 as a competitive arena for strategic buyers, after several years of subdued activity. Large pharmaceutical and biotech buyers are pursuing strategic, de-risked assets to fill pipeline gaps and offset looming patent expirations, while interest from private equity and growth-oriented strategics is rising as confidence in asset valuations and the capital markets begins to increase.

As competition returns for high-quality life sciences assets, successful strategic buyers are rewriting the playbook for winning deals. Emerging tactics to win bids while managing transaction risk are shifting focus from headline price to differentiated strategy, disciplined structures, and thoughtful risk allocation. Although price continues to anchor competitive outcomes, the emerging environment rewards buyers that understand that deals are won or lost based on more than headline valuation.

Several converging forces are driving this shift, including heightened pipeline pressure among large-cap pharmaceutical companies, a narrowing universe of truly differentiated assets, and a more disciplined approach to capital deployment following recent market volatility. As a result, competitive tension is increasingly concentrated in a smaller number of high-quality opportunities, intensifying the need for buyers to distinguish themselves through strategy and execution rather than price alone.

Why Certain Life Sciences Assets Command Competition

It bears noting that not all life sciences assets are drawing the same level of buyer interest. In today’s selective market, competitive intensity is less a function of deal size and more a reflection of how well an asset aligns with buyer priorities regarding risk tolerance, timing, and strategic relevance. In an increasingly selective market, competition is concentrated on later-stage assets that meet specific criteria and have clear paths to near-term value creation.

Buyers are increasingly willing to underwrite scientific and clinical risk in prioritized therapeutic verticals, particularly in oncological, immunologic, neurodegenerative, and metabolic diseases, in which unmet need and portfolio relevance justify investment, while remaining cautious on assets with early-stage science, limited validation, or uncertain development pathways. Competitive processes increasingly favor assets supported by robust preclinical data, early clinical signals, or platform repeatability, rather than purely conceptual science. Buyers are also placing significant value on assets with realistic, near-term development timelines and manageable regulatory complexity, particularly in light of rising development costs and longer approval horizons.

Using Deal Structure to Gain Competitive Advantage

Deal structure can be an effective strategic lever to differentiate buyers in competitive life sciences M&A. The most competitive buyers are not defaulting to complex structures but deploying structure strategically when it adds clarity and alignment. By balancing “clean” up-front consideration with targeted contingent value mechanisms, buyers can meet seller expectations for certainty while protecting against downside risk and preserving long-term value creation.

Earnouts as Targeted, Not Default, Solutions

Earnouts remain an important tool in transactions involving development-stage assets, emerging platforms, or meaningful regulatory uncertainty. However, buyers are increasingly deploying earnouts selectively and surgically rather than broadly as valuation bridges. In this context, earnouts are most successful when tied to specific, objective milestones — such as regulatory approvals or defined clinical events — and supported by clear post-closing governance frameworks.

From the seller’s perspective, well-constructed earnouts can also offer paths to incremental upside while preserving deal momentum, particularly when remaining value is tied to clearly measurable milestones. In competitive processes, clarity regarding earnout mechanics and post-closing conduct is often as important as the economic terms themselves. As “diligent efforts” covenants continue to attract controversy in the wake of the 2025 Alexion Pharmaceuticals decision and its related cases, buyers must seek creative solutions to drive seller confidence without unduly increasing the risk profile of unproven assets. Solutions such as enhanced information and reporting rights, specified development obligations (e.g., minimum financial commitments or flat requirements to commence a specific development milestone such as a near-term clinical trial), and governance-based mechanisms — such as joint steering committees with defined consultation rights — can give sellers meaningful visibility into asset prioritization as an alternative to traditional diligent efforts covenants.

Spinout Structures to Preserve Value in Non-Core Assets

Spinout structures are emerging as a powerful tool to align buyer and seller priorities. In circumstances in which a seller has multiple programs and a buyer is not prepared to offer value for non-core or earlier-stage assets or programs, a buyer can enhance the attractiveness of its offer by permitting a seller to carve out non-core assets from the transaction. This strategy allows sellers to preserve upside in their broader platforms and maintain strategic flexibility, while buyers acquire only the assets they are most interested in owning and developing. Recent transactions such as Eli Lilly and Company’s acquisition of Scorpion Therapeutics and Scorpion’s subsequent spinout of Antares Therapeutics; Sanofi’s strategic collaboration with Dren Bio, following its acquisition of Dren Bio’s lead asset; and Novartis’ acquisition of Avidity Biosciences with a side-by-side spinoff of non-core assets illustrate how spinouts can unlock value by allowing sellers to monetize lead or advanced-stage assets without sacrificing long-term participation in their broader pipelines while offering buyers cleaner risk profiles and sharper strategic focus.

Bolt-On Acquisitions: Driving Certainty and Speed

Bolt-on transactions are particularly well suited to competitive environments in which sellers prioritize execution. Buyers pursuing bolt-on acquisitions can often support higher up-front cash consideration by leveraging existing infrastructure, therapeutic expertise, and development capabilities, reducing perceived execution risk and enhancing seller confidence in buyers’ abilities to execute on strategy. As a result, bolt-on bidders are frequently positioned to deliver the type of simple, all-cash offers (or high up-front cash offers with achievable near-term milestones) that are attractive in competitive auctions while still maintaining internal valuation discipline.

Beyond Valuation: Deal Tactics for Winning Bids

In today’s high-stakes environment, sellers are increasingly focused on pursuing clean bids with expedited timelines to signing, fewer conditions, and limited execution risk. When pursuing a highly sought-after asset, buyers can deliver on precise and efficient transaction execution to establish credibility, gain a first-mover advantage, and ensure alignment with seller priorities. The old adage that “time kills all deals” remains as true now as ever, and the faster a buyer can establish that it is ready to move forward in a manner that fairly balances risks and liabilities between the parties, the more likely it is to find itself a willing counterparty.

Invest Early in Focused, High-Quality Diligence

Buyers that mobilize diligence teams early and conduct deep, targeted diligence can move quickly and submit cleaner bids with fewer contingencies. Early diligence allows buyers to identify and underwrite key scientific, regulatory, commercial, and legal risks up front, increasing confidence at signing and reducing the need for post-signing conditions that can weaken competitiveness or drawn-out diligence processes that drain seller resources and drive deal fatigue.

Address Regulatory and Antitrust Risk Early and Credibly

Buyers that proactively assess and articulate a clear regulatory and antitrust strategy — particularly in concentrated therapeutic areas or cross-border transactions — can materially differentiate themselves in competitive processes. By identifying potential issues early and proposing practical solutions, such as tailored remedies, timing strategies, or alternative deal structures, buyers reduce uncertainty for sellers and reinforce confidence in their abilities to close on anticipated timelines.

Prioritize Must-Haves Over Deal Optionality

In competitive processes, disciplined buyers distinguish between issues that are truly deal-critical and those that can be managed post-closing. By focusing negotiations on core risk areas — such as intellectual property ownership, regulatory path, and key development milestones — rather than preserving broad optionality, buyers can streamline documentation, reduce friction, and present a more executable offer to sellers.

Leverage Deal Tools to Allocate Risk Efficiently

Strategic use of transaction tools, including representations and warranties insurance, liability-specific escrows, and tailored indemnity structures, allows buyers to address risk without introducing complexity or delay. When deployed thoughtfully, these tools can simplify negotiations, accelerate signing, and enhance bid credibility without materially increasing economic exposure.

As competition for a limited set of high-quality assets intensifies, buyers are finding that success depends not just on valuation but on the ability to deploy strategy, structure, and execution in a coordinated and disciplined manner. By involving strategic advisers early in the process, buyers can evaluate alternative deal structures, anticipate areas of friction, and position themselves to move quickly with compelling and executable offers that balance competitiveness with risk management. Those that do so are best positioned to put their strongest foot forward and win the deals that matter most.