Antitrust & Competition Life Sciences 1H 2026 Update

The first half of 2026 featured a slew of significant M&A activity, regulatory developments abroad, and important jury verdicts in the life sciences space. As industry participants consider their next moves, it remains imperative to keep a close eye on the FTC in particular. The return of traditional antitrust enforcement principles has added a degree of predictability, but practitioners must still prepare for vigorous engagement on problematic transactions and those presenting novel issues or involving emerging therapeutic areas. 

Evolving Universe of Biopharma Acquirers

Big Pharma is not the only player using mergers and acquisitions to grow in the biopharmaceutical sector. In recent years, the sector has increasingly seen small and mid-sized pharmaceutical companies use M&A to support their long-term growth. Faced with many of the same strategic pressures as large pharmaceutical companies — including looming patent expirations and the need to strengthen pipelines — these companies are more frequently turning to acquisitions to secure commercial and late-stage assets.

The inclusion of small and mid-sized pharmaceutical companies has expanded the universe of potential acquirers. The Big Pharma acquisitions of pipeline assets often entail the procompetitive effect of enabling the regulatory and commercial capabilities of a larger franchise to catapult an innovative asset into faster and broader development and commercialization. Further, often larger organizations have a well-documented (in the public domain or internally) strategic approach in their respective therapeutics areas, making it easier to educate the agency staff regarding the likely effects of a proposed transaction. By contrast, in transactions by small or mid-sized buyers, antitrust counsel are increasingly called upon to educate the FTC and other competition authorities on the dynamics of new and evolving disease spaces, strategic approaches different from those the agencies might be familiar with, and more case-specific deal rationales. Effectively communicating the competitive dynamics of these transactions is an important part of the regulatory review process and is often critical to securing timely clearance.

Return to Traditional Antitrust Theories at the FTC

Entering 2026, we believed the current FTC administration would continue to apply traditional antitrust theories to life sciences M&A transactions. Halfway through the year, that appears to be holding true. At least with respect to life sciences, the US enforcement climate is largely hospitable to large transactions, and momentum from 2025 continues to thrust the sector forward. The first half of 2026 saw numerous multi-billion-dollar transactions obtain antitrust clearance, several of which eclipsed $10 billion in total value. Some notable examples include:

• Sun Pharma’s $11.75 billion acquisition of Organon
• AbbVie’s $10.9 billion acquisition of Apogee 
• GSK’s $10.6 billion acquisition of Nuvalent
• Vertex’s $10.0 billion acquisition of Crinetics Pharmaceuticals
• Gilead’s $7.8 billion acquisition of Arcellx
• Lilly’s $6.3 billion acquisition of Centessa Pharmaceuticals
• Biogen’s $5.6 billion acquisition of Apellis Pharmaceuticals
• Lilly’s $2.4 billion acquisition of Orna Therapeutics 
• UCB’s $2.2 billion acquisition of Candid Therapeutics
• Gilead’s $2.2 billion acquisition of Ouro Medicines
• Incyte’s $2.0 billion acquisition of Vega Therapeutics

The FTC’s traditional (and predictable) approach to analyzing life sciences transactions is a key driver of the sector’s sustained M&A activity. Companies considering M&A activity can rely on the application of established antitrust and economic principles and thus can evaluate potential opportunities, including the time and costs associated with antitrust reviews, accordingly. 

FTC Enforcement — Aurobindo–Lannett

Of course, increased deal volume is not an indication that the FTC is approving every transaction. One recent consent shows that the FTC is still on the lookout for problematic transactions, that it will move to remedy anticompetitive effects when it finds them, and that small deals will not escape scrutiny based on size alone.

In June, the FTC released a decision and consent decree regarding its investigation into Aurobindo Pharma’s proposed acquisition of Lannett Company. The FTC alleged that the deal would substantially lessen competition in four US generic pharmaceutical markets — generic mycophenolate mofetil oral suspension, niacin extended-release tablets, pilocarpine tablets, and rabeprazole sodium delayed-release tablets — by eliminating direct competition between the two companies.

The FTC claimed Aurobindo and Lannett were among a small number of significant competitors in each market, with particularly high concentration in pilocarpine tablets, where they would become the only remaining suppliers of the 7.5 mg strength. Notably, the FTC does not appear to have just “counted noses” for purposes of assessing competitive effects. While past practice generally has been to require divestiture in transactions that took the number of active competitors down to four or fewer, two of the markets at issue here had “six active competitors” by the FTC’s own admission.¹ In these instances, the FTC discounted the smallest competitors, noting that “most of the sales are concentrated in only four companies, including Aurobindo and Lannett” and “the majority of the share is concentrated in Lannett and two other market participants [and] Aurobindo is the fourth largest competitor in this market and has been rapidly gaining share.” As exemplified here, it remains imperative to examine potential overlaps (even those in generic pharmaceutical markets) based on all the features of the competitive environment and not just the number of players.

The FTC is allowing the transaction to move forward subject to divestitures to remedy its concerns. In particular, Aurobindo must divest the four generic products at issue to Quagen Pharmaceuticals LLC. As is customary, the consent decree also requires Aurobindo to perform transition services, technology transfer, manufacturing support, and employee protections and to submit to ongoing FTC monitoring to ensure the divested assets remain a viable, independent competitor after the transaction closes.

Indeed, this challenge reflects traditional merger enforcement principles. The FTC focused on horizontal overlaps in well-defined product markets, alleging elimination of direct competition between two existing suppliers of four generic pharmaceutical products. Notably, the FTC relied on conventional theories of competitive harm — including high market concentration, reduction in the number of competitors, high barriers to entry, and the likelihood that the merged firm could exercise unilateral market power or facilitate coordinated interaction among remaining competitors.

Ex-US Enforcement Updates

EU Draft Merger Guidelines

In April, the European Commission published the draft revised EU Merger Guidelines (“the Guidelines”)² for public consultation. The Guidelines consolidate the existing horizontal and non-horizontal merger guidelines and codify much of the Commission’s decisional practice and EU case law into a single, effects-based framework. While the substantive legal test remains unchanged, the Guidelines place greater emphasis on dynamic competition, innovation, investment, resilience, and future market developments when assessing whether a transaction is likely to significantly impede effective competition. 

Importantly, the Guidelines formally acknowledge that mergers may generate procompetitive benefits, including enhanced innovation, investment, scale, and supply chain resilience. The burden nevertheless remains on the parties to demonstrate that such benefits are merger-specific, verifiable, and likely to be passed on to customers.
For life sciences transactions, the Guidelines reinforce the Commission’s focus on innovation competition, pipeline products, and potential future competitive interactions between the parties. Consistent with recent enforcement practice, the Commission is likely to look beyond current market shares and assess whether a transaction could weaken incentives to innovate, eliminate an emerging competitive threat, or otherwise reduce future competition, including through so-called “killer acquisition” and “reverse killer acquisition” theories of harm. As a result, parties should be prepared to explain the likely impact of a transaction on pipeline assets, pre-clinical and clinical development programs, future R&D efforts, and the broader innovation landscape. 

Australia’s Mandatory Merger Control Regime

Australia’s new mandatory merger control regime came into force on January 1, 2026, and represents a significant departure from the country’s previous voluntary notification system. Transactions that meet the relevant thresholds must now be notified to the Australian Competition and Consumer Commission (ACCC) and cannot complete until clearance is obtained. The new regime aims to capture a broader range of transactions than the previous system by setting relatively low notification thresholds and requires parties to submit detailed notification forms and supporting information. As a result, potential Australian filing requirements should be identified early in a transaction to avoid unexpected delays. 

The ACCC’s review process can have a meaningful impact on deal timetable. Parties may seek a notification waiver in certain circumstances, with the ACCC having up to 25 business days to decide whether to grant the waiver, though a decision is typically expected in around 10–15 business days. For notifiable transactions proceeding through the standard review process, the overall timetable will vary depending on the complexity of the transaction and the issues identified by the ACCC.

Given the potential impact on deal timing, parties should carefully consider whether a waiver request is the most efficient strategy. While waivers can provide a streamlined route for transactions that present no plausible competition concerns, an unsuccessful waiver application may ultimately result in the parties having to undertake a full notification process. 

Life sciences transactions may raise particular issues under the new regime. In some circumstances, having an active clinical trial site in Australia may be sufficient to meet the “connected to Australia” requirement, meaning that transactions involving early-stage or pre-revenue biopharmaceutical companies can require careful analysis even where Australian revenues are limited. Transaction parties should therefore assess potential Australian filing obligations at an early stage of the deal process.

Although most transactions are expected to obtain clearance, the practical application of Australia’s new regime is still evolving and may result in longer transaction timetables than parties have historically experienced. Until a greater body of ACCC practice develops, parties should factor potential ACCC review requirements into transaction planning and engage early with competition counsel where there is any prospect that the regime could apply, as well as be prepared to engage substantively with the ACCC where notification is required. 

Litigation Update — Applied Medical v. Medtronic

On February 5, 2026, at the conclusion of a 10-day trial, the jury in Applied Medical Resources Corporation v. Medtronic, Inc. found Medtronic liable for anticompetitive conduct in the market for advanced bipolar devices (ABDs). The jury found that Medtronic had violated Sections 1 and 2 of the Sherman Act and state-based antitrust statutes and awarded Applied $381 million in damages for its lost sales. 

Applied alleged that Medtronic maintained and expanded its monopoly through a combination of bundled discounts and exclusionary contracting practices tied to its LigaSure ABDs.³ Applied claimed that Medtronic structured its contracts to provide hospitals with significant bundled discounts and rebates across its broader product portfolio, conditioned on the purchase of its ABDs. According to Applied, these portfolio-wide discounts made it economically impractical for hospitals to purchase competing ABDs because doing so would result in the loss of significant rebates across other product lines. Applied further alleged that, when evaluated across the full product bundle, Medtronic’s pricing effectively fell below cost such that no competitor could match the net pricing without incurring losses.

In addition to pricing practices, Applied challenged several contracting features that, in combination, operated as de facto exclusive arrangements. First, Applied alleged that hospitals were required to purchase Medtronic-compatible generators — significant capital investments that worked only with Medtronic devices — to use the LigaSure devices. Accordingly, it was economically impractical for hospitals to switch from the LigaSure to Applied’s Voyant device, as the hospital would either need to replace its existing generators or run dual generator systems. Second, Applied alleged that Medtronic offered hospitals multiyear agreements (i.e., agreements of three or more years) to obtain ABDs, which further locked hospitals into needing to continue to exclusively purchase Medtronic’s ABDs. Additionally, even when a would-be competitor tried to win a hospital’s business by offering a superior price or a product trial period, Applied alleged that Medtronic deployed targeted, account-specific bundles that failed the Discount Attribution Test (DAT) used to determine whether a bundling or rebate agreement is exclusionary and that made conversion economically impossible. Together, Applied alleged that these practices foreclosed hospitals from purchasing or trialing competing products, such as its Voyant device, thereby foreclosing competition, increasing prices, and harming consumers.

Applied brought eight claims against Medtronic under Sections 1 and 2 of the Sherman Act, the Clayton Antitrust Act, and California state antitrust statutes. The jury found Medtronic liable on all counts and awarded Applied $381 million in damages, representing the high end of damages Applied sought. The jury also found the relevant market to be limited to only ABDs.

On March 12, 2026, Medtronic moved to set aside the jury’s verdict, seeking judgment as a matter of law or, in the alternative, a new trial. It argued that Applied’s bundled-discount and exclusive-dealing theories fail as a matter of law.

With respect to bundling, Medtronic argued that Applied’s expert did not establish that Medtronic had monopoly power in the respective markets for the products bundled with its ABDs, which it asserts is required for a DAT analysis under Ninth Circuit precedent. Medtronic also argued that Applied’s “penalty pricing” theory was unfounded, as its expert did not show that hospitals were unable to shift their purchases of bundled products to other suppliers.

Medtronic further asserted that Applied’s exclusive-dealing claims lacked evidence of substantial foreclosure, pointing to the absence of testimony from ABD consumers, namely hospitals, that Medtronic’s conduct prevented the trial or purchase of competing products. It also challenged Applied’s market definition as limited to ABDs and disputed its damages calculations. Applied and Medtronic have since filed their opposition and reply, respectively.

In challenging both the bundled-discount and exclusive-dealing theories, Medtronic’s motion raised additional questions about the proper application of the DAT for bundled products and what constitutes substantial foreclosure in the absence of explicit exclusivity agreements.

On July 6, 2026, the court denied Medtronic’s motion and ordered briefing on the remaining injunctive and equitable relief issues. The order notably endorsed the Ninth Circuit’s DAT as the proper analysis for bundled-discount claims and concluded that Medtronic does not need to have monopoly power for each bundled product to find anticompetitive bundling. Among other things, the order held that Applied offered sufficient evidence of substantial foreclosure despite lacking some types of evidence because such evidence would merely be “one factor that a jury could have considered.” The court determined that the evidence taken as a whole constituted substantial foreclosure. The court also found the jury reasonably defined the product market as limited to ABDs and that Applied offered sufficient damages evidence for both its theories of anticompetitive harm (bundled-discount and exclusive dealing).

As it stands, the jury verdict in favor of Applied underscores the continued focus in antitrust litigation on the cumulative effect of pricing structures, contracting duration, and switching costs, rather than the presence of explicit exclusivity provisions alone. Here, the breadth of Medtronic’s portfolio discounts was central to Applied’s below-cost pricing theory. This outcome signals increased antitrust risk for organizations leveraging portfolio-wide bundling, particularly when one or more of the relevant products has substantial market power. Additional contract features relevant here that may raise red flags in future cases include: multiyear commitments, penalties for noncompliance, audit/enforcement mechanisms, and tying access to high-demand products to broader purchasing commitments, including up-front capital investments.