As enthusiasm returns in force to the healthcare sector, investors and C-Suite executives from leading public and private companies around the globe will gather at the Jefferies Global Healthcare Conference in London from November 17th through the 20th. Over the course of the week, thousands of investor and company meetings will take place amongst industry leaders, and many will take the stage to discuss key opportunities and challenges facing biopharma, specialty pharmaceutical, medical technology, healthcare services, healthcare IT, and other key sub-sectors, as well as the future impact of AI.
In anticipation of the main event, we sat down with three of Jefferies’ top healthcare investment bankers to discuss what they are seeing and hearing, as well as what to expect in 2026.
Here are the insights we received from Phil Ross, Chairman of Global Healthcare Investment Banking; Tommy Erdei, Joint Global Head of Healthcare and European Healthcare Banking; and Chris Roop, Head of America’s M&A and Joint Head of Global Biopharmaceuticals Investment Banking.
Q: What is the defining trend in healthcare transactions today?
Phil: Over time, the market in biopharma has trended up and to the right with pockets of volatility along the way. Despite an ever-changing geopolitical environment inside and outside of biopharma, the strategic need across the ecosystem has never been greater. With the uptick in positive data readouts and a more robust merger and acquisition environment, market participants are becoming increasingly optimistic, choosing to bolster balance sheets,, while larger organizations are allocating capital to address their strategic needs through both internal and external development.
Our team here at Jefferies is very active across the spectrum of transactions as deal sizes continue to increase across the board. Favorable market reactions to strategic transactions , coupled with the significant return of capital driven by large-scale biopharma M&A continue to drive optimism. It’s creating a flywheel effect for further M&A and capital formation. That said, investors and strategics remain highly selective, and scarcity value remains. From a biology perspective, we know so much more than we did a decade ago. However, from a market or industry perspective, one could say biopharma remains in the early innings, similar to where tech was a decade ago.
Large pharmaceutical companies aim to further streamline their businesses and continue to shed non-core businesses, such as animal health and consumer assets, in order to focus on higher-growth, innovative products. Over the past few years, companies such as Johnson & Johnson and Sanofi have spun off or sold their consumer health businesses, and in turn strengthened their product portfolios through the acquisitions of Intra-Cellular and Blueprint Medicines.
The sleeves of capital available to the industry also continue to expand as investors seek exposure to the biopharma sector. For example, Blackstone, Bain, Apollo, and KKR have all recently made big investments in the sector. Again, compared to tech, exposure to biopharma is in the early stages.
Q: What is the state of Big Pharma now, and what are they looking to invest in?
Chris: Most of the large pharma companies are in a similar predicament, with some of their top-selling treatments going off patent by the end of the decade. Together, they need to find about $70 billion in new revenue by 2030 to maintain mid-single digit growth. It is too late to solve that problem solely through internal R&D efforts, so we expect external business development and M&A to play a key role in filling the gaps over the next few years.
As these large companies approach the patent wall at the end of this decade, they are seeking companies offering treatments that are close to commercialization and have a large total addressable market (TAM). This is why you saw seven or eight $5 billion+ biopharma M&A deals in 2025. On four of them, Jefferies advised the target. Much of the capital returned to shareholders from these deals is being redeployed in our space, which has supported the capital-raising efforts in the ecosystem over the last couple of months.
Q: Is there a sufficient supply of good companies for large pharmaceutical companies to acquire?
Chris: Yes and no.
Filling that $70 billion revenue gap will require the industry to launch a couple of dozen multi-billion-dollar products. The definition of a blockbuster, traditionally north of $1 billion, continues to scale larger as the need persists. Products of that commercial scale don’t come around often.
Today, there are over 700 public biotech companies, more than twice the number that existed a decade ago. This is a function of an accommodating capital formation environment that allowed many early-stage companies to tap the public markets four or five years ago. Fast forward to today, these stories are beginning to pan out, or not, based on clinical data. For those that are clinically de-risked and address large markets, pharma is a willing buyer. But, in an active M&A market like we’ve seen this year, each scale deal takes an important opportunity off the board for pharma. So, good science is the only way to replenish the pipeline.
Q: Where do you see AI having an impact in the near future?
Tommy: Every day, you learn that AI might be useful for something else, and it’s not just the well-publicized potential for speeding drug discovery.
For example, AI can analyze large amounts of clinical data to identify real-world evidence of links to other uses of a drug that haven’t been documented. AI is also creeping into manufacturing, making things more efficient. AI can identify supply chain variables that were previously less obvious. It can predict demand to ensure sufficient supply and an adequate supply chain from the first component to the last.
Q: What areas of drug development are of particular interest to investors today?
Phil: Products targeting the immune system, so called I&I, are uniquely appealing because the same treatment may be able to treat a lot of different diseases given their impact on causal biology. Look at what is going on with drugs like Dupixent, sold by Sanofi and Regeneron. Given the biological target of the drug, it can immune mediated disorders such as atopic dermatitis, COPD, and asthma.
There is still plenty of momentum behind GLP-1s and cardiometabolic treatments as evidenced by the strategic activity this year.
I will give you one area that is generating a lot of attention, and that’s psychedelics. Global rates of anxiety, depression, bipolar disorder, and schizophrenia are increasing, and these ailments have proven challenging to treat. So, a lot of companies are going after psilocybin and LSD derivatives as treatments, with emerging research suggesting some remarkable outcomes for severe depression. Johnson & Johnson was at the forefront of this trend, having legitimized this space with its ketamine nasal spray, Spravato. We see a wave of development activity coming in behind this.
Q: How do you see the CDMO sector evolving after the rush of activity that occurred during and shortly after COVID?
Tommy: COVID obviously woke a lot of people up to the vulnerability of global supply chains. That drove years of robust transaction activity in the contract development manufacturing organization (CDMO) space, as companies rearranged their footprints, expanded their technology offerings, and focused on service levels to capture a greater market share from their customers.
2025 saw a lull due to a disconnect between buyer and seller valuations, partly driven by the slowdown in development revenue growth resulting from lower biotech funding for finding new drugs. But we now expect a resurgence in activity.
For starters, external events – in the form of tariffs – have once again created a renewed focus among customers on the localization of production. And even more importantly, the upswing in biotech financing will lead to an increase in new drug development and numerous new products (that require manufacturing) entering clinical trials, with many eventually being commercialized. October specifically was among the strongest months on record for biotech financing and equity transactions. This replenishes the coffers of a significant number of biotechs, which, in turn, will feed into the pharma services space, including CDMOs and contract research organizations (CROs) in particular.
Q: Plenty of healthcare industry trends are global. But what is an area where you see a fundamental divergence between markets in the U.S. and abroad?
Tommy: Specialty pharma is an excellent example of where the environment in the U.S. and in Europe has been totally different.
I know there are a lot of definitions of specialty pharma out there, but we think of it as companies that aren’t as heavy in R&D, that create a lot of value through licensing or finding new growth avenues from older molecules. And generics are certainly in the specialty pharma bucket.
The U.S. specialty pharmaceutical sector has had an overhang from an investor’s point of view due to aggressive pricing strategies that increased profits but generated backlash from consumers and regulators, as well as the high debt levels of a few companies. We are finally seeing the sector start to come back, with companies finally deleveraging and a few, like MannKind, Amphastar, and ANI, engaging in highly strategic M&A that drive fundamental value and enhance their position with patients.
In contrast, in Europe, the sector has been and remains a very solid market segment going from strength to strength. Some of this is because most specialty pharmaceutical companies did not dramatically raise prices or increase leverage, which has created a more favorable operating and deal environment. Consequently, the specialty pharmaceutical sector has been far more robust in Europe than in the U.S. However, the difference is now finally starting to narrow.
We have seen this pattern in several major deals we have advised on this year. One involved our role in the sale of a majority stake by Bain and Cinven in the German pharmaceutical company Stada Arzneimittel AG to the private equity firm CapVest, for about €10 billion. In another major deal, we represented GTCR in its acquisition of the generic drugmaker Zentiva from Advent International for €4.1 billion. However, in the US, the sector is also returning to strength, where we advised MannKind on its highly strategic move to acquire SC Pharmaceuticals.
All in all, 2025 has been a year of transition with strong momentum starting to form across most sectors heading into what appears to be a strong 2026.
