Is 2026 the Year of Healthcare M&A Growth and AI Innovation?

According to PwC, health industry dealmakers are entering 2026 with renewed confidence and a sense of strategic urgency. 

After navigating two years of economic volatility and regulatory shifts, the merger and acquisition (M&A) environment is poised for acceleration rather than stabilisation. 

Buyers are increasingly focused on resilient assets, value creation and consumer-centric, tech-enabled care, while global innovation hubs are reshaping the competitive landscape. 

As a result, leading players are making bold portfolio moves that position them for a rapidly evolving healthcare ecosystem.

Regulatory reforms for R&D reductions

According to PwC, by 2035 more than US$1tn of global healthcare spending is expected to pivot toward prevention, personalised care, home-based services and digital ecosystems, fundamentally transforming value pools across every sector. 

“M&A remains the fastest and most effective way to modernise operations, accelerate scientific and digital innovation and build the capabilities required for prevention-led, personalised and care-anywhere models,” the company says.

It is predicted that deals that succeed will leverage differentiated data, evidence-based innovation, AI-driven productivity and clear pathways to long-term value creation. 

PwC predict that in this competitive and globalised landscape, early and decisive action is key to be best positioned in the next era of healthcare.

“In 2026, the most successful deals will be the ones that seek to shape the future of healthcare, creating a more resilient, tech-enabled, affordable and patient-centred health system,” says Jaymal Patel, Global Health Industries Deals Leader, PwC UK.

China’s innovative drug licensing 

The company reports that China is increasingly reshaping the pharmaceutical innovation map, now hosting roughly one-third of global clinical trials and ranking as the world’s second-largest developer of new medicines. 

Regulatory reforms there have helped to accelerate approvals, lower R&D costs and enable rapid transitions from discovery to human trials, attracting Western firms seeking partnerships and licensing opportunities. 

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This could be what has fueled cross-border deal activity, with traditional license-out agreements and NewCo structures allowing Chinese biotechs to access global development while retaining domestic value, as exemplified by Pfizer’s PD-1/VEGF bispecific deal with 3SBio and Hengrui Pharma’s partnership with Braveheart Bio.

PwC reports that in 2025 China’s outbound licensing activity for innovative drugs reached unprecedented levels, with total disclosed deal value climbing to US$135.6bn, including US$7bn in upfront payments across 157 transactions. 

Adoption of the NewCo model also accelerated, rising from six deals in 2024 to nine in 2025, reflecting growing sophistication in cross-border structuring.

As pharmaceutical innovation becomes increasingly globalised, China is solidifying its position as a pivotal hub for life sciences dealmaking, offering a combination of development speed, patient scale and scientific depth that few markets can match. 

Converting this innovation strength into successful transactions, however, requires a thoughtful and disciplined strategy. 

Dealmakers must navigate cross-border regulatory complexity, safeguard data and intellectual property and deploy creative deal structures that balance risk-sharing with long-term strategic flexibility.

Rising global health values

According to PwC, global health industries M&A rebounded strongly in 2025, with total deal values rising 46% year on year despite a 5% decline in overall volumes, underscoring a shift toward larger, more strategic transactions. 

The surge was predicted to be driven by 11 megadeals valued at more than US$5bn, up from just three in 2024, highlighting renewed confidence in transformative scale plays. 

“While each region accounted for roughly one-third of global deal volumes, Asia Pacific grew the most, up 12% in 2025, compared to a 5% increase in Europe, the Middle East and Africa (EMEA) and a drop of 23% in the Americas,” writes PwC.

“Much of the growth in Asia Pacific’s M&A activity was due to a 53% increase in China dealmaking, with investors attracted to the country’s innovative drug development landscape. 

“The Americas continued to dominate in terms of deal value, representing nearly two-thirds of total deal value and nine megadeals.”

Looking ahead to 2026, M&A is predicted to serve as a catalyst for business model reinvention across biopharma, medtech, health services and digital health, enabling companies to unlock digital capabilities, accelerate innovation and reposition around consumer-centred care. 

Cross-border partnerships are likely to become increasingly important, with divestitures complementing acquisitions as portfolios are reshaped.