By: Kristin Ciriello Pothier, Americas Life Sciences Sector Leader, and Jeff Stoll, Principal and National Strategy Life Sciences Leader at KPMG

Introduction

As we close out 2025, it’s clear the life sciences sector has been defined by a crucial balancing act: driving innovation while navigating significant constraints. Navigating an uncertain economic landscape, policy changes, and clinical infrastructure drove a recalibration. Rather than simply reacting to these pressures, leading organizations embraced intentional reinvention, transforming the reality of having to “do more with less” into an opportunity for strategic renewal.

The companies that led the way were those that paired scientific advancement with operational discipline, used scenario analysis to prepare for what’s next, and aligned their strategies to long-term value creation. Strategic foresight became the defining characteristic of success.

AI: Broadening Out as a Strategic Lever

This year, artificial intelligence (AI) turned into an essential strategic lever, most critically as the engine powering advances in precision medicine. As more therapies become biomarker-driven, R&D teams face new complexities and massive datasets. AI enables them to meet this challenge, allowing the integration of informatics and data science early in the development process to refine biomarker strategies and accelerate insights. This synergy between AI and precision medicine is fueling the next wave of innovation and promises a new era of R&D efficiency.

Beyond R&D, AI is also delivering tangible value in regulatory documentation, inventory management, and SOP optimization, saving millions of dollars and becoming a key consideration in every tech alliance. With the FDA actively evolving its draft AI guidance released in January, the runway for its impact is only growing. This technological transformation is reshaping how companies approach both innovation and operational efficiency.

M&A: Precision but Not Too Precise

Despite facing headwinds from tariffs, borrowing costs, and geopolitical volatility, the life sciences sector showed a strong appetite for growth in 2025. While large-scale “blockbuster acquisitions” were rare, M&A was defined by a return to deals north of $10Bn and included several notable late-stage acquisitions by big pharma. While several deals focused on obesity – aimed at entering or expanding portfolios in this area – the broader deal market continued to emphasize oncology. Overall, specialty care populations remain the primary focus for pharma. The key exception is gene therapy, where pharma has made a clear shift away from investment, as very few gene therapy deals occurred in 2024 and 2025.

In an environment where innovation and capital must meet under pressure, this has been a pivotal period. M&A in life sciences is now about thoughtful portfolio realignment, scenario-tested diligence, and transformative partnerships that can withstand uncertainty while advancing care. The most successful transactions were those aligned directly with strategy, patient-focused outcomes, and long-term value creation. This strategic approach to dealmaking reflects the broader sector recalibration.

Regulatory Landscape: Navigating Constant Change

The robust pace of policy shifts in 2025 highlighted the importance of scenario planning for the sector. Changes in drug pricing, deal activity regulations, and tariffs directly impacted the industry, while companies navigated a complex global landscape. This environment necessitated robust monitoring processes for organizations seeking to stay ahead.

Building on this, the industry is closely monitoring the BIOSECURE Act, which if enacted, will represent an additional regulatory development that will influence how companies assess their operations and long-term strategy beyond 2026. The version approved by the House of Representatives is different from what was originally proposed in 2024 and early this year. Despite this, main tenants, such as encouraging companies to severe supply chains with certain Chinese firms for national security purposes, remain. Moreover, the proposed policy does not single out specific foreign firms, but instead relies on a new process for identifying biotechnology companies of concern by relying on the Department of Defense’s 1260H list. These restrictions come at a time when U.S. pharma interest in Chinese biotech assets is an all-time high.

In this high-stakes environment, the sector continues to seek regulatory clarity and balanced oversight needed to protect patients and drive innovation. Success will require not only staying informed but staying several steps ahead.

Looking Ahead to 2026

The themes that defined 2025 will continue to accelerate. As big pharma grapples to ensure their portfolios can overcome the $200Bn+ revenues at risk to patent losses, larger, late-stage deals will likely become a greater proportion of 2026 transactions. The race for AI-enabled R&D is only starting.  AI will become more deeply embedded across the value chain, enabling greater scientific precision and operational efficiency. M&A will remain a key mechanism for accessing innovation and capabilities. Companies that both acquire the most impactful technologies and understand how to strategically integrate it, will sustain key talent and scale it.

Those who succeed in 2026 will be the organizations that set a bold vision, empower cross-functional collaboration, and stay committed to continuous innovation. The future of life sciences is one of extraordinary promise – and the recalibration underway today is setting the foundation for a healthier world tomorrow.

Kristin Ciriello Pothier is the KPMG Americas Life Sciences Sector Leader, as well as the Global and National Healthcare and Life Sciences (HCLS) Deal Advisory & Strategy Leader. With almost 30 years in strategy consulting and scientific and clinical research in the healthcare and life sciences industries; her areas of focus are commercial strategy, growth strategy, and M&A for pharmaceutical; diagnostics, device, and consumer health companies; investors; and medical institutions worldwide. She is a leader in precision medicine and in clinical diagnostics laboratory innovation, developing product and service strategies and operations with on-the-ground experience in the Americas, Europe, Asia, India, and the Middle East. Her book, Personalizing Precision Medicine, has garnered attention worldwide for its all-inclusive and comprehensive look at global precision medicine. Kristin also works with health systems and affiliated organizations on their innovative services strategies, diligences, and operations, including clinical trial program development, clinical laboratory builds, health IT, hospital services, and clinical outreach strategy. Earlier in her career, Kristin was a partner and the global head of Life Sciences Strategy at EY-Parthenon and a partner at Health Advances, where she built those businesses from single deals–focused offices to global organizations. She started her career as a geneticist and clinical diagnostics developer at Genome Therapeutics and Genzyme/Sanofi. Kristin holds an MS in Clinical Epidemiology, Health Management, and Maternal and Child Health from the Harvard School of Public Health and a BA in Biochemistry from Smith College.

Jeff Stoll is the National Leader of Life Sciences for the Strategy practice at KPMG. He has 20 years of experience providing strategy consulting services to the biopharmaceutical industry and private equity clients interested in the life science sector. He specializes in supporting clients across the inorganic growth continuum from growth strategy to portfolio optimization to commercial due diligence to integration and divestiture strategy. Jeff and his team have averaged thirty deals per year between strategic and private equity clients for the past ten years. Prior to starting his consulting career, Jeff was an Assistant Professor at the University of Florida with an appointment at Shands Hospital, where he specialized in solid organ transplant.