IP Licensing and M & A in Life Sciences: 2025 trends shaping the future of biotech

These levers are facilitating the next wave of therapeutic breakthroughs, product launches, and global expansion, writes David Gallagher, Partner, European Patent Attorney, European Patent Litigator, UK Patent Attorney with J A Kemp.

IP remains the lifeblood of biotech value. In 2025, companies are focusing on patent strategy, particularly around biologics and biosimilars. With complex therapies dominating pipelines, patent protection is no longer just about molecules. Consideration must also be given to method, manufacturing, and data.

Trade secrets and data rights are also gaining prominence. With clinical trial data now a strategic asset, companies are exploring new ways to shield proprietary information, especially as data privacy laws grow more complex. While acquisitions grab headlines, licensing is quietly fuelling collaboration across borders. In the current capital-constrained environment, licensing offers a nimble alternative to full takeovers. This allows companies to share risk and access cutting-edge IP.

New trends in licensing are emerging. For example, companies are now baking in terms that adjust royalties if US drug prices are subject to federal negotiations, milestones tied to clinical progress are becoming more indication-specific, and data-sharing rights increasingly detailed.

As R & D costs climb, licensing deals are also becoming more financially nuanced. Biotech firms want reimbursement for past investments, while licensees funding future development are pressing for more favourable terms. Cost-sharing models are evolving, often with profit-sharing or tiered royalties based on who foots the bill.

Cross-border licensing continues to thrive, particularly between Western pharma giants and Chinese biotechs. China’s biopharmaceutical sector experienced a notable increase in oncology drug licensing deals in 2024, particularly for monoclonal antibodies and antibody-drug conjugates, with a combined deal value of $30 billion. Some Chinese developers are retaining domestic rights while licensing global markets, a model that supports national innovation while tapping international scale.

Deal activity sharply declined last year, with aggregate M & A value falling to ~$48 billion, the lowest in recent history, driven by a retreat from commercial-stage acquisitions and a pivot toward early-stage assets. However, after a subdued 2024, industry analysts are projecting a cautiously optimistic rebound in biopharma M & A for 2025.

Reflecting a more positive outlook, the year began with several notable deals. Johnson & Johnson (J&J) acquired Intra-Cellular Therapies for $14.6 billion, marking the largest recent commercial-stage M&A and a sharp contrast to 2024’s trends.

Eli Lilly acquired Scorpion Therapeutics, a privately held oncology company, reinforcing its focus on cancer drug innovation while GSK acquired IDRx, a precision oncology firm. These moves by J&J, Lilly, and GSK suggest growing confidence among Big Pharma and a shift back towards strategic M&A, especially targeting privately held, innovative biotech firms.

A key driver is the significant deal-making capacity of large pharma companies, with an estimate $1.5 trillion in deployable capital. This financial firepower, coupled with patent expirations impacting over $200 billion in revenue by 2030, creates a strong drive to replenish pipelines. In this regard, while not yet linked to major 2025 acquisitions, companies such as Merck, Pfizer, and AbbVie, are considered likely acquirers given their looming patent cliffs and deep pockets.

The innovation landscape also favours increased M & A, an estimated 70 per cent of clinical-stage assets originate from emerging biotechs, of which around 60 per cent remain unpartnered. Additionally, biotech valuations remain depressed, with many companies facing cash flow problems due to a depressed IPO market, which may accelerate private company exits via M & A.

Most activity is expected in the $5–15 billion range, rather than mega-acquisitions. Therapeutic interest will likely remain centred on oncology and immunology, with selective attention to CNS and obesity, contingent on asset differentiation.

Overall, while a full return to historic highs is unlikely, 2025 is expected to see measured growth in biopharma M & A, with private company targets and early-stage innovation taking centre stage.

• To contact David, email dgallagher@jakemp.com or telephone +44 12 2363 7092+44 12 2363 7092.