Life sciences M&A: The outlook for mid-market deals in 2026

As a capital-intensive and highly-regulated industry, life sciences M&A often differs from the broader deals market. 

Analysis from DLA Piper shows life sciences deals typically have higher valuation gaps, more rigorous closing conditions, and less involvement from PE firms. 

To find out more about these and other life science trends, I spoke to Basil Saeed, an Associate Partner at CCD Partners, which offers corporate development consultancy focused on life sciences, chemicals, and advanced materials. 

We spoke about how an academic background helps with life sciences M&A, the macroeconomic factors shaping the industry, and his view on how the market will evolve in 2026.

Q. Can you tell me a bit about your career and your current role?

I studied biochemistry at King’s College in London and at that time had no plans to work in M&A; I wanted to work in academia. However, I ended up joining the family business in Sudan which my grandfather started in the 1940s. We now have around 5,000 employees across 12 companies in 10 different sectors (although the ongoing conflict back home has changed that quite a bit!).

I was mainly working in corporate development when COVID hit, and I saw an opportunity to apply for other M&A roles that had some connection with chemistry. I came across CCD, which is somewhere between a specialist corporate finance M&A advisory firm and a chemicals boutique investment bank. 

During their careers, our advisors have worked across the spectrum from nuclear to nanotechnology, but our core focus is on chemicals, life sciences and advanced materials. We support clients on M&A, covering buy- and sell-side strategy, valuation, negotiation, and end-to-end transaction execution. We also design and deliver growth roadmaps including bolt-on acquisition pipelines, new market entry, and strategic adjacencies underpinned by data-driven market insights from a deep network of C-suite and owner relationships across the sector.

Our client base is primarily founders and owner-managers in the lower mid-market, and increasingly we are being recognised as specialists by a number of well-known, billion-dollar corporates seeking sector-focused M&A and growth advice.

As an Associate Partner, I lead transactions and work on valuation, buyer mapping, diligence work streams, developing the marketing materials, running the data room, and all the way through to deal completion.

Q. Your degree in biochemistry obviously helps with the deals that you do, but does everybody at CCD have that kind of background?

Yes, we take great pride in that everyone at CCD either has a science degree (usually chemistry-related), or have had extensive careers in industry. Our founders realized that you can’t fully help a client if you don’t understand them both technically and commercially, and that combination is what really sets us apart. 

The bigger advisory firms have a broad knowledge of the market, but they can’t give their clients the specialist advice that we can. At CCD, we have veterans who have worked for the likes of DuPont, AkzoNobel, Solvay, etc., and their grasp on technical chemistry is simply amazing. 

So when a client comes to us and says they don’t know what to do next, we’ve got people who have been in that same position. We speak their language.

CCD was founded to focus on the smaller, lower mid-market part of the chemicals industry that was being overlooked by the big banks. But since I joined three years ago, both the deals and client sizes have been getting bigger.

Q. From a professional perspective, it must be interesting to be involved in more complex deals?

Yes. We’re actually doing a deal right now where there are four separate transactions in four different jurisdictions, all at the same time, with around 10 senior advisors on the team. 

It’s a very complex deal, but it shows that we can handle deals that are not easy and that require a lot of thought, both commercially and scientifically. I was also thrown into the middle of a hostile takeover last year and had to work right through Christmas and New Year – it’s times like that when the complexity of the deal is what keeps things lively.

Q. What are the main M&A trends you’re seeing in the life sciences and biochemistry sectors?

A lot of our focus, specifically and historically within life sciences, has been on things like contract research organizations (CROs) and contract development manufacturing organizations (CDMOs). We’re seeing a lot of demand from big pharma wanting to outsource a lot of the expensive R&D and development part of drug discovery to a leaner organization (usually to avoid bureaucratic hurdles), until a point they become convenient enough for them to acquire.

The integration that bigger companies are thinking about is that it makes sense to keep the CRO/CDMO guys working for them. For example, last year, Novo Nordisk acquired Catalent for just short of $17 billion, where Catalent was mainly a CDMO player, and Novo Nordisk got them to integrate their supply chains and boost the manufacturing capacity to push the GLP-1 product, Ozempic. 

It’s a classic example of an acquisition that’s largely about scale and capacity, rather than strategic or potential future synergies.

But a big part of the trend is definitely optimization: smaller and smarter deals have become more frequent than mammoth ones. We aren’t seeing the huge billion-dollar acquisitions in biotech and life sciences that were so common in 2023, although I’d say we’re definitely getting back on track after the lull in 2024, and the outlook for 2026 is definitely promising.

Q. Do you think that’s because people are looking to take on less risk?

I feel it’s more about macroeconomics, tied to two things.

Firstly, the rise in interest rates post-COVID. It’s almost always more efficient to finance a transaction through debt, so debt becoming much more expensive has disincentivized a lot of acquisitions in that time period, especially in 2024.

While rates are slowly coming down now, the signals from Central Banks like the FED haven’t exactly fostered confidence in the wider market – a lot of people (in all industries by the way) seem quite hesitant to make definitive moves until they get more conviction as to where monetary and fiscal policies are headed.

The second factor is the valuation gap. During COVID, interest rates were just above zero, so debt was super cheap and there were big deals happening across all industries, but I wager that 80% of M&A deals at that time were overpriced. 

Today, buyers have recognized that they probably overpaid, but the sellers are still struggling to accept that those valuations that we saw in 2021 weren’t ‘real’.

But I think we’re getting closer to the middle ground now. People are slowly coming back to their senses, on both sides of the deal.

Q. Are there any other macroeconomic and geopolitical factors that will affect deals in 2026, such as US tariffs?

Hugely, I think, especially for big pharma. But what many people outside the industry tend not to understand is that US drug pricing reforms and the shifting dynamics in Europe’s chemicals sector are keeping acquirers focused on assets with a very clear clinical product/service differentiation and steady cash flow. It’s now less about the potential of a clinical drug, more about how it’s doing right now. 

The Novo Nordisk acquisition of Catalent is a very good example; they just wanted to massively scale up production of a drug they knew would be in demand for a few years yet. 

But when it comes to life sciences, you have to consider the whole supply chain. With something generic like a Panadol for example, or any other product that contains one or more active pharmaceutical ingredients (APIs) and several inactive ingredients (Excipients) for that matter, people just see the finished dosage form; nobody is really thinking about the 10 or 20 other ingredients going into that one tablet, each of them with their own supply chain and different manufacturing process. This is even more complex when we start talking about specialised or critical life-saving drugs.

So nobody is going to disagree when the Trump administration says they want to stabilize the price of, say, insulin. But the reality is that most of these medicines and APIs are cheaper to make abroad, even though there’s been a noticeable effort towards supply chain re-shoring now in the US and EU, to circumvent tariffs.

Nobody’s thinking about this on a piece-by-piece basis; they look at the whole thing and think it’s all going to magically come together. And it’s not. If the price of one API rises, there will be a rise in the final drug price. It’s just the same as any other industry; the interconnectivity of the chemicals supply chain is not an exception.

So, the biggest themes that we’re seeing are the uncertainties in cost of capital, regulatory scrutiny, and pricing of critical supply chain components.

Q. Are there any sectors within life sciences that you think will have a strong 2026?

I think medical diagnostics is definitely top of my list. People are becoming much more health-aware, so we’re seeing products like the Whoop or the Oura Ring that help track your health. That’s more a consumer-driven trend.

Industry-wise, some companies are doing amazing things with cancer detection and prevention with advancements in radio pharma or radio conjugates. Then there are the weight loss drugs such as Ozempic and Wegovy. But our sector is not like others, say food and beverages, where you can create a product that you think people will enjoy, and then build up your market around it. In chemistry, life sciences, and pharma, you typically have to find the problem first and then work out the solution.

The other big trend I think will be the CRO and CDMO potential I mentioned earlier because if you start manufacturing something, then develop a way to do it cheaper, and make a better product, most likely a big corporate is going to be interested in you. If you’re not a big trade or industry player, then a PE firm might want to take you over, optimize your production, and then exit to a strategic.

Q. Does most of the innovation in life sciences still come from smaller firms?

It’s so much easier to let someone else do the heavy lifting, especially when red tape is not a barrier. We recently had a company talking to us about a possible take private, admitting their IPO was not the right decision in hindsight.

Their original strategy was to create novel inventions in chemistry and sell those to a big corporate. But they didn’t want somebody buying up their equity and taking strategic control, so they went public and raised funds that way while still maintaining their governance.

After the IPO, they hit a wall of regulation and bureaucracy which dramatically hindered their ability to innovate with speed, making them want to go back to being private.  

It’s also much easier to think about scaling when you’re smaller. As long as you have a proof of concept and a few credible clinical studies, the big corporates will take notice. If they decided to do it themselves in-house, they might do it better, given they have more experience and resources, but it might take longer. It’s a toss-up: do you want speed or precision? It’s not impossible to have both, but it’s rare!

Q. Finally, what do you expect from life sciences M&A in 2026?

If I had to boil it down, I’d say life sciences M&A is heading into a phase where discipline matters more than hype. Cheap money is gone, buyers know they overpaid in 2021, and sellers are slowly accepting that those “COVID valuations” were an outlier, not a baseline. Until the signals on rates and policy are clearer, people will keep favouring smaller, smarter, de-risked deals over headline-grabbing mega-transactions. That’s why CROs, CDMOs and other capital-light, cash-generative platforms with clear technical differentiation are drawing so much attention.

At the same time, you can’t talk about this sector without talking about the supply chain. Everyone loves the idea of stabilising drug prices, reshoring production and de-risking geopolitics – but the reality is that every tablet, every vial, has a web of APIs and excipients behind it, each with its own cost base, regulatory burden and geography.

You tug one thread – tariffs, energy costs, compliance – and it shows up in the final drug price sooner or later. That interconnectivity is what makes chemicals and life sciences so interesting, but also so hard to “fix” with simple slogans.

Looking ahead, I’m pretty optimistic. Diagnostics, radio pharma, GLP-1s and specialised outsourcing models should all see strong activity, and the “build it small, prove it, then scale it with a bigger balance sheet” approach is alive and well. Most of the real innovation will still come from smaller teams who can move quickly, and the larger strategics and private equity will continue to act as amplifiers once the science is proven.

In that environment, having advisors who genuinely understand both the chemistry and the commercial side isn’t a nice-to-have – it’s the difference between doing “a deal” and doing the “right” deal.