The biopharmaceutical industry is heading into 2026 with renewed but measured optimism, following a volatile 2025 that delivered both high-profile deals and significant policy uncertainty, according to a new report from GlobalData.

The analysis, The State of the Biopharmaceutical Industry 2026, points to improving industry sentiment, strengthening investment confidence and a gradual recovery in biotech funding, even as pricing pressure, patent expiries and geopolitical risks continue to weigh on decision-making.

The year began with strong momentum, driven by scientific progress and major transactions announced around the JP Morgan Healthcare Conference. These included Johnson & Johnson’s $14.6 billion acquisition of Intra-Cellular Therapies to expand its neuroscience portfolio, GSK’s $1 billion deal with IDRx, and Eli Lilly’s $2.5 billion acquisition of an oncology drug candidate from Scorpion Therapeutics.

However, confidence softened as the year progressed. By the second quarter of 2025, policy and cost pressures began to dominate boardroom discussions, particularly in the US.

Hannah Hans, head of pharma strategic intelligence at GlobalData, said: “However, industry sentiment quickly turned cautious. Q2 2025 saw the biopharma industry adopt a more guarded stance. Announcements of US drug pricing reforms under the Most Favoured Nation policy, tariffs, and trade uncertainties, combined with the looming patent cliffs, and rising costs collectively drove a more cautious outlook.”

In response, many companies recalibrated their strategies in the third quarter, adjusting cost structures, narrowing development priorities and re-engaging with policymakers. Several large pharma companies entered discussions with the Trump administration around drug pricing, seeking greater clarity as reforms took shape.

Deal activity remained a key indicator of confidence. Pfizer outbid Novo Nordisk to re-enter the obesity space through its acquisition of Metsera’s clinical-stage GLP-1 receptor agonist and amylin analogue programmes, while Novartis moved to strengthen its neuromuscular disease pipeline with the acquisition of Avidity. Out-licensing also continued, highlighted by GSK’s $12.5 billion licensing deal with Jiangsu Hengrui, underlining the growing global relevance of innovation emerging from China.

By November, sentiment had begun to stabilise. The Jefferies Healthcare 2025 conference provided a clear read-out on executive confidence heading into the new year, with industry leaders signalling appetite for both early-stage innovation and later-stage assets with differentiated clinical data. Larger acquisitions completed earlier in the year by companies such as Merck and Pfizer were cited as evidence that strategic dealmaking remained central to long-term growth.

Market performance reflected this shift. The Nasdaq Biotech Index delivered its strongest showing since 2014, reinforcing expectations that investor confidence was returning, albeit selectively.

GlobalData’s survey data supports this cautiously improving outlook. According to the report, 52% of pharmaceutical professionals described themselves as optimistic or very optimistic about industry growth in 2026, an increase of 10% compared with sentiment recorded six months earlier. Meanwhile, 39% of respondents said they were optimistic or very optimistic about biotech funding recovery over the next 12 months, up 15% from May 2025.

Hans added: “As we look to 2026, strong drug pipelines and breakthrough clinical catalysts will drive the sector, as pricing pressures are addressed, innovation and differentiation will take centre stage, and strategic deals accelerate growth and portfolio transformation.”

Attention is now turning to the upcoming JP Morgan Healthcare Conference, which is expected to set the tone for capital allocation, dealmaking and R&D priorities in 2026, as companies seek to balance financial discipline with the need to replenish pipelines and sustain long-term growth.