By Julius Reynolds-Canilli, Founder and CEO of The Fund Marketing Group.
In August 2026, Eli Lilly agreed to pay up to $2.8 billion for Merida Biosciences, a small Massachusetts-based biotech company that is developing engineered proteins for autoimmune disease. It was Eli Lilly’s fourth major acquisition of the year, coming just one month after its $3.8 billion purchase of the mental health drug developer AtaiBeckley.
But Lilly is not the only whale that’s shopping. By June, total biopharma mergers and acquisitions for 2026 had already reached $106 billion across 201 deals, the strongest pace the industry has seen since before the pandemic. Analysts at Stifel estimate the full-year total could top $250 billion, second only to the record of $328 billion that was set in 2019.
Much of this is not getting the attention it deserves due to the media frenzy around AI. This AI-centric focus has left the market oblivious to a sector that is delivering better fundamentals than many of the big AI names. While biotech may not have the narrative, the sector been quietly picking up real momentum. Revenue is now growing substantially on newly approved drugs and investors are paying real cash for real assets rather than promises.
There are three forces behind the current biotech boom. The first is the patent cliff. More than $300 billion in industry revenue is vulnerable to a loss of exclusivity over the next five years. Large pharmaceutical companies with deep cash reserves are increasingly choosing to buy growth rather than build it themselves. This pattern is visible in Eli Lilly’s, GSK’s and Johnson & Johnson’s deal activity this year. Large M&A activity is a clear opportunity for investors, supporting a buoyant stock market that rewards investors willing to bet on long-term growth.
The second is demographics. The World Health Organization counted 1.1 billion people aged over 60 or older globally in 2023, a figure projected to nearly double to 2.1 billion by 2050. These figures present a multi-decade increase in the population that consumes the most medicine. It underwrites demand for exactly the kind of chronic and age-related disease treatments that biotech companies can deliver.
The third force behind biotech’s boom brings us back to AI. Many of its most tangible returns from the AI revolution are currently being found in biotech, where AI-discovered molecules have shown Phase 1 clinical success rates of 80 to 90 percent compared to a historical average of 40 to 65 percent. If that advantage compounds through later trial phases, it makes biotech’s economics even better, which is the kind of tailwind that an AI-obsessed market should be pricing into the sector.
Pharma’s household names like Pfizer, Johnson & Johnson, Eli Lilly and Merck receive a lot of attention, as they should. However, some of biotech’s most exciting opportunities often fly well under the radar. Take rare disease markets, where innovative new treatments can deliver significant market returns. Palo Alto-based BridgeBio (NASDAQ: BBIO), for example, has developed an innovative treatment to ATTR-CM, a rare heart condition that causes an abnormal protein build-up in heart muscle fibers.
Attruby, approved in November 2024, generated $222 million in quarterly net revenue by the second quarter of 2026, up from $71.5 million a year earlier, with the company moving towards huge sales for the full year.
The company is now diversifying into new markets and has three additional late-stage programs with blockbuster potential, covering rare muscular dystrophy, achondroplasia and a calcium regulation disorder. HC Wainright’s buy rating on BridgeBio Pharma has held at $120, with broader analyst consensus putting the average target at $109. This is a clear sign of stable long-term growth backed by an impressive disease pipeline.
Madrigal Pharmaceuticals (NASDAQ: MDGL) is another company quietly making a name for itself in the rare disease market. Its drug Rezdiffra was the first therapy approved for MASH, a fatty liver disease with a large untreated population. Quarterly net sales reached $321 million by the fourth quarter of 2025, up 211%year on year and full-year 2025 revenue came in at $958 million, driven by the growth of its patient base from roughly 17,000 in the first quarter of the year to 36,000 by the end.
It’s no surprise therefore that Madrigal’s share price has steadily increased over the last year, from around $400 in August 2025 to over $520 today. And the market is pricing in further growth: according to TipRanks, Madrigal carries an average 12-month price target of $689 across covering analysts, implying roughly 32% upside from recent trading levels.
Together BridgeBio and Madrigal show how fast paced and exciting the biotech market is becoming. A single approval turning into a fast-scaling commercial business is exactly the kind of trajectory that investors want to catch early in a public name.
Biotech’s appeal has always come down to the scale of the problems it addresses and the pace at which it moves. What’s changing now are the three significant macro-factors that are compounding at once to create a market that is set for a boom.
