M&A activity in the global healthcare sector is picking up with big pharma looking to replace revenue from drugs coming off patent
Comes in a year of mixed results for the global healthcare sector, with the S&P 500 Health Care index up 3.47% YTD and local sector down 21.92%
Morgans healthcare analyst Iain Wilkie said several ASX healthcare stocks with late stage or approved products could be M&A targets 

 

Healthcare globally is having an M&A boom not seen since before Covid.

Big Pharma Vertex Pharmaceuticals, which is listed on the Nasdaq, this week announced it had made a US$10 billion takeover bid for endocrinology-focused Crinetics Pharmaceuticals, which also calls the US exchange home.

At US$85 per share, the offer represents a ~102% premium to where Crinetics shares were trading before the announcement.

Vertex has been on a mission to build out its next generation of drug products beyond its longstanding cystic fibrosis portfolio.

The deal brings the company Crinetics’ US FDA and EMA approved adult acromegaly treatment Palsonify, plus a late-stage candidate, atumelnant, targeting congenital adrenal hyperplasia.

Vertex expects the combined assets to generate more than $5 billion in annual revenue with the deal receiving unanimous board approval from both companies and expected to close in Q3 CY26.

The deal is the fourth transaction worth at least US$10 billion so far this year as big pharma hunts de-risked, late-stage assets. Now experts think that effect could trickle down to M&A on the ASX.

“Announced M&A deals in public markets for calendar 2026 is ~US$143 billion so already outpacing 2025,” Morgans healthcare analyst Iain Wilkie told Stockhead.

“If the pace holds, full-year 2026 could rival or exceed the pre-Covid record set in 2019.”

The last big M&A boom was back in 2019 led by Bristol Myer Squibbs’ US$74 billion buyout of Celgene and AbbVie’s US$63 billion acquisition of Allergan, pushing the year’s total deal value to a record ~US$224 billion.

Like today, Wilkie said the driver was patents due to expire and Big Pharma looking to buy growth rather than waiting on R&D.

“There’s a big patent cliff coming at the moment, particularly in US pharma stocks,” he said.

“The top 20 drugs due to come off patent between 2025 and 2028 last year made a combined US$176 billion in sales.”

Pharmaceutical giant Merck is a good example with its leading anticancer drug Keytruda, accounting for ~55% of its revenue and recording sales of almost $31.7 billion in 2025, due to come off patent in 2028.

“Companies are looking to reload their pipelines to bolster the impact of drugs coming off patent,” Wilkie said.

 

Undervalued healthcare stocks on M&A radar

For all the dealmaking, healthcare equities have had a mixed year, with the picture shifting sharply in recent weeks following signs of a rotation back into the sector.

As of June 30, the S&P 500 Health Care sector was up 3.47% YTD having rallied 6.62% in June alone.

Despite rising 13.31% in June to be the top performing sector for the month, the S&P/ASX 200 Health Care Index (ASX:XHJ) is down 21.92% YTD.

“Rare diseases, orphan indications and later stage assets could be a target, and the M&A activity gives needed positive sentiment,” Wilkie said.

 

Neuren’s strong clinical pipeline and approved drug

Wilkie said Neuren Pharmaceuticals (ASX:NEU) could be a M&A target with its lead asset trofinetide (marketed as Daybue in the US), the first and only FDA-approved treatment for rare paediatric neurological disorder Rett syndrome.

Neuren out-licences the drug to Nasdaq-listed Acadia Pharmaceuticals for North America and collects royalties and milestones.

The FDA also approved a powder formulation of the drug called Daybue Stix in December 2025.

Neuren has earned more than $500 million of cumulative revenue, consisting of royalties and milestone payments, since Acadia launched Daybue in the US in 2023.

Recent European regulatory progress on trofinetide is set to add a second royalty geography.

Neuren also has another second asset NNZ-2591, which the company believes could have greater commercial potential.

NNZ-2591 is in various stages of clinical development for other rare paediatric neurological conditions including Phelan-McDermid, Angelman, Pitt Hopkins, Prader-Willi syndromes, all under FDA orphan drug designation.

“Neuren has a strong late-stage pipeline and drug already approved so reasonable revenue,” Wilkie said.

 

Clarity, Telix in M&A frame as radiopharmaceuticals heat up

Clarity Pharmaceuticals (ASX:CU6) and Telix Pharmaceuticals (ASX:TLX) could also be potential M&A targets with radiopharmaceuticals a strong growth area in healthcare.

Clarity has developed a proprietary copper theranostics platform with Cu-64 for imaging and Cu-67 for therapy.

The company has various late-stage trials underway including two phase III trials dubbed Clarify and Amplify for prostate cancer diagnostics and a Phase 1/2a trial Secure for prostate cancer treatment.

It also preparing for a Phase III trial for neuroendocrine tumours diagnosis after a successful Phase II trial called Disco.

“Clarity has a differentiated asset to what has already been approved with strong clinical data,” Wilkie said.

Telix’s flagship product Illuccix is a US FDA approved PSMA PET imaging agent for prostate cancer.

Telix also has a strong clinical pipeline including Zircaix, a kidney cancer imaging agent with the company finalising a resubmission to the US FDA for approval.

The countdown is also on to a PDUFA date of September 2026 for its brain cancer imaging agent Pixclara, the deadline by which the FDA must complete its review and issue a decision on approval.

Telix’s TLX591 is an antibody-based radioligand therapy for prostate cancer is currently in a Phase III trial.

The company has also been an acquirer itself in recent years including of ARTMS and RLS Radiopharmacies.

“Telix been vertically integrating and building out its entire value chain, including production, manufacturing and distribution,” Wilkie said.

 

Dimerix targeting a rare kidney disease

Dimerix (ASX:DXB) also has a lead drug candidate in a late stage clinical trial with DMX-200 (proposed brand Qytovra) in a pivotal Phase III trial for rare kidney disease focal segmental glomerulosclerosis.

The trial, titled Angiotensin II Type 1 Receptor & Chemokine Receptor 2 Targets for Inflammatory Nephrosis and dubbed ACTION3 for short, has completed recruitment in the adult cohort with 333 patients enrolled across 21 countries.

Adult recruitment closed above the original 286-patient target with patients expected to receive their final dose in March 2028.

The trial is also recruiting paediatric patients aged 12-17 as an independent cohort.

In March 2024, Dimerix reported positive interim results showing DMX-200 performed better than placebo in reducing proteinuria, a key marker of kidney disease progression.

An external blinded statistical review has also confirmed the study remained appropriately powered to detect the primary endpoint of proteinuria reduction.

An independent data monitoring committee has completed eight reviews with no safety concerns identified.

Dimerix has already secured five lucrative regional licensing deals, including a US deal with Amicus Therapeutics worth up to US$590 million in upfront and milestone payments.

“Dimerix is a late-stage clinical company and from all we’ve seen so far it looks pretty good,” Wilkie said.

 

 

 

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