Navigating Fragmentation, Capital and Commercial Reality in Life Sciences in 2026
This essay is part of our New Year's series on what to expect in 2026 and can be downloaded as one compiled PDF via the download form. Thank you!
By Matthew Neal, Partner and Head of Health & Life Sciences at 5654 & Company
The global health and life sciences sector enters 2026 with renewed momentum after a stronger second half of M&A activity, but the operating environment remains complex. Companies seeking capital or preparing for transactions must navigate geopolitical fragmentation, more protectionist industrial policy and shifting regulatory expectations. For corporate affairs leaders, investor relations teams and C-suite executives, the year ahead will demand sharper communication, credible clinical progress and clear commercial pathways.
Macroeconomic and geopolitical forces now shape how investors deploy capital. Scientific collaboration continues, yet governments are placing greater emphasis on domestic advantage, supply-chain resilience and the strength of local innovation ecosystems. This has created a more polarised investment landscape in which capital flows and partnerships are increasingly influenced by geopolitics as well as scientific performance. Europe is reassessing the reliability of American support, while a growing number of companies are looking to China for capital, clinical development and partnerships, driven by both policy incentives and the practical need for speed, scale and cost efficiency.
Protectionist dynamics are accelerating across major markets. The United States has adopted a more interventionist posture and Europe is beginning to echo it. The launch of the Scale-Up Europe Fund, backed by major pension funds, banks and Novo Holdings, reflects a renewed focus on retaining high-growth companies within the region. For leaders responsible for capital markets engagement, this trend reinforces the importance of anticipating regional sensitivities, explaining geographic strategy and addressing investor concerns about resilience, supply chains and long-term value creation.
The United States enters 2026 with buoyant capital markets and renewed appetite for deals. Buyers are active but selective, favouring companies that combine robust data with credible commercial plans and a clear route to exit. Secondary raises are progressing and several companies are preparing for a potential 2026 IPO window. If confidence holds, competition between listings and M&A could lift valuations and enable late-stage private companies to move decisively.
Europe presents a more mixed picture. High-quality late-stage companies continue to attract capital, supported by strong data, experienced syndicates and growing participation from pharma venture arms. Smaller players face tighter funding conditions as many investors prioritise existing portfolios. M&A activity is rising but public markets remain subdued. Partnerships with Chinese firms are becoming more appealing as China strengthens first-in-human regulation and trial quality, positioning itself as a credible scale partner. European companies will need to demonstrate scientific strength and realistic plans for regional growth and commercial translation.
In the UK, competitive pressure is intensifying. Science, talent, capital, trials and manufacturing capacity are all internationally contested. Clarity on pricing and reimbursement remains essential to securing investment. The MHRA now has a global reputation as an innovation leader, but UK companies must present persuasive commercial narratives, visible routes to scale and clear pathways to exit. Continued engagement with policymakers will also be important as regulatory and pricing signals shape confidence.
As global boundaries harden, the companies that succeed in 2026 will combine scientific excellence with financing agility and disciplined communication. A compelling investor and corporate story is a central determinant of valuation, partnership potential and long-term competitiveness. For those leading communications on behalf of companies, the priority will be disciplined storytelling that clearly sets out clinical inflection points, market readiness and differentiation in competitive therapeutic areas, while projecting clarity, conviction and intent in an uncertain environment.