Independent Validation and Big Pharma: Implications for UK Pharma M&A

Executive Summary

Political and regulatory shifts in the UK, US, and EU are reshaping the healthcare and life sciences investment landscape. Movements like RFK Jr.’s MAHA agenda and “Make Britain Healthy Again” are driving public demand for transparency, prevention, and independence from pharmaceutical influence.

At the same time, the EU and US are diverging sharply in their approaches: Europe is pushing toward patient-centric regulation, price caps, and joint technology assessments, while the US remains more lucrative but politically volatile, relying on high list prices and fragmented oversight. This split will increasingly shape valuations, deal terms, and capital flows.

Regulatory reforms, pricing pressures, and supply chain disruptions, such as delays in vaccine contracts, are creating uncertainty but also opportunities for investors who align with evidence-based, outcome-driven innovation.

Key themes:

• Rising scrutiny of novel therapies and mRNA platforms – spear headed by the US!
• Demand for independent validation and reduced regulatory capture
• EU reforms increasing transparency and quality standards
• US political shifts influencing global regulatory culture
• Pricing volatility in UK and US markets impacting valuations
• EU–US divergence driving different innovation and investment dynamics
• Investors pivoting toward prevention and real-world evidence
• safe zones emerging in generics, peptides, plant-based medicines, and decentralised diagnostics.

1. Context: Shifting Narratives

Public and regulatory focus on preventive health, outcomes, evidence-based medicine, and transparency is growing, mirrored by movements such as RFK Jr.’s Make America Healthy Again (MAHA) and the emerging UK conversation around “Make Britain Healthy Again” (MBHA).

At the 2025 Reform UK conference, Dr. Aseem Malhotra raised questions about the safety of mRNA vaccines, reflecting a growing public focus on preventive health, outcomes, evidence-based medicine, transparency, and independence from pharmaceutical influence.

For companies like Pfizer and Moderna, whose revenues remain tied to COVID-19 and mRNA franchises, this heightened scrutiny increases the pressure to demonstrate safety and real-world value. GSK and JnJ, while diversifying, face similar attention on new vaccines and cell therapies. Mid-tier developers experience even greater challenges, as they often lack the lobbying power and capital buffers of larger peers.

Conclusion: Rising public and regulatory scrutiny of novel therapies is accelerating, creating uncertainty that is already shaping investor behaviour.

2. Independent Oversight and Public Trust

Themes gaining traction across both sides of the Atlantic include:

• Independent validation of safety and efficacy
• Reduced pharmaceutical influence on regulators (NIH, CDC, FDA, EMA, WHO, MHRA)
• Greater transparency in trial data and adverse event reporting

Knock-on effect: Public trust now directly affects commercialisation timelines. Pfizer’s post-COVID market share, GSK’s RSV launch trajectory, and JnJ’s repositioning all hinge on how effectively these companies engage independent validation channels. For mid- and smaller-cap firms, lack of resources to generate large-scale real-world data can delay or derail partnerships.

Conclusion: Trust, not just science, will determine market access. Investors remain cautious until stronger safeguards against regulatory capture are established.

3. EU Regulatory Reform

European reforms are reshaping the environment for drug development:

• Clinical Trials Regulation (EU 536/2014): centralised submissions and transparency
• Health Technology Assessment (EU 2021/2282): joint assessments for high-impact therapies
• Critical Medicines Act: monitoring supply chains and stockpiling essential drugs

Impact on Big Pharma:

• Pfizer and Moderna face higher compliance costs for mRNA trials.
• GSK is adapting to pan-EU HTA for vaccines and biologics.
• JnJ’s oncology assets must pass tighter cross-border assessments.

Mid- and lower-tier impact: Compliance burdens disproportionately affect smaller firms, who may lack the resources to navigate complex EU frameworks. This is pushing consolidation and licensing deals as survival strategies.

Conclusion: Regulation is moving toward evidence-driven, patient-centric models. This increases costs and timelines but also raises the quality bar.

4. EU vs. US: Diverging Market Models

The EU and US are tackling the pharmaceutical market in very different ways, with significant implications for both Big Pharma and smaller innovators.

• Pricing & Access: The US relies on a fragmented, market-driven model where manufacturers set prices, leading to higher margins but greater volatility. Europe enforces price caps and health technology assessments, delivering lower costs but raising concerns about underinvestment and slower adoption.
• Regulation: The FDA’s faster, more flexible pathways (e.g. EUA) contrast with the EMA’s centralised but heavier processes, which demand stricter follow-up and longer timelines.
• Innovation Incentives: High profitability in the US fuels aggressive R&D spend, while the EU lags behind, with industry leaders warning of a widening investment gap (€25bn versus the US).
• Biosimilars & Competition: The EU leads in biosimilar uptake, eroding biologic prices faster than in the US, where “interchangeability” rules slow substitution.
• Start-ups & Capital: US biotech enjoys deeper venture funding and a unified market, while EU start-ups face fragmentation and regulatory complexity.
• Trade & Policy Risks: Trump’s proposed 15% tariffs on EU medicines highlight growing transatlantic frictions, raising costs and threatening supply chains.

Conclusion: The US remains the more lucrative but politically volatile growth engine, while the EU offers predictability, patient-centric reforms, and stronger price controls at the cost of slower innovation. Investors must model both environments carefully, as divergence will increasingly shape valuations, deal terms, and capital flows.

5. US Politics: Trump, RFK Jr., and Regulatory “Cleansing”

President Trump has doubled down on his alignment with RFK Jr., who has called for “cleansing” US health institutions, the FDA, CDC, and NIH, of perceived regulatory capture.

Implications:

• Pfizer, JnJ, and Moderna risk closer scrutiny of trial transparency and pricing, particularly for vaccines and oncology assets.
• Mid-tier US biotech firms may paradoxically benefit if reforms weaken Big Pharma’s regulatory influence, creating space for challengers.

Conclusion: If this agenda gains momentum, it could reshape US regulatory culture toward greater independence and transparency. Such shifts would ripple into UK and EU frameworks, intensifying scrutiny of new therapies.

6. UK Rebates, US Pricing, and Trump’s Visit

The UK’s rebate schemes, with statutory rates above 20% and clawbacks over 30% on new drugs, contrast with the US model, where pharmaceutical profits rely on high list prices but now face pressure for rebate reform and “most favoured nation” pricing.

Big Pharma exposure:

• Pfizer and GSK face dual pressure from UK rebates and US reform debates.
• JnJ is heavily exposed through high-value oncology assets vulnerable to price caps.
• Smaller firms negotiating with the NHS struggle most, as margins erode and rebate mechanics reduce deal attractiveness.

Trump’s September 2025 state visit to the UK puts these issues in the spotlight, as trade talks may directly touch on tariffs and drug pricing.

Conclusion: Aggressive UK rebates and volatile US reforms both weigh on valuations, requiring investors to model international pricing exposure into deals.

7. Impact on Pharma M&A: A Transition Phase

The convergence of public scepticism, regulatory reform, and preventive health narratives is reshaping deal-making.

Big Pharma under pressure:

• Moderna faces delayed revenues from UK vaccine contracts. While this is not a reflection of regulatory or trust issues above, it has lowered Moderna’s forecast and adds to broader challenges from weakening vaccine demand and rising cost pressures.
• Pfizer’s COVID-19 windfall is fading, pushing it to seek bolt-on M&A to fill its pipeline.
• GSK’s RSV launch demonstrates both opportunity and risk, demand is high, though questions around long-term reimbursement linger
• JnJ is retrenching around oncology and cell therapy after scaling back vaccines.

Mid-tier and lower-tier impact:

• Biotech’s with single assets are suffering valuation discounts.
• Smaller vaccine developers are squeezed hardest, as capital markets demand late-stage evidence before providing funding.
• Partnerships and royalties are replacing acquisitions as risk-sharing becomes the norm.

Signals so far:

• Valuations are adjusting for pricing, transparency, and regulatory risks
• Deal structures are evolving, earn-outs, royalties, and JVs increasingly spread risk
• Investors have cooled on some pharma platforms (returns hovering 15-20%) while they “wait and see”

Conclusion: This is a transition phase. Even Pfizer, GSK, and JnJ are recalibrating strategy under pressure, while smaller firms face survival challenges. The sector’s volatility reinforces the need for diversified portfolios and robust supply chain strategies.

8. Investor Strategy in a Paradigm Shift

Investors can adapt by:

• Rebalancing toward prevention, nutrition, and lifestyle medicine
• Building trust and regulatory exposure into due diligence
• Backing firms that engage with regulators, patients, and independent bodies
• Supporting innovation aligned with policy priorities (AI diagnostics, microbiome, food-as-medicine)
• Prioritising models that deliver evidence-based medicine grounded in real-world outcomes, not just clinical endpoints
• Shifting capital toward platforms that enable preventive care and measurable health impact, including decentralised diagnostics and longitudinal monitoring

Conclusion: Capital will flow to companies, large and small, that align with transparency, prevention, and outcomes-driven care.

9. “Safe Zones” for M&A

• Reprofiling generics with strong safety records
• Mimetics, peptides, proteins, and plant-based medicines
• Investments underpinned by real-world evidence and outcome-based validation
• Ancillary testing and monitoring to strengthen safety and efficacy claims

10. Overall Outlook

Healthcare is shifting from opaque, treatment-driven models to evidence-based, prevention-focused, and trust-centred innovation. Political theatre (Trump’s visit, RFK Jr.’s reform agenda) and divergent pricing regimes (UK rebates vs. US reforms) heighten near-term uncertainty.

Final thought: It is too early to say exactly how M&A will settle, but the trajectory is clear winners will be those who embrace independent validation, resilience, and adapt to the emerging paradigm. The widening gap between EU predictability and US volatility will be the defining dynamic for investors, shaping not only valuations but also the very structure of cross-border healthcare deals, and potentially creating a lag in market responses.

Summary Table: Real-World Illustrations of Risk-Sharing Structures:

Written by Ramesh Jassal