The past year has seen an increase in investment in biopharma companies following a couple of lean years, but the sector is not fully out of the woods yet. However, most industry leaders see funding opportunities for those with attractive propositions, while big pharma needs innovative biotech to refill its pipelines and fuel future growth.
“Although the funding environment in 2024 presented significant challenges, high-quality companies with strong data, scientific foundations and compelling value propositions continued to secure investment,” said Phil L’Huillier, CEO of cancer immunotherapy developer Scancell Holdings. “As interest rates potentially normalize and macroeconomic conditions stabilize in 2025, the focus will increasingly shift towards innovative and creative companies who are driving the development of transformative therapies to address critical unmet medical needs. Alongside this, in 2025 we should continue to see transformative partnerships in biopharma to foster innovation and drive value for stakeholders. ”
“Pharma’s interest in novel mechanisms of action, increasingly precise therapeutic targeting, and scalable scientific approaches remains steadfast,” said Andy Page, chief operating officer and chief business officer of Oxford, UK-based Greywolf Therapeutics, which is developing new therapies based on T-cell activation.
Manfred Rudiger, CEO of radiopharmaceutical products developer Ariceum Therapeutics, said: “2024 has seen a marked improvement for all forms of financing for biopharma companies, whether it be through private fundraising, mergers, or partnerships. There have also been some biotech IPOs, which are a sure sign that demand has been building during the fallow period after the pandemic.” But he also struck a note of warning: “That said, there are headwinds and it remains to be seen how the incoming Trump administration will shape the market, and whether geopolitical issues will damage confidence, or disrupt markets.”
For Verve Therapeutics’ chief financial officer, Allison Dorval, there are reasons to be cheerful. “Looking to 2025, continued focus on thoughtful capital allocation will be necessary. That said, I feel optimistic about the industry’s appetite for financing, especially with clinical validation,” she commented. “There has been a significant amount of fresh capital raised over the course of 2024 that brightens the outlook for funding innovation for the foreseeable future, and I believe there will be opportunity in the capital markets in particular to continue to fund early clinical development.”
Optimism
If there was an overarching sentiment among the industry leaders and investors who shared their views on the funding and deal-making environment going into 2025, it was one of measured optimism.
Antoine Papiernik, chairman and managing partner at European venture capital firm Sofinnova Partners, underlined the sector’s intrinsic value. “Biopharma in 2024 proved its ability to deliver real solutions in a complex and uncertain world. Despite geopolitical and economic challenges, the industry stayed focused on its core mission: improving lives through innovation. Scientific advances – though rarely linear – have consistently transformed outcomes and reinforced hope for the future.
“Take GLP1 therapies – first developed for diabetes, now tackling obesity, one of today’s most pressing health challenges – driving both industry impact and pharma growth. In 2024, we witnessed a new modality, RNA editing, transitioning from concept to reality with the first clinical demonstration in patients suffering from debilitating genetic diseases like Alpha1 antitrypsin deficiency. These breakthroughs highlight how even in a field as complex as biopharma, persistence and innovation can transform lives.”
Papiernik sees all this feeding into fresh growth and activity over the coming year: “In 2025, biopharma’s resilience and achievements are poised to fuel a NASDAQ rebound. M&As are also expected to continue to strengthen pharma’s pipelines. Meanwhile, Generative AI promises to reshape drug development and healthcare efficiency, unlocking new opportunities for the industry,” he said.
In 2025, biopharma’s resilience and achievements are poised to fuel a NASDAQ rebound.
Antoine Papiernik, Sofinnova Partners
“The future is always an inexact science, but I am optimistic that the industry will benefit from a macroeconomic environment that supports continued innovation and encourages healthy M&A and partnering activity,” said Fred Chereau, senior vice president, strategy and business development of Alexion, AstraZeneca Rare Disease.
“The biotech industry has endured nearly three challenging years, with smaller companies hit hardest by a lack of funding, minimal IPO activity, and an environment where even positive developments struggled to gain traction. Many firms have merged, closed, or restructured, leading to a contraction across the sector. However, this period of struggle is now paving the way for new opportunities,” said Dikla Czaczkes Akselbrad, CEO of PolyPid, which has developed technology to continuously deliver medications locally over an extended period. “Companies that weathered the dry spell are emerging stronger, poised for significant growth in 2025. These resilient players are set to drive M&A activity, forge strategic partnerships, and shape executive strategies as the industry rebounds and funding conditions continue to improve.”
Tim Dyer, CEO of Addex Therapeutics, which develops small-molecule allosteric modulators for neurological disorders, predicted “an improving funding environment due to reducing interest rates and improved fund flows back into equities and tech in general.”
“Whilst the recovery of the funding environment has been slower than many predicted, increasingly across the UK and Europe we’re seeing businesses beginning to invest to support growing headcounts and expansion. To me that suggests the tide is turning,” observed James Sheppard, international head of asset management at Kadans Science Partner, which operates laboratory and office buildings for innovative sectors. “There’s growing confidence in the funding environment, particularly for private companies, which should allow them to flex their muscles and execute operationally to reach important milestones. In turn, this should position them favorably with large pharmas looking to restock their pipelines, so I expect to see both growth and consolidation across the sector in 2025.”
“A quieter year for M&A has allowed pharma to build its firepower, while pressure on internal R&D budgets and productivity tips the balance in favor of dealmaking to refill pipelines,” said Dan Chancellor, director of thought leadership at Scrip’s parent company Norstella. “Add the patent cliff that begins to ramp in 2025, an abundance of biotechs willing to come to the table, alongside the sentiment that an incoming [US] Republican administration brings, the ingredients are all there for a strong deal flow in 2025. This will help to catalyze the wider ecosystem – from valuations to IPOs – alongside an uptick in VC deployment that is widely expected.”
“With the [US] election results known and following a slowdown in deal volume in the second half of 2024, likely driven by election-related uncertainty, I’m anticipating an uptick in deal volume in 2025 after initial market volatility in the first quarter,” predicted Jeffrey Erickson, vice president of business development at Triumvira Immunologics, whose T-cell platform technology is designed to induce a patient’s anti-tumor response. “Market dynamics that could help drive this trend include significant amounts of revenue required to achieve growth targets for large caps, near record-setting amounts of capital raised by public companies through follow-ons and PIPEs in 2024, increased participation in M&A from mid-cap companies looking at bolstering pipelines with earlier stage assets, and undercapitalized small-cap companies restructuring to cut costs or seeking strategic alternatives such as reverse mergers. Additionally, with a slowdown in public offerings ahead of the election, there is likely a backlog of IPO-ready companies not on file. Interest rates, the geopolitical landscape, and confirmation of key cabinet members are uncertainties, but overall, I’m bullish on 2025 financing and deal flow.”
I’m anticipating an uptick in deal volume in 2025 after initial market volatility in the first quarter.
Jeffrey Erickson, Triumvira Immunologics
Miguel Forte, president of International Society for Cell & Gene Therapy, board member for Alliance for Regenerative Medicine and CEO of Kiji Therapeutics, also saw chinks of light ahead after a difficult period.
“Funding for biotech in general and for cell and gene therapy in particular has been challenging in 2024,” he said. “Investors have been somewhat risk-averse and invested either in rare very early opportunities or in later stages with clinical data or de-risked opportunities. For cell and gene companies this is made more challenging because of the cost of development, manufacture and limited patient access, making a perception of delayed or reduced return on investment. Nevertheless, there is money available and companies are getting funded with a brighter environment over the last 12 months in comparison to previous year even if investments are slow to materialize. In addition, we have seen companies looking for alternative ways of financing, like deals and M&A, and we saw a few good examples at the end of November, early December. It seems likely that this positive trend will continue, and hopefully increase, through 2025.”
With increased biotech funding, companies that provide services should also benefit. “We expect a positive outlook into 2025 and beyond for biotech and pharmaceutical funding as the market returns to strength, pulling along with it the supply chain and services industries to support new therapeutics,” said James West, managing director in London at investment bank Lincoln International. “The pinch has been most notable in the past two years in preclinical and drug discovery sub-sectors where clients have been cash-constrained and forced to focus on a smaller number of higher likelihood assets. Over the next 12 months we expect biotech funding levels to increase, and this will be a welcome relief to all the supply sectors supporting drug discovery and development.”
Public Markets
Among those predicting a recovery on the public markets was Addex Therapeutics’ Tim Dyer, who thought reducing interest rates and funds flowing back into equities and tech “should lead to many more biotech IPOs than we’ve seen in the past 12-18 months as the backlog of private companies push to take advantage of the IPO window reopening.”
“Assuming that uncertainty settles after a year of elections, we expect to see a slow but steady recovery in IPO and M&A activity in 2025,” predicted Roel Bulthuis, managing partner, head of investments at UK life science investment firm Syncona. “This should create opportunities for small- and mid-cap biotech stocks that have been punished ‘disproportionally’ and have not yet been part of the market recovery. Successful IPOs in 2025 will be primarily driven by mid-to-late clinical-stage companies, who will need to compete for attention and capital with a busy register of small- and mid-cap biotechs.”
“While there are still some uncertainties, the consensus is that the positive sentiment for deals in biotech will continue. I expect 2025 will see a number of exciting fundraising deals, M&A activity and partnering opportunities come to fruition,” said Catherine Pickering, CEO of cancer-focused Dutch biotech iOnctura. “There have been a number of biotech IPOs towards the end of 2024 and more public listings will take place in 2025, particularly in the US, where there is an abundance of capital and analyst expertise to support new listings.”
In 2025, I would expect a gradual improvement in follow-ons due to macro conditions, especially for companies that have strong clinical data.
Travis Whitfill, Azitra
“On the funding side, 2024 remained challenging with a continued hostile IPO and follow-on environment,” said Travis Whitfill, chief operating officer of dermatology product developer Azitra. “In 2025, I would expect a gradual improvement in follow-ons due to macro conditions, especially for companies that have strong clinical data.”
Venture Capital
“2025 will be a year of accelerated venture funding, continuing the trend we saw in 2024 where existing companies obtained financing, and many new companies raised mega $100m+ Series A rounds,” predicted Daniel O’Connell, partner, Venture Investments, Novo Holdings. “In 2024 we saw accelerated funding driven both by pushing and pulling forces: on the pull side, several large acquisitions and exciting data pulled investors deeper into funding next-generation products in obesity, autoimmunity, ADCs, and neuropsych spaces. On the push side, a turn towards a more favorable environment enabled investors with large funds to eagerly deploy capital into companies. In 2025 we will see these trends continuing, with investors backing versions 2.0 of familiar stories.”
However, O’Connell tempered his optimism with a note of warning: “The challenge will remain for cutting edge science, which may continue to be underfunded relative to other stories.”
The challenge will remain for cutting edge science, which may continue to be underfunded relative to other stories.
Daniel O’Connell, Novo Holdings
Syncona’s Roel Bulthuis also foresaw investors looking to deploy significant sums in the sector: “Private markets will continue to fund companies to data. IPOs will become more relevant again but optional for the time being, as significant capacity in private markets allows companies to stay private longer and scale prior to a listing,” he said.
“As the funding environment continues to recalibrate post-pandemic, we will see an increase in venture investments in companies possessing both a differentiated platform and transformative therapeutic assets that will be in the clinic in the near term,” said Ron Mazumder, partner at Illumina Ventures, which specializes in investing in genomics and precision health companies, who also predicted that “areas such as RNA-based medicines and bi-specific molecules will continue to attract capital.”
“What strikes me in thinking about 2025, is how we see the VC [venture capital] market coming together for more syndicates. Next to the ever-increasing costs of drug development due to regulatory requirements and rising complexity of clinical trials, this is largely being driven by the need to deliver ready-to-market assets to pharma,” commented Andreas Kastenbauer, partner at deep tech and life sciences-focused MIG Capital AG. “This entails larger sums of capital necessary to get start-ups across the finishing line to an exit. It is important to provide head room for extra studies. For example, if a startup can get more validation for a Phase II study, that increases the quality of existing data, and the company’s likelihood of being ready for acquisition by pharma, helping them to circumvent the looming patent cliff.”
M&A
“Overall, we’ve seen slightly improving conditions for M&A and partnering in biopharma in 2024 with total deal amounts exceeding 2023. I’d expect a gradual increase in deal activity in 2025 due to some macro trends, including gradual lowering of interest rates and inflation, looming patent cliffs in big pharma necessitating the need for pipeline replenishment, attractive valuations of clinical-stage assets, and anticipated regulatory changes (eg, FTC) more favorable for dealmaking,” commented Azitra’s Travis Whitfill.
Big pharma’s threatened revenue streams were a recurring refrain in expectations around M&A. “As we’ve seen during 2024, large pharma will continue to execute M&A to compensate for the looming patent cliff in product pipelines faced by most,” predicted Tim Dyer, CEO of Addex Therapeutics. Meanwhile, Syncona’s Roel Bulthuis noted: “In M&A we expect the emphasis on later stage assets to continue, as pressure builds on pharma to show BD [business development] productivity and address revenue losses with upcoming patent expirations.”
Greywolf Therapeutics’ Andy Page, however, foresaw a focus on earlier-stage assets and risk-sharing in both partnering and “in the M&A market, where deals have predominantly targeted early clinical and even preclinical stage assets, particularly in high-priority areas such as autoimmunity and immuno-oncology. These therapeutic areas have maintained strong appeal due to their potential for groundbreaking treatments and significant unmet medical need, making them relatively more attractive than some other biopharma sectors.
“If the industry navigates its current funding challenges, 2025 could mark the long-anticipated M&A inflection point, especially for assets in these sought-after areas. Alternatively, as VC and public fundraising return to biotech, the cost of acquiring assets could rise, further shaping Pharma’s strategic priorities and reinforcing the importance of focusing on high-value therapeutic areas,” he added.
Illumina Ventures’ Ron Mazumder thought: “M&A activity, especially in oncology, immunology and cardiometabolic, will continue to increase.”
“Global biotech funding rebounded in 2024, surpassing $70bn – up 20% year-over-year. This growth was fueled by investor interest in high-impact areas like ADCs, CNS and obesity, each supported by promising clinical data and market potential. Pharma companies, faced with mounting patent cliffs, are pursuing innovative assets; we’ve seen firsthand the uptick in partnership inquiries and acquisition offers in these focus areas,” also commented Stefan Fischer, managing partner (finance) at venture capital firm TVM Capital Life Science.
“Looking to 2025, we anticipate a surge in M&A activity, driven by distinct observable trends: the maturation of medtech platform technologies, accelerated adoption of AI-powered drug discovery, and pharma’s need to offset R&D stagnation in traditional pipelines. Medtech deals alone are projected to exceed $60bn, fueled by breakthroughs in minimally invasive surgery and diagnostics. Recent examples from our network include health IT partnerships doubling as companies look to integrate real-world evidence into clinical trial designs. This cross-sector urgency reflects the realities we continually encounter in deal-making discussions,” Fischer added.
“Despite industry pressures, biopharma remains an attractive space with many reasons to believe that biotech M&A activity will increase. From the demand side, we see an accelerating need for external innovation to deliver on investor expectations,” said Jake Henry, senior partner and global co-leader, M&A practice, McKinsey & Company. “Pharmacos can offer a potential lifeline for earlier-stage biotechs. Across the top 20 pharmacos there is a $250bn gap in expected company sales versus known asset forecasts that will need to be filled. Approximately 40% of industry revenue will go off-patent by 2030. Companies also are looking to place bets in “hot spot” therapeutic areas, including obesity, immunology, oncology, and neurology.”
However, biotech’s ability to plug that revenue gap entirely is far from assured.
“The universe of targets is vast but limited in terms of blockbuster potential. While we expect earlier stage bolt-on deals to continue to dominate, the changing landscape could reinvigorate mega-mergers,” Henry said. “So, what are the new paths for value creation in 2025? Creative deal structures and dynamic partnerships will reign.”
While we expect earlier stage bolt-on deals to continue to dominate, the changing landscape could reinvigorate mega-mergers
Jake Henry, McKinsey & Company
Partnerships
“Partnerships will remain more important than ever in 2025 and beyond. The nature of the work pursued by our industry requires that we collaborate with all stakeholders. While research and development drive our industry, it is collaboration with academic institutions, governments, and other peers that make innovative life-saving therapies and products a reality,” said Ruxandra Draghia-Akli, executive vice president, head of R&D, Novavax. “Partnerships can help overcome scientific and technological challenges, create greater cost efficiencies, share resources, and accelerate the delivery of innovative treatments that address unmet needs. I expect to see a larger trend of companies coming together and finding ways to capitalize on what each does best.”
“Partnerships are essential for delivering critical therapies to patients faster, combining transformative science with the resources and expertise needed to bring treatments to market,” said Ken Galbraith, CEO of Canadian biotech Zymeworks. “Strategic partnerships also allow for nimble biotechs to continue focusing on their R&D, and reinvest in their novel pipelines to move the needle in areas like oncology, and autoimmune and inflammatory diseases. As we look to 2025, I’m hopeful that industry collaborations and asset acquisitions will continue to play a large role in accelerating progress, and ensuring that potentially life-changing therapies reach those with the greatest need. This trend reflects the growing recognition that meaningful advancements in healthcare become all the more possible when organizations work together to change the standard of care.”
Also extolling the virtues of collaboration was Paul Biondi, general partner at Flagship Pioneering and president of Flagship’s in-house drug discovery and development unit Pioneering Medicines. “2025 is poised to be a transformative year for biopharma, with M&A and partnerships driving innovation across the sector. Companies are strategically aligning to strengthen pipelines, leverage complementary expertise, and accelerate the development of life-changing therapies. In an industry where progress depends on collaboration, the ability to bridge capabilities and work across ecosystems is what will define success in 2025,” he said. “By fostering partnerships that combine novel scientific platforms with late-stage development expertise, we can deliver therapies to patients faster and with greater impact.”
Gavin Samuels, chief business officer of “hub-and-spoke” biotech company CinRx Pharma, also saw opportunity through partnerships. “At the heart of biotechnology’s potential lies collaboration and innovation. As CBO at CinRx Pharma, I recognize that the funding environment for small biotech companies is increasingly challenging, with cautious venture capital, a sluggish IPO market, and volatility affecting valuations. Yet, there are still significant opportunities through strategic partnerships and collaborations,” he said. “Partnering with larger firms is crucial, but it requires navigating negotiation leverage. To succeed in this evolving landscape, small biotechs must be strategic, flexible, and innovative.”
In an industry where progress depends on collaboration, the ability to bridge capabilities and work across ecosystems is what will define success in 2025.
Paul Biondi, Flagship Pioneering
“We continue to expect to see a partnering market dominated by a smaller number of marquee deals, where the fundamentals of the relevant program create a strong atmosphere of optionality, with management able to play off a partnering opportunity with other partnering opportunities as well as possibly an M&A opportunity or a public markets opportunity,” said London-based Frances Stocks Allen, a partner at global law firm Cooley. “Pharma continue to be hungry for compelling product candidates in the right area and at the right stage of development to fill their pipeline.”
Homing in on a specific subsector of biotech, Jason Bock, CEO of CTMC [Cell Therapy Manufacturing Center, a Texas-based joint venture between MD Anderson Cancer Center and National Resilience], highlighted that “the current funding landscape presents challenges for cell therapy biotechs, resulting in companies forming strategic partnerships to accelerate drug development in a capital-efficient way.
“One promising model leverages the unique supply chain structure of autologous cell therapies, distinct from antibodies and small molecules,” he explained. “Since the starting material and final product begin and end with the patient, clinical centers become integral components of the supply chain. Forward-thinking centers are building industrial-grade, patient-adjacent manufacturing capabilities. Biotech companies are forming partnerships to reduce costs and shorten turnaround times.
“Another strategy involves collaborating with partners offering comprehensive manufacturing technology platforms, including proprietary IP. This approach allows innovative biotech companies to bolt onto existing, de-risked platforms, reducing timelines and delivering more efficacious therapeutics. In this evolving field, understanding the value-add of partnerships is imperative. In this funding environment, fit-for-purpose partnerships designed to address challenges in the field have an advantage over traditional partnership models.”
For Illumina Ventures’ Ron Mazumder, “We are likely to see more partnerships between biopharma and life science/diagnostics companies who can meaningfully impact clinical trial success rates or cycle times, thereby improving pharma’s R&D productivity and broadening the definition of precision medicine.”
Areas Of Investment Focus
“After years of speculation and tempered optimism, dealmaking activity is expected to increase in 2025, as companies look to acquire viable, late-stage assets in order to grow their pipeline and accomplish their business objectives,” said Robert Stanislaro, senior managing director, corporate reputation at FTI Consulting.
“Particular areas of investment include the rise of obesity treatments, an increased focus in immuno-oncology, gene editing and AI-powered drug discovery. The growing optimism amongst industry leaders and key stakeholders opens up the opportunity for companies to position themselves as innovators in the field and rise above the crowded marketplace,” said Stanislaro.
“Looking ahead, investment in genetic medicine – both in payload and delivery technologies – is an area of particular focus,” said Christian Schubert, vice president and head, AbbVie Ventures. “Recognizing that genetic medicine has the potential to transform the treatment of a wide range of diseases across AbbVie’s therapeutic areas of interest, we are investing in building up its capabilities internally, and investing in early-stage companies and partnering with leaders in the field through external innovation.”
Looking ahead, investment in genetic medicine – both in payload and delivery technologies – is an area of particular focus.
Christian Schubert, AbbVie Ventures
Vikas Sinha is CFO of Waltham, Massachusetts-based genetic medicines company ElevateBio. He outlined how the subsector might weather ongoing financial challenges. “The biopharma industry’s risk-averse environment will continue to shape the funding landscape through 2025, particularly in genetic medicine. Companies with de-risked, later-stage assets will continue to attract capital markets and M&A interest. Meanwhile, early-stage companies will increasingly turn to hybrid partnership models that combine traditional R&D payments with steady revenue streams generated by technology platforms and infrastructure services – from manufacturing to gene editing and AI. This sort of model enables industry access to critical capabilities, such as scalable cell and gene therapy manufacturing, without capital-intensive internal development. Such partnerships allow companies to continuously invest in and advance their capabilities, leveraging broader industry expertise in emerging areas while accessing non-dilutive funding to create a sustainable cycle of innovation.”
“The genomic medicine sector stands at an important moment heading into 2025. With dozens of approved therapies demonstrating remarkable efficacy, the key challenge isn’t scientific validation but proving they can generate sustainable returns,” said Stephane Boissel, president and CEO of SparingVision, a French gene therapy company focused on retinal diseases.
Boissel anticipated “three key trends: first, investor focus will shift toward genomic medicines targeting larger patient populations, as the underlying technology has matured to address more complex, prevalent diseases. Second, we’ll see increased collaboration between biotechs and CDMOs [contract development and manufacturing organizations] to tackle manufacturing costs and improve production efficiency. Finally, expect consolidation – the era of single-asset genomic medicine companies is ending. Success in 2025 will belong to companies that can demonstrate scale while maintaining therapeutic area focus.”
Antibody-drug conjugates are another area of interest. “Following a 2024 where we saw some landmark deals, ADCs will continue to be hot properties in 2025. With a number of new ADCs expected to hit the market following approval by regulators, there will be further options for patients and doctors,” pointed out Andreas Pahl, CEO of Heidelberg Pharma, a German company operating in the field. “As we learn more about ADC design, and how to minimize toxicity of payloads while maximizing their therapeutic potential, ADCs can only grow more attractive as we seek new therapies that build on the progress seen in oncology over the past few decades.
“By reducing ADCs’ toxicity and increasing their efficacy, the door opens for combination therapies with existing cancer drugs such as checkpoint inhibitors, potentially improving response rates and patient survival.”
“I believe next-generation ADCs will continue to be a major area of interest for investors next year as they seek new, innovative therapies with improved efficacy and safety profiles,” agreed Mohit Trikha, president and chief operating officer of Kivu Bioscience, which is also developing the technology.
“ADCs have been gaining attention due to their ability to target specific cancer cells while sparing healthy tissue, making them an attractive option for treating a range of cancers with potentially fewer side effects. We’re seeing increased investment in the development of next-generation ADCs that incorporate novel linkers, payloads, and targeting strategies. These advancements are critical for enhancing therapeutic potency and reducing off-target effects. In 2025, we expect ADCs to be at the forefront of oncology research and a key focus for investors looking to support transformative treatments,” said Trikha.
For Ariceum’s Manfred Rudiger, meanwhile, “Radiopharmaceuticals are really coming of age and this is reflected in the predictions that the global market is going to continue grow in 2025 and beyond. There’s also better availability of the materials needed to manufacture them thanks to a growing number of cyclotrons, accelerators and other approaches to service the industry.”
“I predict a significant increase in investor interest in novel classes of oncology therapies,” said William Ho, CEO OF IN8bio, which is developing gamma delta T-cells for solid and hematological tumors, the “targeted specificity and adaptability [of which] make them attractive for treating cancers with potentially fewer side effects with longer durability,” he noted. “I expect that the funding trend will accelerate next year, driven by a growing understanding of the benefits of gamma delta T-cells as a novel oncology therapy. This trend reflects a broader movement towards more targeted and personalized treatment options, positioning gamma delta T-cell therapies as a promising approach for the future of cancer care.”
“The growing interest in neurology will continue to be an important theme both for investment and M&A in 2025,” predicted Tim Dyer, CEO of Addex Therapeutics.
“What we have seen developing in the fundraising environment in 2024 is a ‘winner takes all’ mentality where the amounts being raised are high but concentrated into fewer investments. So, it’s positive that the market is in a rebound mode, but the distribution is polarized,” observed Richard Jones, CEO of Adrenomed AG.
“What we hope to see in 2025, is the ‘winning’ companies are those addressing areas with the highest unmet medical need, such as sepsis and septic shock, currently a major cause of death [and the focus of Adrenomed’s lead candidate],” he said.
“Bold and courageous efforts from private and public investors are essential to developing targeted treatments for diseases previously considered untreatable and high-risk. There are encouraging examples: thanks to advances in treating rheumatoid arthritis deformed extremities almost no longer exist, and life expectancy in children with cystic fibrosis previously dying early in life has improved dramatically,” Jones pointed out.
Meanwhile, AstraZeneca’s Fred Chereau, thought that “new technologies, such as AI, and modalities, like gene therapy, will continue to be attractive areas for M&A and partnerships. Deals happen when the science is right and with the pace at which technology is advancing, I believe we will continue to see more long-term, strategic partnerships throughout the industry.”
Deals happen when the science is right and with the pace at which technology is advancing, I believe we will continue to see more long-term, strategic partnerships throughout the industry.
Fred Chereau, Alexion, AstraZeneca Rare Disease
For Jason Silvers, CFO of Generate:Biomedicines, “The most transformative change” in the sector “lies in the integration of generative AI and data-driven platforms into drug discovery. Companies adopting these technologies are setting new benchmarks for innovation, enabling dynamic partnerships that target scalable programs rather than single assets.”
Cooley’s Frances Stocks Allen also highlighted AI. “We expect to continue to see strong investment and partnering opportunities around discovery and drug development that leverage AI and machine learning platforms to increase efficiency and decrease time and cost to clinic. As IRA [the US Inflation Reduction Act] puts continued pressure on drug pricing, improving efficiencies across the pipeline will continue to drive opportunities.”
Early-Stage Deals
Some observers expect a trend towards earlier stage deals.
“Beginning in 2025 and progressing over the next several years, patents from some of the largest drug brands on the market are set to expire. These patent lapses will significantly impact revenues across several of the largest pharmaceutical companies in the industry. My prediction is that this will lead to an increase in mergers and acquisitions as companies look to restock their pipelines with early-stage assets,” said Tony Goodman, chief operating officer of Adial Pharmaceuticals, which is developing therapeutics to treat addictions. “In particular, I see precision medicine continuing to gain prominence as a major focus for all commercial-stage companies and we should expect to see an uptick in the number of deals in this space.”
“I’m hoping that 2025 begins to see the rise of earlier-phase deals, as big pharma and big biotech look at earlier-phase deals with better pricing than late-phase deals to refill their pipelines,” said Ira Spector, CEO of SFA Therapeutics, which develops oral small-molecule biosynthetic compounds for chronic inflammatory disease. “With a significant number of companies facing patent cliffs, bidding for late-phase assets is driving up acquisition costs, and earlier-phase deals will begin to be more desirable.”
With a significant number of companies facing patent cliffs, bidding for late-phase assets is driving up acquisition costs, and earlier-phase deals will begin to be more desirable.
Ira Spector, SFA Therapeutics
Later-Stage Deals
“The funding environment may continue to be based more on trends than data and fundamental opportunity. We would welcome a shift to financing later-stage programs that have a real chance to become drugs that improve the lives of patients,” said Stephen Brady president and CEO of Tempest Therapeutics, which develops small-molecule therapeutics for cancer.
Some believe demand will indeed be higher for later-stage technology.
“In 2025, biopharma dealmaking will shift toward clinical-stage assets, driven by stabilizing interest rates, evolving political landscapes, and the need to fill pipeline gaps from patent expirations and biosimilar competition,” foresaw Generate:Biomedicines’ Jason Silvers. “Late-stage data emerging from promising assets could also reignite larger M&A transactions, bringing greater certainty to dealmaking,” he added.
“We see investors and strategic partners more likely to focus on later-stage assets in 2025 that are truly differentiated with a compelling commercial potential, corresponding to the increasing number of patent LOEs [loss of exclusivity] that are on the horizon,” said Barry Wohl, chief business officer of sleep apnea-focused Apnimed. “In addition, with some elements of the Inflation Reduction Act now closer to implementation, we see BD and financing activity likely to pick up around higher-quality, derisked development programs that have the clear potential to improve patients' lives.”
Late-stage clinical biotech companies are poised to dominate investor interest as the sector focuses on value creation and risk mitigation.
Andrew Lam, Ally Bridge Group
“In 2025, late-stage clinical biotech companies are poised to dominate investor interest as the sector focuses on value creation and risk mitigation. With a more selective funding environment, investors will prioritize assets with strong clinical validation, clear regulatory pathways, and near-term commercial potential,” predicted Andrew Lam, head of healthcare investment at global investment firm Ally Bridge Group.
“Late-stage biotech offers a compelling blend of reduced scientific risk and significant upside, particularly for therapies addressing unmet medical needs in large markets. Ally Bridge Group’s investments this year in CG Oncology and Profound Bio highlight this trend. Both companies had an exit this year, and as for next year, investments like these underscore the importance of late-stage biotech in driving impactful outcomes and shaping the next wave of healthcare breakthroughs,” said Lam.
Higher Selectivity
With the financing downturn in biopharma, investors have become more exacting in their demands.
“2025 will remain tough for many young companies. We are currently in a period where VCs and partners are emphasizing assets with shorter paths to value recognition,” said Linda Pullan, Founder of Pullan Consulting. “For a platform or an early-stage asset to compete for funds and partnerships, it will require very clear and crisp messages on differentiation, and a well-thought-out path forward with early risk-reduction steps. Approaches such as cell therapy, where discerning the differentiation of one therapy versus another is complex and multi-factorial, will continue to struggle compared to approaches such as radiotherapy, where the mechanism of efficacy is clear and the risks of logistics and biodistributions can be addressed with plans. Winners in partnering and fundraising will be those with clear differentiation and plans to address risks early.”
Venture capitalists and strategic investors are setting a higher bar for validation, compelling companies to demonstrate scientific excellence and operational resilience before securing resources.
Monique Allaire, THRUST
“We expect the 2025 funding landscape to be further defined by strategic recalibration and heightened selectivity,” said Monique Allaire, president of life sciences strategic advisory firm THRUST. “Venture capitalists and strategic investors are setting a higher bar for validation, compelling companies to demonstrate scientific excellence and operational resilience before securing resources.
“A notable trend is the shift toward mature assets with established proof-of-concept in well-characterized markets. Investors favor diversified portfolios that mitigate risk and cutting-edge drug discovery platforms that enable sustainable pipeline growth. The integration of AI-driven technologies remains a differentiator, offering streamlined drug discovery timelines and enhanced therapeutic precision to meet the growing demand for patient-specific treatments. For emerging companies, collaborations will be pivotal, providing resources and expertise for enhanced capital efficiency and organizational agility,” Allaire went on. “Companies that align their pipelines and strategies with these evolving dynamics will position themselves for success, and likely find a competitive advantage in the selective markets of 2025.”
“In today’s challenging investment landscape, biotech companies must rigorously validate their science and data to derisk clinical trials and obtain insights into a broader range of applications for their therapeutic approaches,” said Liesbeth Ceelen, CEO of BioLizard, which partners with life sciences companies to support their data strategies. “Leveraging insights from both public and proprietary information is no longer a luxury, but a necessity for attracting investment and driving successful M&A deals.
“As financing advanced clinical trials becomes harder, we’re seeing increasing demand from companies seeking support in evaluating their research with the help of data science experts, aiming to add value and gain additional flexibility to monetize their research.”
“After a few bruising years, I am hopeful that the green shoots of 2024 bloom in 2025,” said Asit Parikh, CEO of precision medicines developer MOMA Therapeutics. “However, I fear that going forward we may be dealing with ‘haves’ and ‘have nots’. For the haves the outlook is promising. VCs have dry powder to deploy to companies with good science and strong teams. These VC funds can be picky though, so we may continue to have larger funding rounds going to fewer companies who demonstrate the value of their science and are proximal to data. On the flip side, unfortunately, companies with low cash balances, inconclusive data readouts, or unclear paths to data may face challenges securing funds they need. As a result, we’ll likely see some continued belt tightening and reductions, albeit at a slower rate. My hope is great science finds itself in the first group, and we finally move beyond the challenges of the last 24+ months.”
Jim Anthony, president and global head at contract research organization Parexel, emphasized the demands that will be placed on biotech service providers as a knock-on effect of increased selectivity of biotech investors. “Funding will remain a critical need for biotech sponsors in 2025. Despite significant interest and available funding, investors are focusing on a much narrower set of companies and investing in them at a higher level, while some truly innovative biotechs are still seeking funding,” he said. “For these companies, understanding payer reimbursement for new therapies is essential. Early excitement about a drug’s promise, including a large patient population and even regulatory approval, doesn’t guarantee payer acceptance. Investors are now analyzing assets based on both regulatory and commercial success, recognizing payer approval as the final hurdle. In 2025, I predict that biotechs will continue to demand faster trials, but also efficiency gains like higher quality and cost effectiveness. Given their available budget for development programs, they want assurance that their CRO partner will deliver efficiencies and lead them to the strongest return on their investment.”
Risk-Sharing
“The way pharma acquires its science has evolved significantly over the past two years. High post-COVID valuations across the industry have made partnerships more attractive, as they allow companies to share and mitigate risk, with milestone-dependent biobucks often replacing large upfront payments,” said Greywolf Therapeutics’ Andy Page.
“In 2025, the biopharma partnering landscape will be shaped by a mix of evolving global dynamics and a heightened focus on value-driven collaborations,” commented Stefan Weber, CEO of Newron Pharmaceuticals, which develops treatments for nervous system diseases. “Based on our recent experience in partnering discussions, we observe a growing emphasis on shared risk models, particularly in areas addressing complex diseases. Partners are increasingly recognizing the value of robust, differentiating clinical data that underscore a compound’s potential to transform care in difficult-to-treat areas.
“Notably, the recent funding environment has presented challenges for many European biotech companies, pushing them to explore alternative financing routes, such as partnership agreements. While geopolitical tensions and shifting global influence continue to impact dealmaking, we remain optimistic. Strategic discipline, early engagement, and adaptability will be key to forging successful partnerships in this volatile but opportunity-rich market.”
We will see deals that include more balanced risk sharing between biotech and pharma, but with that, will come greater value retention for the biotech companies.
Matthew Caldemeyer, Recludix Pharma
“We will see deals that include more balanced risk sharing between biotech and pharma, but with that, will come greater value retention for the biotech companies,” said Matthew Caldemeyer, chief business officer of Recludix Pharma. Recludix is developing STAT inhibitors for inflammatory diseases and cancer and entered a collaboration with Sanofi in 2023 with the potential for up to $1.2bn in milestones as well as an option to participate in US profit/loss share. “By leveraging the expertise of industry leaders while positioning the biotechs with favorable terms, such as profit-sharing arrangements, these now-small companies could be positioned to become the next generation of leading midsize innovators and disruptors.”
China Innovation
Andera Life Sciences partner Sofia Ioannidou highlighted the ascent of China in the global biopharma innovation stakes. “Something that surprised me this year and will certainly change my thinking in 2025 is the number of good quality Chinese companies now active in the field,” she said. “This is true for companies fundraising, but we also saw impressive M&A this year involving China. Genmab made an all-cash acquisition of ProfoundBio, a Seattle-based biotech company with an R&D center in Suzhou and Roche acquired the CDK inhibitors portfolio of another Chinese/US company, Regor Pharmaceuticals.
“In terms of our deal flow, between 2023 and 2024 we saw five times more Chinese opportunities. So, more quantity, but also more quality. This is a sign of greater innovation there and a move from ‘me too’ treatments to best in class. We’re open to China as a source of innovation, be it the in-licensing of an asset for our portfolio companies, creation of a European newco around an asset coming from a Chinese company or the possibility of investing there.”
We’re open to China as a source of innovation, be it the in-licensing of an asset for our portfolio companies, creation of a European newco around an asset coming from a Chinese company or the possibility of investing there.
Sofia Ioannidou, Andera Life Sciences
Helen Chen, Shanghai-based Asia healthcare sector head at strategy consultancy L.E.K. Consulting, also flagged up China.
“The ‘newco’ model where Chinese/Asian asset(s) are packaged and funded as a new company and taken to the Western market for development and commercialization will continue to expand,” she predicted. “Both the sources of the assets and of the funding will continue to expand. Chinese companies are actively seeking the opportunity to set up their assets into newcos.
Meanwhile, “Korean deals (only one of note to-date) are likely to continue as well,” she said. “Financial sponsors will expand from the prestigious bellwethers, such as Bain Capital Life Sciences and OrbiMed, to a broader range of investors. This will likely be the brightest spot for funding venture-backed biotechs in China in 2025.”
