In June, Boston welcomed more than 20,000 industry professionals to the BIO International Convention. This annual meeting is one of the prime opportunities for biotechs to get in front of a global audience of potential partners and investors. And 2025, despite the continuing market doldrums, was no exception. If anything, the imperative is greater than ever, as exemplified by BIO’s meeting slogan: The World Can’t Wait.
Norstella was also front and center, whether in the exhibit hall where both Citeline and Evaluate had prominent booths, or in the content program. Scrip’s Mandy Jackson led a fireside chat with senior leaders from J&J, and together with colleague Sarah Karlin-Smith compiled a host of executive interviews, articles, and a podcast. And I was joined by BIO’s Director of Industry Research Chad Wessel to deliver a data-driven rundown on the state of emerging biotech companies.
From this vantage point, and the many discussions held over the course of the week, I would like to share our reflections on the meeting itself. Many of the statistics and soundbites below stem from our interviews and data presented at BIO. On the whole, we want to strike a tone of cautious optimism. Biotechs certainly face numerous long-standing challenges, and new dynamics are emerging that further complicate their path to market. However, their contribution to pharma pipelines and ability to benefit society are as great as ever. Zooming out beyond the present-day news flow, the opportunity ahead is tremendous.
The biotech market is undeniably in a tough spot. While investors are celebrating the S&P500 reaching new all-time highs, common biotech indices are down around 50% from their 2021 peak. This has chased a lot of generalist investors away from the sector, starving pre-revenue drug developers of the capital needed to run expensive clinical trials. The venture capital ecosystem has thankfully remained relatively stable, but public fundraising activities in 2025 have been further suppressed. EY revealed that 39% of listed companies have a cash runway of less than 12 months.
This raises the importance of partnerships not only as a source of scientific validation, but also short-term capital. Biotechs have been more willing to partner their assets and technologies and assets in the current market conditions. Last year saw almost $14bn in upfront funding via alliances, while a strong start to 2025 has seen this pace double. Such deal-making enables biotechs to progress scientifically, while retaining control of strategy should the financing environment improve. And via creative deal structuring, both sides of the partnership can align on incentives and risk mitigation. Many such discussions will have taken place at the partnering tables and meeting rooms of BIO International.
Biotechs can also take solace from the fact that their strategic importance to their partners continues to grow. Large pharmas fill around half their pipelines with externally sourced drugs, and the biotech ecosystem is the main source for this. As pharma retreats from early translational research, the dependence on start-ups increases. And with clinical success rates falling, R&D portfolios will need to be larger than ever to produce the next generation of drugs and sustain revenue growth. This all points towards a close and symbiotic relationship between the biotech ecosystem and large pharma, providing longer-term security and prosperity.
Biotechs have borne the brunt of much of the uncertainty surrounding the developing regulatory, pricing, and geopolitical environment. As their strategy is highly dependent on their ability to gain access to patients in the US, any ambiguity in the value proposition has an exaggerated effect. Without doubt, it has taken some time to digest the ramifications of the changes at the FDA, an unpredictable tariff policy, and the looming return of most favored nation pricing.
However, a pattern of initial overreaction to the news flow has emerged. Any disquiet about the leadership and modernization at the FDA has dissipated as a raft of sensible new measures have been announced. While the on-off nature of tariffs is still ongoing, pharmas are making infrastructure investments that mitigate any effect to their bottom line. And for the time being, pharma companies are retaining a large degree of control over their pricing.
Among this noise, all the signs point towards the pharmaceutical industry continuing to invest, and this will support the broader life sciences ecosystem including biotechs. A look at the fundamentals shows a situation that is largely unchanged. Healthcare expenditure is growing as populations age, which brings increasing unmet need that new therapies can address. On the scientific side, the pace of development is rapid, supported by new biological insights and a growing drug toolkit with which to design novel therapies. These immutable facts should ultimately ease any short-term nervousness on the prospects of the biotech industry. As summarized by Novartis’s Ronny Gal, “Whenever we make transactions with folks, it’s usually with thinking forward 10 to 15 years, if not longer, frankly.”
The companies that are most in demand are very often those that align themselves with large pharma portfolio strategies in areas of emerging science. These are fueled by their greater capacity to attract financing and recruit talent, and then provide tangible value to their investors typically with an exit via deal-making. For many years, this has concentrated heavily in oncology as almost every single multinational pharma has strengthened their focus on the unmet need of cancer patients. However, the first signs are now emerging that this intensity is beginning to fall and other therapeutic priorities are emerging.
Oncology still leads the pipeline with an approximate 40% share of total candidates, and a large number of high-value alliance and M&A deals involve new cancer therapies. But its rate of growth has slowed, and indeed fallen on relative terms. Rather, pharma companies have been more active in bolstering their immunology and rare disease portfolios. And the tremendous success of the GLP-1 class is leading to a full renaissance of cardiometabolic research. Several billion-dollar-plus licensing deals have already been announced in 2025 as the most promising next generation of obesity drugs are expedited, while portfolio decision makers are strategizing over how best to address the broader unmet need.
Cardiovascular diseases in particular cause tremendous societal burden, and historically have not attracted anywhere near the degree of investment merited. But we are likely to be entering a long-term reprioritization of resources to address these important causes of disability and mortality. This contrasts with the concerted effort against oncology over the last two decades, where each clinical breakthrough has fragmented the opportunity for the drugs that follow. As such, drug development trends are inevitably cyclical, and also a sign of success.
Please download your copy of The State of Emerging Biotech Companies via the BIO Industry Analysis website. This report was compiled specifically for the 2025 BIO International Convention and presented live on Tuesday June 17. Our thanks go to Chad Wessel and the BIO team for the collaboration.
VP of Thought Leadership | Norstella