Takeovers, Trump, and trends: how biopharma is likely to shift this year

Compared to the pandemic-fuelled bonanza in 2021, 2024 proved to be a year of both caution and optimism for the biotech and pharma space as it battled frosty investment markets and lukewarm merger and acquisition (M&A) activity from big pharma companies.

Nevertheless, the global biopharma market is set to skyrocket by 7.4% per year from almost $400 billion in 2023 to $655 billion in 2030, with growth fuelled by demand for recombinant proteins and monoclonal antibodies for the treatment of diseases such as cancer.

While nothing is certain amid tumultuous circumstances worldwide, industry observers provided us with their expectations this year, starting with the outlook for the market for investments and exits via M&A deals and initial public offerings (IPOs).

Investments and exits

In comparison to a few years ago, when private investors weren’t very concerned about the next funding round, they are now “much more careful to ensure that you have money for a longer runway," Erik Wiklund, CEO of the RNA therapy developer Circio, told BioXconomy.

In terms of IPOs, the window was completely closed a year ago and is now slightly ajar. However, this would only be an opportunity for relatively late-stage and de-risked assets with predictable paths, Wiklund said. “Earlier-stage IPOs will continue to be difficult," he added.

In any case, IPOs are one of the later elements of a market resurgence and there is unlikely to be a significant stream of activity in the near future, Miguel Forte, CEO of the cell therapy company Kiji Therapeutics, told us. And even if the market opened today, there is already an 18-month backlog of companies eager to tap into public markets.

In parallel, M&A is likely to materialize in force this year as the top biopharma companies face patent cliffs that are set to wipe away billions of dollars in revenue, Wiklund said. As these firms lack strong internal candidates in their own pipelines, they will look to snap up late-stage clinical companies, he commented.

On the other hand, M&A deals may see management teams forced to make tough decisions to do a deal for lower valuations than in the past, said Edd Stone, CEO of the automated cell therapy manufacturing company Cellular Origins, in an interview.

The big geopolitical questions

A major elephant in the room for 2025 will be the impact of the incoming Trump administration on the biopharma space. Big promises were made in the election campaign, including to “take on big pharma” and to address the cost of healthcare. Once the transition happens, however, the incoming leaders will actually need to consider what will work and what won’t, Ali Pashazadeh, CEO of the financial advisor Treehill Partners, explained to BioXconomy.

Geopolitical tensions are also increasing between the US and China, with the Biosecure Act designed to stop US biotech and pharma companies from using services or equipment from Chinese providers. Though the passing of the Biosecure Act isn’t guaranteed, the climate may lead to more scrutiny for US investments in Chinese pharma and biotech companies, more indirect roles of Chinese investors in US companies, and more requirements to manufacture drugs on US soil.

There is also concern that an increased inward focus in the US could be followed by similar behavior in other geographies, which would be detrimental to the global collaboration needed to address challenges like manufacturing and supply chains, Stone remarked.

If Europe plays its cards right, however, the changing geopolitics could lead to opportunities.

“If you can enable some predictable pathways to approval in the cell and gene therapy (CGT) space, plus lower costs, that could be a big argument for moving more clinical development and initial work to Europe,” Wiklund said, adding that the threat of a trade war between the US and China could also incentivize Chinese investments in Europe.

Trends and hype

CGTs are set to continue gaining momentum in 2025, particularly gene editing tools and off-the-shelf approaches, Forte said, adding that there is particular interest in the technology from investors in Asia.

One of the major challenges to overcome in the space will be the gap between manufacturing capacity and demand for treatments, Stone said. This could be addressed with investments in manufacturing technology and automation, assuming the life sciences space can overcome caution toward newer approaches, he said.

However, investor interest has “cooled” toward what used to be the spellbinding potential of cell and gene technology platforms, with more focus devoted to companies with specific treatments in development, Wiklund said. Additionally, the excitement around cell and gene therapies is having to compete with mounting attention around other technologies such as messenger RNA (mRNA), antibody-drug conjugates (ADCs) and radiopharmaceuticals.

As with all trends, however, some may prove overblown. For example, radiopharmaceuticals face formidable obstacles in terms of shelf-life, high costs and their logistical complexity. Oncology companies rebranding themselves as immunology specialists without fully understanding the nuances of the therapeutic area is another trap to watch out for.

And while AI will have a massive impact on many areas of healthcare, the hype around large language models and generative AI may be disproportionate to their actual near-term impact and applicability in life sciences, Stone said, adding that improving robotics and automation could be more impactful for the industry.

Embracing the change

With a plethora of changes to track this year, agility and resilience remain the top focus, said Antoine Papiernik, chairman and managing partner of the venture capital (VC) firm Sofinnova Partners. For the VC in particular, the key will be identifying transformative opportunities—whether they are slow-burn successes like glucagon-like peptide-1 (GLP-1) therapies or rapid breakthroughs such as emerging forms of AI, he said.

Meanwhile, it is understandable to be cautious as biopharma endures a perfect storm of shifting governments, new leaders and a tough investment market. On the other hand, change has been required for a while, Pashazadeh said.

“We could all be nervous and cautious, or we could think about change and embrace it,” he concluded.