A week after the conclusion of HBI 2025, which marked the inaugural shift of cities to Paris after fifteen years in London, we returned to the city to attend the 2025 Health and Life Science Symposium hosted by McDermott Will & Emery. 300 Investors, Biotech, Pharma, MedTech and TechBio execs gathered to discuss emerging trends, innovating financing, navigating the fluid geopolitical situation and investment opportunities in TechBio and Pharma Services.
The Life Science ecosystem is undergoing a significant transformation, entering a brave new world. The room was filled with a noticeable mist of uncertainty stemming from the current situation in the USA. However, amidst this uncertainty, there was plenty of positivity, particularly regarding an elevated opportunity that Europe may now play for Life Science investment and innovation. Where the US was previously the key to unlocking Life Science growth, could Europe scale up to become a market of choice?
At the start of 2025, there was a discrepancy in financing between the US and Europe. While there was a lot of money being raised across the pond, Europe was lagging. Three months on, the global market is stuck in a holding pattern, waiting to see what happens next. President Trump confirmed the Tariffs the US will levy on imports to the US in the evening, once the conference had concluded. What would have been a sigh of relief to the audience, Pharma and Biotech sectors were exempt but the question remains if or how long this exemption will last.
But the nature of any fluid or uncertain environment is that they lead to a spark in creative solutions. Investors looking to get deals done will need to be creative with how they structure their equity in an acquisition or by opting for a license deal instead of a traditional acquisition to keep the market moving.
Raising capital isn’t a challenge, but lenders will favour experienced investors with proven track records in supporting their portfolio companies in the sector.
A US-research exodus creates an opportunity for Europe, but it lacks a comprehensive regulator like the FDA
Cuts to university budgets have seen researchers leaving the US or returning to Europe which could lead to a boom in Europe’s clinical trial market or growth in other countries such as Australia where anecdotally costs are cheaper and where the government is offering large incentives.
Despite this, Europe and the rest of the world lack a regulator akin to the FDA who is willing to come to the table and work through challenges in a pragmatic way. For drugs, the European Medicines Agency doesn't act this way and for MedTech, the regulatory structure is a bit muddier.
Europe is attempting to create more harmonisation through regulations such as the Health Technology Assessment Regulation, The European Health Data Space, the EU AI act and the Cyber Resilience Act which have all come into effect over the last few years. The challenge for anyone looking to reshore from the US to Europe needs to bear in mind that these regulations are in their nascence and there are still 27 different markets, plus Switzerland, Norway and the UK with their own idiosyncracies to contend with.
A decade ago the top three clinical trial areas would have been Oncology, Oncology and Oncology. Today, in part thanks to the pandemic and the recent success of GLP-1s, the balance is more equal with growing funding in rare diseases, infectious diseases, and autoimmune diseases.
But Biotechs should be careful not to change their strategy based on what is ‘fashionable’ for investors. Instead they should stick to their convictions and retain a strong commercial focus, given the cyclical nature of the market eventually they will find an exit. For example, Central Nervous System therapies made up c.30% of total deal volume in FY23/24, even when it had appeared to go off the boil.
While research is shifting one way, the US remains where most of the capital is, particularly for biotech funds. US investors had previously been wary of businesses that were only exposed to Europe, but there are shoots of change here.
Exiting to big Pharma or strategics remains Plan A; but be cautious ruling out IPO
With Pharma’s looming patent cliff including major cancer drugs like Merck & Co’s Keytruda and Bristol Myers Squibb’s Optivo expiring in 2028, there are enormous opportunities for biotechs at Phase 3 to fill the gap. Here the focus for biotech should be on top-line growth, typically favoured over profitability.
Whilst strategic acquisition remains the current default exit route, the ever changing landscape means that having the agility to pivot to alternative exit routes prepared is wise. The option to IPO should not be ruled out, but caution should be taken to not go too early.
If pursuing an IPO the Nasdaq is the exchange of choice for biotech and medtech businesses and that remains the case. The European alternative, Euronext, lacks the historical performance of its American counterpart and so investors tend to shy away from it. There are calls for Europe to develop an equivalent to give businesses another option. As to who, how, when or if, that remains to be seen. Perhaps current events will catalyse this.
Partnership was the word of the day
Partnerships are a good strategy in today’s fluid climate to both speed up the delivery and scale of innovation and to mitigate risk. There is creativity to be had in such structures. Partnerships in financing, venture capital, and strategics, for example, can bring complementary benefits to each other, while partnering with upstream helps industrialise and launch at scale.
There is equally a growing trend in ‘mega-financing rounds,’ so there is a need to find syndicates of investment or capital that can help push companies to their next inflection points. Investors are creatures of habit—they like stuff that they understand, so when entering new areas, partnerships with Big Pharma give it a kitemark that they can get behind.
Experience matters, particularly to investors in re-risking their investment, this often means retaining and working with founders who own and develop technology and Intellectual Property but bringing in experienced managers to drive growth.
To develop a blockbuster drug or product, management teams need to have clear vision, and ensure they focus on the strategy and cash runway to reach their goals. This requires grit, resilience and determination which may require organisations to downsize or put an exciting project on hold to achieve. Learning to thrive through frugality, where you have no option to fail can create positive benefits.
The rapid convergence of technology and biology has sprung a new sector, TechBio creating a surge in businesses with mixed business models. TechBio is distinct, in that while biotech is focussed on leveraging biological processes and parts of living organisms, TechBio is more focussed on the tech aspect, including the utilisation of large datasets and AI.
Some TechBio companies operate like traditional biotechs, others pharma services and some both. For investors looking at these businesses, it can be confusing.
Whilst it may be tempting to play in both arenas it is important to think about how an investor or future acquirer will value your business. Are they looking to value you on a revenue or an EBITDA multiple? The answer will impact how you drive growth and value creation. Two TechBios, Roivant Sciences and Galapagos, have found success in a mixed model but the perspective of investors was that these are the exception and not the rule.