The outlook for healthtech and life sciences in 2025

2024 was pivotal for UK Life Sciences’ venture funding landscape. Softening macro and geopolitical conditions saw activity rebound, setting the stage for an upwards trajectory in 2025.
Our recent Life Sciences and Healthcare 2024 report revealed that total venture funding for UK life sciences rose 36% year-on-year in 2024, coming in just shy of £3bn. Encouragingly, this resurgence was primarily driven by an increase in late- and growth-stage rounds. Megarounds were up 50% over 2023, and 8 of the top 20 deals in regions we cover (UK, Denmark, and Sweden) were at the Series B level.
Robust investment at the critical scale-up stage combined with a return of blockbuster late-stage rounds signals a very healthy ecosystem. Increased participation from crossover investors also suggests highly-valued companies are poised to capitalise on the expected global IPO resurgence in 2025.
Spotlight on biopharma
Alongside revitalised late-stage and scale-up funding environments, 2024 was an outstanding year for early-stage investment into the UK’s world-class biopharma ecosystem, with six ‘first financing’ Series A or seed rounds of £40+ million in the UK alone. This indicates the innovation pipeline remains strong, offering significant room to run as this cohort matures.
Interestingly, we’re seeing corporates and strategics grow in prominence at the early-stage, an area in which VCs historically took on most of the risk. The likes of Pfizer and Nvidia leading early-stage rounds signals a diversified and healthy ecosystem, with strategic players stepping up to lead early-stage biopharma innovation.
The industry is entering an exciting new phase of innovation in complex drug design, leveraging multi-targeted approaches and novel biological agents to improve patient outcomes. Almost all the biggest early-stage rounds went to companies pioneering innovative drug design, and we expect the pace of early-stage innovation to continue to attract major funding.
Sectors to watch
Although PD-1s have set the oncology care standard for the past decade, the UK and Nordics are emerging as leaders in the field of antibody-drug conjugates (ADCs), with three of the four largest biopharma and DX tools rounds last year involving preclinical ADCs. This reflects urgency from Big Pharma to replenish pipelines amidst patent cliffs, and this competition should drive further innovation and investment in this space. Areas of legacy strength such as diagnostics and tools also remain healthy, with the sector set to be shaken up by the opportunities of AI and techbio.
Europe’s ecosystem continues to strengthen
Geography is an overlooked advantage for UK biopharma. Compared to the vast distances separating the United States’ east and west coasts, the concentration of talent, investors, and corporates within the ‘golden triangle’ of Cambridge, London, and Oxford is an underappreciated catalyst. Cross pollination of AI and life sciences expertise positions the UK strongly to lead at the cutting edge of techbio and AI-enabled biopharma and diagnostic tools
Beyond proximity, the regional ecosystem is evolving. Across the top 10 early-stage biopharma deals in the UK and Nordics, half were led by UK and European VCs. With leading US firms expanding their European presence, and leading European and domestic players like Novo Ventures, Syncona, and Forbion rapidly scaling, we expect UK venture rounds to continue to grow in both volume and value in 2025 and beyond.
Spotlight on healthtech
Healthtech, however, enters 2025 with cautious optimism, balancing challenges and opportunities. Following the post-pandemic reset, 2024 saw the sector begin adjusting to revised valuations, with a renewed emphasis on growth, profitability, and solid fundamentals, potentially paving the way for a wave of healthtech IPOs that can set a new benchmark for valuations. This adaptation is still ongoing, however, and we can expect to also see further down rounds and low value exits as the landscape evolves.
The rise of D2C healthcare
Amidst a renewed focus on commercial fundamentals and consistent revenues, the rise of direct-to-consumer healthcare models with strong foundations have captured attention. Companies offering online care and subscription models are growing at pace to meet demand for emerging treatments in obesity care, mental health, women’s health, and beyond that bypass traditional channels.
As patients take a more active role in monitoring and managing their health, the demand grows for solutions that can provide personalised treatments at scale. This drives a wave of mobile health providers that can deliver actionable insights and foster positive behavioural changes that lead to meaningful health outcomes. AI plays a transformative role here and, amidst strong competition, companies to watch will be those that combine scientific credibility with true personalisation and accessibility while also setting high privacy and regulatory standards.
Overdue spotlight on women’s health
Amongst these consumer-facing success stories, Flo Health’s elevation to Europe’s first femtech unicorn brings overdue visibility to this space. However, this is just the tip of the iceberg.
Women’s health remains significantly underfunded relative to its potential. The perception of women’s health as limited to women-only conditions remains, and continued efforts are necessary to expand focus beyond this.
It’s easy to forget that women weren’t allowed to participate in US or UK clinical trials until the 1990s. Research gaps in diagnosis and treatment for conditions that disproportionately affect or present differently in women remain unaddressed.
Addressing this long imbalance cannot happen overnight, but with a growing awareness of gender disparities and an increasingly holistic approach to healthcare, companies that can bridge this gap with precision medicine will be in demand.
Cutting through the AI noise
Across all industries, AI excitement has been ubiquitous, and healthcare is no exception. Looking forward the challenge will be understanding how to separate the truly revolutionary applications from ‘AI washing’.
Although AI’s promise will take years to truly be fulfilled, the excitement remains strong. Companies that can leverage generative AI to revolutionise drug discovery, cut down on clinical trial times, and model interactions will be at the forefront of a transformative opportunity.
Further to this and the delivery of personalised care at scale, use-cases to watch include solutions supporting a shift from treatment to prevention and the expansion of AI-enabled diagnostics and devices. We also expect to see continued innovation in AI-based tools that streamline administration and improve workflow efficiencies, ultimately enabling clinicians to spend more time with their patients.
Challenges and bottlenecks
The persistent challenge for UK healthtech remains support for companies at scale-up stage, which typically lead businesses to seek investment, commercial, and exit opportunities abroad. Improving access to capital and talent, reducing the complexity of government contracts and creating a pro-innovation regulatory environment are key focus areas to ensure that successful businesses start, scale, and ultimately list in the UK.
Positively, enabling innovation appears high on the government’s agenda, and we look forward to working with partners across the ecosystem to support founders, unlock growth, and ensure that the UK remains at the cutting edge of European healthcare innovation.
About the authors
Michael White is the market manager and head of life sciences at HSBC Innovation Banking UK, a position held since June 2023. In this role, he leads the team that delivers HSBC Innovation Banking UK's specialised banking and lending to high-growth public and private life science companies with market caps ranging from $100 million to $5 billion. Prior to this, White spent over two decades at Silicon Valley Bank in various leadership roles overseeing business development and investor coverage in the Southwest and West Coast regions. He co-managed the San Diego office and played a pivotal role in building a substantial life science credit portfolio.
Paula Burke is a director on the life sciences and healthcare team at HSBC Innovation Banking, where she partners with healthcare investors and companies at all stages to support their growth. Burke has spent over a decade working with life sciences and healthcare companies. Before joining the bank, she was a principal at a healthtech venture capital fund, managing a portfolio of development and commercial-stage businesses. Prior to that, she spent six years at Silicon Valley Bank as a VP, providing strategic capital and bespoke banking solutions to clients across biopharma, diagnostics, digital health, and medical devices – from Series A start=ups to publicly traded companies. She holds a BSc (Hons) in Cell and Molecular Biology from University College Dublin and an MSc in Management from University College London.