UK biotech sees "strong finish" to 2025 financing

2025 was a challenging year for the UK biotech sector, but it ended the year with signs of "renewed confidence and broadening investor appetite."

That is the conclusion of the annual assessment of the sector's ability to attract financing by the BioIndustry Association (BIA), with its positive verdict coming despite venture capital investment falling 13.1% to £1.79 billion ($2.47 billion) last year, with 58 deals completed.

The deal count was well down on the 113 deals completed in the prior year, however, and there was a 49% decline in equity financing overall – to £1.9 billion – as follow-on financing on public markets fell 94% to £96 million.

Just two VC deals – involving Isomorphic Labs and Verdiva Bio – accounted for 44% of the total venture capital raised in the year, and were instrumental in raising the average value of deals to £30.8 million from £18.7 million in 2024.

However, with 22 VC deals completed in the final quarter of the year, BIA is hopeful that sets the scene for improved investor sentiment going into 2026.

The absence of IPOs for UK biotechs also continued, now for the third consecutive year, although M&A activity picked up, headlined by MSD's buyout of Verona Pharma, valued at £7.5 billion, and Sanofi's £1.2 billion takeover of Vice Bio.

The BIA said the numbers reflect one of the sector's "most selective" investment climates in a decade, with managing director Jane Wall calling 2025 "a year of caution and strategic maturation" with VC investment concentrated within a small number of large financings.

"The geopolitical landscape is precarious, and the IPO window is entering its fifth year of restricted activity," said Wall, currently taking the lead at BIA as it awaits the arrival of new chief executive Prof Chris Molloy in May.

"Later-stage leads are still dominated by international capital, and the mandate for 2026 is clear: the UK Government must deliver to support a vital sector of the economy, and domestic investors must be encouraged to deploy here while we continue to welcome overseas capital," added Wall.

On the plus side, the UK firmly retained its position as Europe's leading national biotech market throughout the year, representing 30% of all European venture financing. It reckons improved sentiment around biotech – the Nasdaq in the US ended 2025 on an all-time high, for example – will translate into a healthier distribution of capital across the biotech ecosystem in 2026.