Dr Richard Seabrook, Sector Specialist in the University of Bristol’s Department of Research, Enterprise and Innovation, and member of the South West Life Sciences team, summarises his key take homes from BioTrinity – OBN’s flagship two-day conference for the life sciences industry.
The Department of Government Efficiency (DOGE)’s reductions to the US Food and Drug Administration (FDA) workforce and budget will result in a slowdown of interactions with FDA and approvals for what is the world’s most important life sciences market. Indeed, it’s speculated that the most senior FDA regulator for biologicals resigned as he was under threat of being fired!
In addition to imposing tariffs, the White House is expected to force down drug prices. This will affect big pharma, as the USA is its most lucrative market, with typically 50% of company profits derived from US sales.
Furthermore, the key XBI index for US public biotech stocks is down around 50% compared with its 52-week high, which contrasts poorly with the booming tech stocks. For example, NVIDIA’s market cap is apparently now equivalent to the top 10 NYSE pharma companies combined.
And there’s further pressure on biotech stocks as big pharma, represented by Lilly and Novo, have grown their market cap in the last three years (driven by GLP 1 receptor agonists) to a greater extent than public biotech has done collectively over 25 years, enhancing pharma over biotech as an investment prospect.
More encouragingly, it was reported that pharma’s R&D pipeline is highly dependent on the smaller biotechs. Importantly, pharma companies have strong cash balances and access to debt to finance acquisitions of products or companies, which they need to as multiple product patents expire in the next four years. For these acquisitions, pharma is expected to focus more on core therapy areas and less in rare or niche opportunities.
For investors, structural biology and AI assets appear attractive at the moment, exemplified by Isomorphic Labs’ $600M fund raise announced in March. Biomarkers and diagnostics remain attractive assets for selecting patients, particularly for managing trial risks and enhancing the probability of success.
However, investors are generally cautious given the macro uncertainties and reserving funds to keep their existing portfolio of assets moving forward. Indeed, it was reported that while 2024 was a strong year for UK venture deals, many rounds were either flat or down but the sums raised were generally more substantial than has previously been the case; more capital invested into fewer companies.
Amidst the apparent pressure on companies to have a USA presence, my take home from the commentary was that companies need to think carefully about the USA as the world’s major life sciences market, They also need to think carefully about China, given White House resistance to Chinese influence and products, as this attitude (or threat) may, in turn, influence the all-important IP/product acquisitive companies that will want to avoid any possible White House sanctions on their USA earnings if they are perceived as too closely engaged with China.
Importantly, and encouragingly, the UK remains the European leader in life sciences, with 40% of companies based in the UK and 40% of the capital raised here in 2024. Indeed, the future will be very bright if the Mansion House Compact to unlock a proportion of UK pension funds for investment in unlisted equities becomes a reality.
Published 06 May 2025