The\u00a0healthcare funding\u00a0landscape\u00a0was not\u00a0particularly\u00a0kind to the U.K. in 2025.\u00a0Following Merck pulling out of its $1 billion expansion\u00a0plans\u00a0in London, it was\u00a0evident\u00a0that life science investments in the\u00a0region have been scarce\u00a0in\u00a0the past year.\u00a0Yet\u00a0the BIA 2025 report\u00a0has found that despite it all, the biotech sector in the U.K. has shown resilience and investor appetite\u00a0is poised to grow in 2026.\u00a0<\/p>\n
2025 sees 13.2%\u00a0drop\u00a0in biotech investment in the UK but sector slated to grow\u00a0in 2026<\/p>\n
The report published by the\u00a0BioIndustry\u00a0Association\u00a0(BIA)\u00a0revealed that the\u00a0U.K. ended last year with \u201cclear signs of renewed momentum and increased investor confidence.\u201d\u00a0The country\u00a0retained\u00a0its position as Europe\u2019s\u00a0leading biotech market in 2025, accounting for around 30% of all European venture financing.\u00a0Deals cost around \u00a31.79 billion\u00a0($2.47 billion)\u00a0across 58 deals last year, which was a 13.2% year\u2011on\u2011year drop in investment.\u00a0<\/p>\n
This is a\u00a0surprising\u00a0outcome\u00a0considering the past year was marked by a decline in investor interest in the sector. Major pharma players such as\u00a0the American giant Merck\u00a0backed out<\/a>\u00a0of a billion-dollar deal, slashing 125 jobs,\u00a0amid\u00a0volatile\u00a0trade tariff policies<\/a>\u00a0at the time. Merck blamed its departure\u00a0on Britain\u2019s reluctance\u00a0to\u00a0invest\u00a0in life sciences and the government\u2019s lack of drug spending.\u00a0\u00a0\u00a0<\/p>\n On the same vein, French pharmaceutical Sanofi and Britain\u2019s own AstraZeneca bailed on the region. Sanofi halted investments, claiming\u00a0that the U.K.\u00a0was an unfriendly place to conduct business and boost innovation. AstraZeneca, on the other hand,\u00a0paused a \u00a3200 million ($271 million) project\u00a0to expand its Cambridge research facility, having previously scrapped a \u00a3450 million\u00a0($620.41 million)\u00a0vaccine plant project in Liverpool a year ago.\u00a0\u00a0<\/p>\n Backing out of Britain,\u00a0high clawback rates were partly to blame, according to experts, coupled with clinical trial bottlenecks and\u00a0a\u00a0highly\u00a0uncertain funding environment. However, while it was\u00a0speculated\u00a0at the time\u00a0that these big\u00a0pharmas\u00a0may have been plotting\u00a0exit strategies,\u00a0the BIA report tells a\u00a0slightly different\u00a0story.\u00a0<\/p>\n According to the report, the final quarter of 2025 saw an uptick in deals. With 22 deals recorded, it was the highest quarterly deal count of the year. Meanwhile, despite almost 47% of total capital raised in 2025 coming\u00a0from two deals in the first quarter of last year, they were enough to buoy\u00a0the sector.\u00a0\u00a0<\/p>\n Did the\u00a0Verdiva\u00a0Bio and Isomorphic Labs financings save the year?\u00a0<\/p>\n These\u00a0noteworthy\u00a0investments were in\u00a0two\u00a0biotechs, namely,\u00a0Verdiva\u00a0Bio\u00a0and Isomorphic Labs.\u00a0Verdiva\u00a0is\u00a0a London-headquartered startup focused on developing treatments for metabolic diseases like obesity, a\u00a0field\u00a0that is rapidly growing and has\u00a0witnessed\u00a0buying sprees for GLP1 agonists\u00a0Ozempic and\u00a0Wegovy\u00a0in recent times.\u00a0The $410 million\u00a0series A funding\u00a0in\u00a0Verdiva\u00a0went towards advancing its GLP-1 agonist for obesity.\u00a0\u00a0<\/p>\n As for\u00a0Isomorphic Labs, it secured $600 million\u00a0to develop its\u00a0artificial intelligence\u00a0(AI)-based drug design engine\u00a0in March.\u00a0This\u00a0was\u00a0likely part\u00a0of\u00a0a wider\u00a0AI<\/a>\u00a0financing boom, even\u00a0within the healthcare sector. AI startups now account for 60% of all digital health funding, according to a\u00a0report<\/a>\u00a0by Qubit. Over the next four years, AI is thought to \u201cempower\u201d pharmaceuticals to tap into a lucrative market, worth around $868 billion, a\u00a0report<\/a>\u00a0by\u00a0Strategy&\u00a0stated. It added that while 10% to 30% of healthcare systems have adopted AI at present,\u00a0these figures are expected to rise to 30% to 45% by 2030.\u00a0<\/p>\n \u201cThe U.K.\u00a0is increasingly seen by global pharmaceutical companies and specialist international investors as a place where world-class biology, rich human data and advanced AI can be integrated with scientific rigour and speed,\u201d said Rosie Rodriguez, senior vice president (SVP) of Growth at London-based Relation Therapeutics.\u00a0<\/p>\n BIA 2025 report: new initiatives in motion\u00a0\u00a0<\/p>\n Meanwhile, investor sentiment has\u00a0slowly\u00a0been building up over the past year in the U.K.\u00a0And despite trade tariff unpredictability that plagued the industry\u00a0globally\u00a0last year,\u00a0the U.K. came to an agreement with the U.S. in December. Granting a zero percent tariff on\u00a0pharmaceuticals from the U.K. to the U.S.\u00a0for at least three years, the UK-US Economic Prosperity Deal\u00a0is expected to bolster biotech in the region.\u00a0<\/p>\n Moreover,\u00a0the British government introduced the Life Sciences Sector Plan last year. This initiative is aimed at driving the uptake of the most\u00a0appropriate medicines\u00a0and medical technologies,\u00a0remove bureaucratic delays to patient access,\u00a0and straighten out the path to procuring\u00a0medtech\u00a0products.\u00a0\u00a0<\/p>\n Another scheme that came into effect was the Mansion House reforms,\u00a0designed to overhaul pension regulations and capital markets.\u00a0By releasing billions of pounds from pension funds into promising British companies, the\u00a0project\u00a0is focused on boosting the\u00a0U.K.\u00a0economy\u00a0and increasing the\u00a0pension\u00a0pot\u00a0for workers, albeit\u00a0elevating the risk to pension returns.\u00a0\u00a0<\/p>\n James Costine, chief financial officer (CFO) and finance partner of SV Health Investors, said in the BIA release: \u201cWhilst SV helps build robust investor syndicates for our companies, often involving international investors, we very much welcome the Mansion House Accord as a positive step in the right direction. Not only will it provide domestic scale-up capital for the most promising UK-based companies,\u00a0it\u00a0should also help boost returns for U.K. pensioners to be more in line with those seen in the U.S. and Canada.\u201d\u00a0<\/p>\n The first evidence of the pension-backed scheme in the biotech sector was the\u00a0$140 million\u00a0investment in Cardiff\u00a0University\u00a0spin-out\u00a0Draig Therapeutics, which is developing therapies for neuropsychiatric disorders, last year.\u00a0\u00a0<\/p>\n UK biotech in 2026: BIA 2025 report shows strong overseas investor confidence<\/p>\n Domestic institutions in the U.K. could\u00a0take advantage of these initiatives, as currently, 68% of investors in series A deals and 89% of investors in series B deals and upwards, are from outside the region, the BIA report noted.\u00a0<\/p>\n Besides, UK Advanced Therapy Medicinal Product (ATMP)\u00a0clinical\u00a0trials\u00a0represent\u00a057% of all European trials in 2025, according to Cell and Gene Therapy Catapult\u2019s database. Out of 193 trials held last year, 56% were early-stage trials, and 80% were commercially sponsored,\u00a0signaling\u00a0that innovation is going strong. Most of these trials were targeted towards cancer indications, while inflammation-related\u00a0studies were in the mix too.\u00a0\u00a0<\/p>\n While the public market remained unwavering\u00a0with zero U.K.\u00a0biotechs\u00a0going public the entire year\u00a0\u2013\u00a0the third year in a row\u00a0with no new listings \u2013 mergers and acquisitions (M&As) cued\u00a0international investor\u00a0confidence. And\u00a0despite\u00a0Merck\u2019s\u00a0London\u00a0exit, its \u00a37.5 billion ($10.34 billion) buyout of\u00a0lung disease therapeutics company\u00a0Verona Pharma\u00a0as well as Sanofi\u2019s of $1.15 billion acquisition of vaccine developer\u00a0Vicebio\u00a0are\u00a0telling\u00a0of overseas keenness to invest in research and development (R&D) in the U.K.\u00a0<\/p>\n Notwithstanding\u00a0the 13.2% plummet in venture capital in 2025 compared to 2024, Jane Wall, managing director of the BIA,\u00a0thinks that this figure \u201cbelies a sector that is increasingly focused on high conviction in U.K.\u00a0science.\u201d\u00a0<\/p>\n \u201cLater-stage leads are still dominated by international capital, and the mandate for 2026 is clear: the U.K.\u00a0Government 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,\u201d said\u00a0Wall.\u00a0\u201cThis report is a testament to our sector\u2019s resilience and a roadmap for the breakthrough decade ahead.\u201d\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"The\u00a0healthcare funding\u00a0landscape\u00a0was not\u00a0particularly\u00a0kind to the U.K. in 2025.\u00a0Following Merck pulling out of its $1 billion expansion\u00a0plans\u00a0in London, it…\n","protected":false},"author":2,"featured_media":395261,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[59,57,58,50,56,54,55],"class_list":["post-395260","post","type-post","status-publish","format-standard","has-post-thumbnail","category-united-kingdom","tag-gb","tag-great-britain","tag-greatbritain","tag-news","tag-uk","tag-united-kingdom","tag-unitedkingdom"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/395260","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=395260"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/395260\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/395261"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=395260"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=395260"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=395260"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}