Biotech (2024)

1. Growing stakes

   Biotech has always been a key source of drug-making innovation — and this role has grown over the past two decades. In 2003, the top 10 pharma companies still accounted for 53% of clinical trial enrollment.

   By 2021, the top 10 firms enrolled only 18% of clinical trial participants, according to McKinsey. Last year, younger biotech companies were responsible for a record 65% of the molecules in the R&D pipeline without a larger company involved, up from less than 50% in 2016 and 34% in 2001, according to the IQVIA Institute.

2. The M&A saviour

   Biotech’s an outlier in Europe’s limp 2024 M&A market. Not only are acquisitions frequent — they’re also massive: Sifted tracked four acquisitions closed at more than $800m for companies launched after 2010.

   Granted, the time to exit isn’t as quick as we see in other sectors: older biotech companies launched in the 90s are being scooped up by larger competitors too. Though it’s a moribund IPO market in Europe, biotech companies may be best placed to break the mould here (considering the strong performance of their US counterparts this year).

3. Dense talent for fluid cash

   Unsurprisingly, biotech companies raise more in places with high scientific talent density. Take Oxford: 78% of VC funding flowing into the city came from either biotech or drug discovery this year, for a combined total of €356m.

   Barcelona — Europe’s fourth most active biotech hub by deal count, and the continent’s densest pharma environment according to CPHI — is another example: here, legacy health giants provide the draw for new businesses to settle and operate.

4. As AI wills

   The effect of AI technology on biotech is still largely unexploited, but the tech’s making its way into biotech cousins like drug discovery.

   If AI makes good on its promise, the key blocker for biotech success — lengthy cycles between scientific concept and commercial execution — may finally ease. Even if AI eventually improves the science bit, tough regulations and tricky business models will keep biotech in check.

Who early stage startups are up against