UK Biotech Funding Finishes On High Despite Difficult 2025
UK biotech experienced a challenging year in 2025, with tighter funding, hesitant investors, and prolonged deal closures. However, it concluded the year with positive momentum.
UK biotech experienced a challenging year in 2025, with tighter funding, hesitant investors, and prolonged deal closures. However, it concluded the year with positive momentum.
The BioIndustry Association's UK biotech financing 2025 report indicated that the sector maintained its position and ended the year stronger than it began, with signs of recovery as it entered 2026.
Throughout most of 2025, securing investment in biotech proved challenging. A 13.2% year-on-year decline in venture capital investment resulted in £1.79 billion across 58 deals. Despite this, the UK remained Europe's largest biotech market, capturing 30% of the continent's biotech venture funding.
The sector's outlook improved towards the end of the year, with 22 deals completed in the final quarter, marking the highest quarterly total in 2025. This increase indicated growing investor confidence, setting a more optimistic tone for 2026.
Significant funding contributions came from two major early-stage deals, involving investments in Isomorphic Labs and Verdiva Bio. These transactions increased the average deal size to £30.8 million, compared to £18.7 million in the previous year, demonstrating continued willingness among investors to fund UK biotech.
UK biotech experienced a challenging year in 2025, with tighter funding, hesitant investors, and prolonged deal closures.
Major Transactions and Market Influence
Key transactions in 2025 highlighted sustained interest in UK biotech. Notably, MSD's £7.5 billion acquisition of Verona Pharma was one of the largest global biotech exits in recent years, occurring in a year without IPOs. Other acquisitions, such as those involving Sanofi, reinforced the attractiveness of UK companies to global pharmaceutical firms.
Entering 2026, the market appears more robust, supported by a record-high Nasdaq finish in 2025 and the UK-US pharmaceutical trade agreement, which has bolstered interest. Despite this, international investors continue to play a dominant role, representing 68% of Series A investors and nearly 90% of Series B and later-stage investors.
The potential for increased participation by UK investors, including pension funds, remains evident. Jane Wall, Managing Director of the BIA, emphasized the need for government support and domestic investment to nurture the sector's growth. The BIA is committed to ensuring that UK science not only starts but also thrives domestically.
James Costine, CFO (UK) at SV Health Investors, highlighted the strength of the UK biotech ecosystem and its potential impact on patient lives. He welcomed initiatives like the Mansion House Accord, which aim to provide domestic scale-up capital and enhance returns for UK pensioners.
According to Rosie Rodriguez, SVP Growth at Relation Therapeutics, the UK's reputation as a hub for integrating world-class biology, rich human data, and advanced AI is growing among global pharmaceutical companies and international investors.
Based on reporting by techround.co.uk.