Although 2025 was not without its challenges, there is growing momentum and increased investor confidence in the UK biotech sector.
Against a challenging market backdrop, the UK biotech sector ended last year with signs of renewed momentum and increased investor confidence.
According to the BioIndustry Association’s latest report, the UK retained its position as Europe’s leading national biotech market throughout the year, representing 30% of all European venture financing, despite a 13.2% year-on-year drop in venture capital investment, totalling £1.79 billion across 58 deals.
While much of last year was characterised by investor caution, the final quarter delivered an unmistakable shift. A record 22 completed deals – the highest quarterly deal count of the year. This renewed deal flow, the association said, signals the beginning of a healthier distribution of capital across the biotech ecosystem.
“If 2024 was marked by a rebound, 2025 has been a year of caution and strategic maturation,” said BIA managing director Jane Wall.
“While the headline venture capital figure of £1.79 billion represents a 13.2% decrease from the previous year, this figure belies a sector that is increasingly focused on high conviction in UK science,” she added.
Two transactions
There is no getting away from the fact that almost half of total capital raised last year (47%) came from just two transactions in the first quarter. The investments in Isomorphic Labs and Verdiva Bio transactions contributed to a sharp rise in the average deal size to £30.8 million – up from £18.7 million in 2024.
Beyond private capital markets, strategic transactions provided a strong indicator of sector confidence. MSD’s £7.5 billion acquisition of Verona Pharma was one of the largest global biotech exits in recent years and underscored sustained international appetite for high-quality UK biotech despite the absence of IPO activity.
Major acquisitions by Sanofi and other global pharmaceutical leaders further reinforced this trend.
The macro-environment going into 2026 should also bolster UK biotech. The Nasdaq ended last year at an all-time high, investor sentiment is strengthening, and the association says the UK-US pharmaceutical trade deal has reinforced confidence in the UK market.
Crucially, it adds, last year saw the policy foundations laid for a new era of domestic capital deployment – most notably the Life Sciences Sector Plan, the Mansion House reforms, and the first evidence of pension-backed investment into the sector through the Draig Therapeutics financing and Aviva investing in Cambridge Innovation Capital.
“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, it should also help boost returns for UK pensioners to be more in line with those seen in the US and Canada,” said James Costine, UK chief finance officer of SV Health Investors.
