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In this report, we take a closer look at how the world has changed and how that shift has impacted the biopharma sector at large, as well as the strategies that will position the industry for long-term success even as uncertainty persists.
The 35th annual EY Biotech Beyond Borders report finds the biopharma industry at a crossroads with history, where sentiment and numbers do not always align. Since the pandemic, the biotech industry has been going through a down cycle, but the numbers show financing returning to the sector in 2024.
Yet, a clear picture of the haves and have-nots has persisted, with only a small number of companies having access to capital while others need to cut costs and create operational efficiencies.
This picture is further complicated by the macroeconomic uncertainty. The advent of tariffs into the economic policy landscape has greatly increased uncertainty and market volatility for both biotechnology companies and investors – creating an environment that makes corporate M&A and IPOs highly unlikely.
How to manage uncertainty amid rapidly shifting policy
The EY-Parthenon CEO Outlook Survey for May 2025, indicated that 94% of life sciences CEOs were concerned about tariff increases affecting operations and sales in the next 12 months.
With a dearth of dealmaking, focus on efficient capital allocation
Dealmaking over the last 18 months has slowed as large pharmaceutical companies focus on smaller, more strategic deals and shy away from the megadeals that make headlines.
Biotech must leverage AI to lower its cost base
A recent EY AI Pulse Survey of senior leaders across industries suggests that over half will move at least 25% of total budget toward AI investment over the next 12 months.
Public company revenue over the last four years was nearly $50b more annually than in the four years prior.
The overall biotech workforce dropped 4.8% to 288,195 employees.
Despite pessimistic views of the biotech market, US and European public biotech revenues were strong in 2024, growing 6.8% year over year to $205 billion. Public company revenue over the last four years was nearly $50 billion more annually than in the four years prior. Yet, 2024 still had companies operating at a deficit, reporting an aggregate loss of $26.8 billion.
This bar chart shows annual revenue from 2000 to 2024 for public biotech companies in the US and Europe, segmented by commercial and emerging leaders.
"Biopharmaceutical companies are already feeling the effects of new tariffs on Canada, Mexico, China, and other nations subject to universal 10% tariff rates. While pharmaceutical products have historically been exempt, materials used to package and produce drugs could be impacted. The industry will be further affected by impending sector-specific tariffs.”
Heather Meade | Principal, Washington Council, Ernst & Young LLP
Biopharma companies continue to face a challenging financing environment that has only been made more complicated by a rapidly changing world and political environment. The ongoing hurdle for biopharmas will be to adapt their business models to a new, highly compartmentalized world and to update tax and operational strategies to fit the demands of the new norm.
In Q1 2025, only six companies raised a total of $860 million through a public offering before the market entered bear territory at the beginning of April.
As investors have become more cautious about where they put their money, we are seeing a move back toward greater emphasis on scientific milestones.
Follow-on and other financings came in at only $19.9 billion, about $10 billion lower than in 2023.
Biotech companies are now having to make funds last longer between raises or inflection points, and focus more on capital and operational efficiency.
The number of public companies also declined, dropping from 939 in 2022 to 783 in 2024.
For more information
Rich Ramko
EY Americas Life Sciences Sector and Biotechnology Leader
Ashwin Singhania
Principal, Life Sciences Strategy, EY-Parthenon
