On Groundhog Day 2025, Punxsutawney Phil saw his shadow and, as per tradition, predicted six more weeks of winter. That proved apropos of biopharma’s performance in the first quarter of 2025, as the sector finds itself reliving existential anxieties. The XBI and NBI retreated 22% and 13%, respectively, from their November 2024 highs as recession fears loom and the market navigates large disruptions at the FDA and HHS. The IPO window showed brief signs of life with five pricings in January and early February while secondary activity slowed with total proceeds down 76% and deal volume down 70% compared to Q1 2024. Private financings proved a lone bright spot in financing markets, underscored by several Series A mega-rounds, although crossover activity slowed compared to previous quarters.
Dealmaking remained anemic, with Intra-Cellular/J&J the only sizable public M&A transaction. Meaningful M&A (>$1 billion in deal value) stayed concentrated on the private side, accounting for over 75% of these larger transactions. Amid this tumultuous backdrop, our recent conversations with biopharma investors highlight renewed caution, as they are caught between a heightened focus on commercially viable drugs and supporting continued scientific innovation.
The second quarter should provide the market with greater clarity on President Trump’s policies and tariff agenda, while expectations for additional rate cuts from the Fed may provide a shot in the arm for a resilient biopharma sector.
William Blair's biopharma team shares additional perspectives on the biopharma environment and what to expect for the remainder of 2025.
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