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By any metric, 2025 has been one of the most turbulent years for the biopharmaceutical industry in recent memory. With a bitter policy environment in Washington, sluggish capital markets, widespread layoffs, and operational retrenchment across all stages of the drug development lifecycle, biopharma is undeniably under stress. Headlines point to layoffs, shuttered trials, government upheaval, and a chilling in investor sentiment. Yet underneath the debris of the current downturn, green shoots are quietly emerging. This is a cyclical industry—and history tells us that the most disruptive innovations often germinate under pressure.
For commercial and insights professionals, now is the time to zoom out. The key to navigating this environment is understanding not just the week-to-week volatility, but the deeper structural forces at play—and where new opportunities may arise once the storm clears.
Much of today’s market volatility can be traced to political instability, particularly in the U.S. The Biden-era Inflation Reduction Act (IRA) set in motion the first federal price negotiations for Medicare drugs, reshaping long-term revenue expectations for the industry. That policy alone is forcing companies to rethink launch strategies and lifecycle management. But more recent developments under the new administration have been seismic.
Most notably and recently, Health and Human Services Secretary Robert F. Kennedy Jr. abruptly fired all 17 members of the CDC’s Advisory Committee on Immunization Practices (ACIP), citing alleged conflicts of interest. This panel has served for decades as a cornerstone of vaccine policy, determining which immunizations are recommended—and therefore reimbursed—nationwide. With no replacements named and a new meeting on the horizon, vaccine makers now face unprecedented uncertainty around regulatory timelines, clinical requirements, and commercial coverage.
At the same time, the Trump administration’s proposed FY2026 budget calls for nearly 40% cuts to the National Institutes of Health, as well as a consolidation of 27 health agencies into just eight. If enacted, the result would be fewer research grants, weaker academic partnerships, and diminished U.S. leadership in biomedical science.
In short: the rules of engagement between industry and government are shifting rapidly, with profound implications for R&D strategy, pricing, and public trust.
On the capital side, the contrast between the pandemic-era boom and today’s bust is stark. In 2020 and 2021, it seemed a new biotech IPO was priced every week. In 2025, it’s been nearly four months since a biotech raised more than $50 million via a public offering. The last sizable IPO, by Aardvark Therapeutics, dates back to mid-February. As of May, only six of the 33 biotech IPOs since 2023 were trading above their issue price. Median performance is down nearly 60%.
Even fallback strategies like reverse mergers—once a common path for private biotechs to reach public markets—have dried up. While reverse mergers historically carried stigma, they’ve recently outperformed traditional IPOs (-10% vs. -62% median returns). But deal volume has plummeted in 2025, as new investors show little interest without large concurrent PIPE financings to de-risk the transaction.
Meanwhile, activist investors are pressuring leadership teams to liquidate rather than pivot. Companies like Sutro Biopharma and Third Harmonic Bio have faced calls to wind down and return cash to shareholders. A new fund, Alis Biosciences, has launched specifically to push for this kind of capital return from “zombie” biotechs—those with negative enterprise value and little strategic direction.
The financial strain is manifesting in real-world cutbacks. In the past few months alone:
Across the board, biotech companies are narrowing focus, streamlining operations, and prioritizing only the most promising assets. The days of pursuing five or six indications in parallel are over—for now.
But this retrenchment isn’t necessarily a bad thing. In many cases, it reflects a needed discipline that was absent during the frothy years of zero-interest-rate-fueled exuberance. Companies are being forced to prove the strength of their science, tighten clinical priorities, and align more closely with payer and patient value.
Amid all the contraction, however, there are signals of a slow thaw—particularly in digital health. Two recent IPOs have offered a much-needed glimmer of investor enthusiasm:
These are not biotech therapeutics companies per se—but they operate in adjacent territory. Their success shows there is investor appetite for health innovation that improves outcomes and reduces costs—especially with scalable, tech-enabled platforms. For commercial leaders, this may signal a new chapter of hybrid care delivery models, and emerging opportunities for digital partnerships or companion diagnostics.
The biotech sector is undeniably struggling. Policy volatility, pricing pressure, and capital scarcity have produced a sharp downturn—perhaps even a full-blown recession. But this is a sector built on resilience.
The companies that survive 2025 will do so because they’ve demonstrated real value: scientifically, operationally, and commercially. And while many doors are closing, others are quietly opening. The next generation of winners is already taking shape—in labs, in incubators, and on the platforms of companies like Hinge and Omada.
As commercial and insights professionals, our role is to see both the pain of today and the potential of tomorrow. The challenge now is to stay alert to early signals of recovery and reframe strategies for a more rational, value-driven market ahead.
The drought is real—but so are the seeds being planted.
