Will 2025 be better? After another tough year, the answer to that question will shape the prospects of innumerable drug candidates and the lives of people who work in biotech. Evaluate analysts made predictions in their 2025 preview—and anyone expecting a dramatic turnaround should look away now.
Green shoots were evident in 2024. Evaluate tracked an increase in the number of IPOs and the amount they raised, as well as an uptick in the number of venture capital rounds. Companies that navigated the challenges of the past few years are closing in on approvals, with Cytokinetics’ aficamten and Insmed’s brensocatib scoring places on the analysts’ list of the potential biggest launches of 2025.
Yet, 2024 only looked good compared to the disastrous 2022 and 2023. The number and value of IPOs were well down on the highs of 2020 and 2021, the amount raised in venture rounds continued a slide that began in 2022 and the analysts characterized dealmaking as “subdued.”
Evaluate analysts said the pace of IPO activity is expected to pick up again after pausing around the U.S. election late last year. There is huge pent-up demand “in the private world,” the analysts said, but only the safest bets and companies heavily supported by existing investors are expected to go public in the early months of the year.
“While many predict that 2025 will see another uptick in these IPO statistics, few are predicting the floodgates to suddenly open. The equity markets are skittish, and blow-ups like BioAge in early December do not help improve biotech’s reputation,” the analysts said.
The Evaluate team said market conditions need to change for the IPO window to open more. Such a shift is unlikely to happen “until the Trump administration is in place and laying out firm policy directions,” the analysts said, suggesting that IPO activity will remain subdued until later in 2025 at the earliest.
Some private companies will need to look to venture capital firms for funding and buyouts for exits while the IPO window is only ajar. M&A activity slumped in 2024, with the deal count and value through mid-November tracking well below the levels seen in 2023.
But the analysts said an M&A uptick in 2025 is “almost inevitable, as Big Pharma boardrooms come under pressure to deliver long-term growth.”