September 10, 2025, 10:30 AM -12:00 PM EDT
Biotech has been on a roller coaster since 2019. If we consider this simply from the perspective as being on the cusp of the subsequent pandemic rise from 2020-2023, that then allows a larger purview on the industry-specific and macroeconomic trends by which Biotech is buffeted. But something is critically different now: the perfect storm of pressure on the very innovation engine, in this Biotech burst bubble post pandemic, at a time when such innovation is needed to fill large Pharma’s pipelines, while at the same time the basic science that feeds the Biotechs is being undercut through recent policy changes.
All these events are conspiring to spook investors and partners alike, and at a time when large Pharma is facing hundreds of billions of dollars in patent expirations.
As shown in the Stifel Oncology Market Update from June 5, 2025 (citing an IQVIA analysis), most oncology trial starts are coming now from emerging BioPharma companies.
And as colleagues from Lumanity showed in their 2023 analysis, the innovations of small cancer companies (i.e., Biotechs by and large) have been feeding the oncology pipeline of Pharma.
And yet, Biotechs are facing an existential crisis at the moment, certainly oncology ones. And while some may claim that this is a Darwinian winnowing of the wheat from the chafe, I tend not to buy such a theory as it takes too little account of all the behind the scenes finagling that goes on that ultimately goes into funding and partnering. It is not a purely rationale process, and in fact the “Old Boys Network” (sadly still mostly that) continues to play an important role.
So now there is much talk about a welcomed and necessary correction – and that does have some merit in the exposure faced by the early Biotechs seeded in the pandemic boom: some companies were certainly not ready for primetime and were more research projects that should have remained in an academic institution. But my supposition is that more of these are facing pressure now, and may have even fared poorly in continued boom times, as their underlying understanding of how their science or technology aligned with unmet needs and how best to effect clinical development strategy that would be clinically (and commercially) relevant and inflect value (Ed Saltzman’s Proof of Relevance, POR) was ill-informed or misinformed.
And therefore how to convince the struggling Biotechs that while appreciating the need to focus and conserve cash – the focus on the wrong thing, for the wrong setting let alone indication, can spell their doom. There is little to no wiggle room anymore. As the latest E&Y analysis shows, their “Survival Index” is rather bleak (though in truth closer to the pre-pandemic boom).
In such a climate, Biotechs must recognize the value of outside input, even basic pressure-testing and objective vetting let alone deep insights that redirect the company’s portfolio or clinical development strategy. The old adage “penny-wise, pound-foolish” may sound a harsh statement but the truth of it can be found in the flawed trade-offs Biotechs have continued to make in terms of say a fast-to-market approach that fails to appropriately take into account the limited or even lack of commercial potential (and hence delimited ROI). This often results from the still all too common mantra of reducing technical risk or time to POC, while failing to sufficiently account for whether POC is in fact POR; that is, will the readout be clinically relevant and potentially have a line of sight to the market, and an ROI, even if the Biotech itself never intends to commercialize the product. Which in itself is another point that even nascent Biotechs need to consider in their scenario planning these days—that they may need to go it alone.