What are the dominant trends in UK Life Sciences during 2025: funding, collaboration and AI adoption
RSM UK’s co-leads of life sciences, Laragh Jeanroy and Graham Bond, highlight three key themes dominating the sector in 2025:
Tighter funding
The value of private equity (PE) buyouts in the UK life sciences sector jumped from £778m in 2023 to £5.3bn in 2024, according to Pitchbook. However, the number of deals has remained fairly steady over the years, increasing from 10 in 2023 to 13 in 2024. A large proportion of PE and venture capital investment in the sector focused on traditional pharmaceuticals last year.
Laragh Jeanroy said: “High interest rates over the past year, and therefore, the higher cost of debt, has meant PE and VC have been more risk adverse and opted for larger businesses that are further along in the life cycle with a proven track record. Investors are carrying out thorough due diligence so they can be certain the business is robust, which is highly dependent on the quality of data available. With positive direction from the government as it looks to set out an Industrial Strategy, prioritising high-growth sectors including life sciences, plus interest rates likely to fall further, this points towards a more positive funding and investment environment, which earlier stage life sciences businesses should benefit from.”
Graham Bond added: “When looking at public markets, Q3 2024 was the ninth consecutive quarter with no IPO activity in the life sciences sector since 2022*. The continued lack of IPO activity highlights clear challenges in accessing public markets, albeit we may start to see green shoots in the latter part of 2025.”
Read our key takeaways from the BioCap 2024 investment panel.
Partnering and collaboration
Graham Bond: “Partnerships and alliances with external organisations have always been a vital route to growth for the life sciences sector. We expect collaboration to be key in the coming year, as this can bridge the gap in funding and enable biotech companies to develop a number of additional assets. The pharmaceutical industry in particular is increasingly on the hunt for drugs that can be widely deployed, but this requires undertaking larger trials which need more funding, resource and technological capabilities. A common route to access these resources is to partner with experts in these areas that share similar objectives.”
Read our guidance for successful partnering and collaboration for life sciences
Data and AI
Laragh Jeanroy: “As life sciences businesses grow and evolve, so too does the complexity and use of data. Carrying out larger trials means handling bigger data sets, so many businesses are, and will, inevitability turn to AI to help efficiently analyse and process data. But it’s essential they have the necessary protections in place to protect research, and safeguard investor funds and confidence for long-term success. The life sciences sector holds a wealth of intellectual property and sensitive patient data making it a prime target for cyber-attacks. This risk will almost certainly grow, particularly as businesses in the sector increasingly collaborate with third parties, and as cyber criminals become more sophisticated. It’s now more important than ever that businesses adopt cyber security foundations early on to avoid falling victim to an attack.”
Read our guidance on cyber security for life sciences
To discuss the impact for your life sciences business, please contact Graham Bond or Laragh Jeanroy.
*UK BioIndustry Assocation, UK biotech financing 2024 (July-September 2024)
