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January 13, 2025

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What to Expect from Healthcare Investments in 2025

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By Ryan Flinn

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Overview

What biopharma innovations are capturing investors’ attention at the 2025 JP Morgan Healthcare Conference?

AI, GLP-1 Therapies, and M&A are Shaping the Future for Biopharma Entrepreneurs

Will 2025 be the year – finally – that healthcare investors breakout of their years-long slumber and pour money into the sector? Or will the slump continue?

That’s the big question entrepreneurs, investors and commentators are asking as the industry kicks off healthcare’s largest investor event, the annual JP Morgan Healthcare Conference in San Francisco, January 13 to16, 2025.

At the start of last year’s conference, the biotech sector was in limbo, stalled by an investment drought and a sluggish IPO market. Now, industry prognosticators are saying they see signs of change, both because of advancing technologies such as artificial intelligence (AI) as well as the success of GLP-1 therapies for obesity.

The Funding Landscape

After years of turbulence, early-stage startups are entering 2025 with cautious optimism. Venture capital funding for healthcare showed resilience in 2024, with seed-stage deals accounting for nearly 40 percent of all investments — a jump from just 26 percent in 2021, according to Silicon Valley Bank.

“There are some new Series A companies happening, and the ones raising money are really impressive because the bar is really high,” said Megan Scheffel, Head of Healthcare and Life Sciences lending at Silicon Valley Bank, in an interview withEndpoints News.

Meanwhile, later-stage startups face a harsher reality. With valuations recalibrating and fewer paths to exit, many are exploring mergers or strategic pivots. Approximately 20 percent of startups have taken down rounds during the past six quarters, according to Carta data, Endpoints reported.

IPOs and M&A Activity

The IPO market, nearly frozen for two years, is poised for a slow thaw in 2025. Companies like Hinge Health and Omada Health are preparing to go public. And on January 10, news broke that obesity-focused Metsera had filed to go public less than a year after its launch. Success for these ventures could reignite investor confidence in a sector that has been weighed down by disappointing exits and stagnant valuations.

Andrew Adams, Co-founder and Managing Partner at Oak HC/FT, predicted that companies in areas like physical therapy and behavioral health would lead the IPO resurgence, as they’ve been growing well and are widely accepted by insurers and consumers, according to Endpoints News.

On the M&A front, activity remains a critical pathway for later-stage startups navigating challenging capital markets. Pharmaceutical giants are doubling down on acquisitions in fast-growing fields like oncology, obesity and metabolic diseases. Roche’s acquisition of Carmot Therapeutics for its GLP-1 agonists and Novartis’ purchase of Mariana Oncology exemplify the appetite for innovation in high-value disease areas.

"M&A follows where segments of industry have higher-than-average growth rates," Daniel Chancellor, Vice President of Thought Leadership at life sciences advisory

Norstella, told Investor’s Business Daily. "If you're looking at anything that's above average — immunology, oncology, neurology, even cardiovascular and, of course the GLP-1 space — these are areas where companies will want to be adding to their portfolios."

Emerging Technologies and Disease Focus

Technology continues to reshape healthcare, with AI leading the charge. AI’s role in drug discovery and clinical trial design is gaining momentum, fueled by record investments. In 2024, $5.6 billion was invested in AI-focused biotech, a nearly threefold increase from the previous year, according to Silicon Valley Bank.

“The first entirely AI-designed drugs are moving through clinical trials that started in 2020,” according to Silicon Valley Bank’s 2024 annual healthcare investment report. “With readouts of the earliest drugs coming up, 2025 will be a long-awaited “prove-it” year for AI drug discovery.”

Obesity remains a dominant focus in the therapeutic landscape, driven by the explosive growth of GLP-1 drugs like Novo Nordisk’s Wegovy and Eli Lilly’s Mounjaro. Analysts estimate that the obesity drug market will reach $100 billion in sales by 2030, creating opportunities for startups to develop next-generation treatments.

"There are these next-generation obesity targets that will continue to capture the

imagination of Wall Street," BridgeBio Pharma CEO Neil Kumar, PhD, told Investor’s Business Daily. "There's always going to be this massive admiration of these monster markets."

Beyond weight loss, drug companies are testing whether GLP-1s can help patients living with other conditions. As STAT notes, Lilly is studying the therapy for alcohol and drug addiction, while Novo is seeing if the drug class can help people living with Alzheimer’s disease.

Another surprising area with surging interest is radiopharmaceuticals, FiercePharma highlighted. In addition to the previous mention of Novatis’ acquisition of Mariana Oncology, Lilly bought Point Biopharma for $1 billion, AstraZeneca purchased Fusion Pharmaceuticals for $2.4 billion and Bristol Myers Squibb spent $4.1 billion for RayzeBio.

China’s Growing Biotech Presence

Geopolitical forces are set to play a significant role in shaping the healthcare and biotech landscape in 2025. As U.S.-China relations evolve and new policies emerge under the second Trump administration, entrepreneurs face both challenges and opportunities.

China has solidified its position as a global biotech powerhouse, with companies making significant strides in research and development productivity and innovative drug development. Chinese biotech companies are now competitive in developing first-in-class drugs, from antibodies to advanced small molecules, wrote David Li, Co-Founder and CEO of Meliora Therapeutics, in the Timmerman Report.

These advances have spurred a flurry of deals, including Summit Therapeutics partnering with Akeso Inc. for bispecific antibodies; Roche’s $850 million purchase of two breast cancer drugs from Regor Therapeutics; and Merck’s licensing deal with LaNova Medicines for its bispecific antibody drugs targeting PD-1xVEGF.

Shifts in U.S. Policy Under Trump 2.0

The return of Donald Trump to the White House brings regulatory uncertainty for biotech startups. Proposed leadership changes at the FDA and Department of Health and Human Services could impact drug approval processes and industry oversight. While some in the industry anticipate deregulation and faster approvals, others worry about the influence of controversial appointments.

Preparing for 2025

As the biotech and healthcare landscape evolves in 2025, entrepreneurs may find themselves with more opportunities than startups did a year ago. If the slate of biotech IPOs scheduled for this year perform well, the floodgates may for other companies that have been waiting for years.

On the innovation front, AI could prove itself more than just a useful tool and earn a place as a critical component of successful companies. And pharma companies will continue to push the boundaries of GLP-1s, from obesity and beyond, as long as the market continues to slake its thirst for the therapy as the going rate.

2025 could prove to be the start of the biopharma turnaround…or more of the same as the last few years. Only time will tell, but the initial signs look promising.

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