EY’s Biotech Beyond Borders 2026 report said the biotech industry posted its third consecutive year of growth, with revenue up 13% to $232 billion in 2025, even as financing pressure, patent cliffs and geopolitical uncertainty continued to weigh on the sector. The report also said biotech financing remained relatively strong, with $68.5 billion raised in 2025, up 11% from 2024, while capital increasingly flowed toward later-stage assets and larger, higher-conviction deals.

A key theme was the industry’s shift toward more balanced portfolios and new financing structures. EY noted that companies leaned more heavily on alliances and acquisitions to offset loss of exclusivity and build resilience, while some biotechs adopted synthetic royalty agreements and other innovative contracting models to manage market pressure. M&A activity also rebounded, with oncology and neurology emerging as major dealmaking themes.

The report also said that the capital had become more selective. Late-stage VC dominated funding activity, while early-stage value and volume fell, reinforcing a widening split between better-capitalized biotechs and smaller players. M&A activity rebounded as companies leaned more heavily on acquisitions and alliances to build stronger portfolios and offset patent cliffs and loss of exclusivity.

The report placed strong emphasis on Asia, particularly China. EY said 39% of US biobucks flowed to China, while more than 88% of AI-related biotech investment was concentrated in R&D, especially drug target identification, drug design and clinical trial patient recruitment. That signaled Asia’s growing importance not just as a market, but as a core source of innovation and partnering activity.

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Source: Ernst & Young Global Limited

EY also pointed to regulatory shifts and “repatriating” trends, with industry leaders pledging up to US$370 billion toward domestic manufacturing in response to tariffs and supply-chain concerns. Overall, the report portrayed a sector that remained fundamentally strong, but one that needed to stay agile as capital, regulation and innovation all moved in new directions.