UK biotech finishes on high despite challenging 2025, BIA report finds
London, UK, 26 January 2026 – UK biotech has demonstrated resilience in a challenging 2025 and enters 2026 with renewed confidence and broadening investor appetite, the BioIndustry Association’s (BIA) report UK biotech financing 2025 has found.
A strong finish for VC deals
The UK biotech sector has emerged from one of its most selective investment climates in a decade, ending 2025 with clear signs of renewed momentum and increased investor confidence. The UK firmly retained its position as Europe’s leading national biotech market throughout the year, representing 30% of all European venture financing, despite a 13.2% year‑on‑year drop in venture capital investment, totalling £1.79 billion across 58 deals.
While much of 2025 was characterised by investor caution, the final quarter delivered an unmistakable shift. Q4 recorded 22 completed deals – the highest quarterly deal count of the year – indicating positive investor sentiment going into 2026. This renewed deal flow signals the beginning of a healthier distribution of capital across the biotech ecosystem.
Despite almost 47% of total capital raised in 2025 coming from just two Q1 transactions, the landmark investments in Isomorphic Labs and Verdiva Bio reaffirmed that global investors continue to view the UK as a destination of choice for biotech. These transactions contributed to a sharp rise in the average deal size to £30.8 million – up from £18.7 million in 2024.
Transactions underscore positive investor appetite
Beyond private capital markets, strategic transactions provided a strong indicator of sector confidence. MSD’s £7.5 billion acquisition of Verona Pharma was one of the largest global biotech exits in recent years, underscoring sustained international appetite for high‑quality UK biotech despite the absence of IPO activity. Major acquisitions by Sanofi and other global pharmaceutical leaders further reinforced this trend.
Turning policy into action
The macro‑environment going into 2026 should also bolster UK biotech. The Nasdaq ended 2025 at an all‑time high, investor sentiment is strengthening, and the UK‑US pharmaceutical trade deal has reinforced confidence in the UK market. Crucially, 2025 saw the policy foundations laid for a new era of domestic capital deployment – most notably the Life Sciences Sector Plan, the Mansion House reforms – and the first evidence of pension‑backed investment into the sector through the Draig Therapeutics financing and Aviva investing in Cambridge Innovation Capital. With overseas institutions making up 68% of investors in UK Series A deals and 89% of investors in Series B+, the quality of UK opportunities are not in question, but there’s clear opportunity for greater participation by UK domestic institutions, such as pension funds.
Jane Wall, Managing Director of the BIA, said:
If 2024 was marked by a rebound, 2025 has been a year of caution and strategic maturation. While the headline venture capital figure of £1.79 billion represents a 13.2% decrease from the previous year, this figure belies a sector that is increasingly focused on high conviction in UK science. However, the geopolitical landscape is precarious and the IPO window is entering its fifth year of restricted activity. Later-stage leads are still dominated by international capital, and the mandate for 2026 is clear: the UK Government must deliver to support a vital sector of the economy, and domestic investors must be encouraged to deploy here while we continue to welcome overseas capital. The BIA remains committed to ensuring the UK is not just a place where world-class science starts, but where it stays, grows, and thrives. This report is a testament to our sector’s resilience and a roadmap for the breakthrough decade ahead.
James Costine, CFO (UK) and Finance Partner of SV Health Investors, said:
Whilst 2025 represented a challenging financing environment globally, SV Health Investors remains excited by the strength of the UK biotech ecosystem which is a key component of our trans-Atlantic strategy. We are excited about the potential impact our UK portfolio is set to have on patients’ lives and will continue to support the growth of these companies as they scale. The ability of UK biotech companies to attract international funding serves as validation of their potential. Whilst SV helps build robust investor syndicates for our companies, often involving international investors, we very much welcome the Mansion House Accord as a positive step in the right direction. Not only will it provide domestic scale-up capital for the most promising UK-based companies, it should also help boost returns for UK pensioners to be more in line with those seen in the US and Canada.
Rosie Rodriguez, SVP Growth at Relation Therapeutics, said:
The UK is increasingly seen by global pharmaceutical companies and specialist international investors as a place where world-class biology, rich human data and advanced AI can be integrated with scientific rigour and speed. This shift is driven not by hype, but by platforms that can generate proprietary, disease-relevant data and translate it into programmes with clear paths to the clinic.
