Report: Europe’s biotech leaders see recovery, but investors remain the obstacle

The European breakdown covers companies headquartered in the EU/EEA, the UK and Switzerland. It separates their responses from the global survey of 81 executives being released by the organizers.

Why it matters: European biotech leaders want to raise money and strike partnerships, but their answers expose a difficult dependency: companies need convincing data to attract capital, and capital to generate that data. Their optimism about the next 12 months does not mean that tension has eased.

• “The gap in early-stage innovation funding,” said Nisit Khandelwal, CEO of Cycuria Therapeutics, when asked what keeps him up at night. “Deal-making and investment volume are consolidated and skewed toward near-market-ready assets – but we have all got to wake up to this: the investment we make in early pipeline today is the mid-stage pharma pipeline we’ll be scrambling for tomorrow.”

By the numbers: Deal appetite is rising, but acquisitions are a secondary priority.

• 74% report higher appetite for partnering or M&A over the next 12 months; none report a decline.
• 45% name raising growth capital as their company’s most likely activity, followed by strategic partnering or licensing at 29%.
• 13% prioritize advancing key clinical programs and 12% an acquisition or sale.
• Just one respondent identifies public markets or an IPO as the most likely activity.

The responses point toward companies financing their own development and finding partners, rather than a broad rush to consolidate. Venture capital remains the most frequently selected source of funding for the next two years, chosen by 45%, ahead of pharma partnerships and upfront payments at 19%.

The funding squeeze: Investor caution dominates the European responses even more than the global results, where 79% identify risk aversion as the main investment constraint.

• Within the European group, 45% identify capital availability as the biggest barrier to getting deals done. Buyer-seller valuation gaps and competition from Chinese assets follow, each at 16%.
• Asked which single industry challenge they would solve tomorrow, 52% choose access to capital. Clinical trial efficiency is a distant second at 12%.
• One CEO at an EU/EEA-headquartered company described the problem as “Investors slow and opaque decision making.” Another European CEO pointed to “European public market fragmentation / lack of public growth capital.”
• Not everyone believes funding conditions will simply return to normal. Only 33% regard the current environment as primarily cyclical; 39% see a mix of cyclical and structural pressures, and 14% see a lasting structural change.

The data dilemma: Clinical evidence is the factor European respondents most often say investors and pharma partners scrutinize when assessing a company, selected by 43%. Execution and operational track record follow at 22%.

• George Badescu, chief business officer at Heidelberg Pharma, captured the practical problem in his response: “How to generate the right kind of data, quickly enough, while having to cut costs to the bone to prolong runway.”
• An anonymous chief business officer at a Swiss-headquartered company reported “lack of adequate financing despite excellent track record of delivery and strong clinical Phase 1 data.”
• These are executives’ assessments of their own circumstances, but still show why stronger dealmaking sentiment can coexist with continued anxiety about cash: producing data does not necessarily guarantee financing on the timetable a company needs.

Europe’s opening: US policy and regulatory uncertainty has made Europe more attractive as a place to build and partner for 49% of the European respondents. Another 36% report no change, while 14% view Europe as less attractive.

• But for most, that is an opening, rather than a vote of confidence in Europe’s competitiveness as respondents give the region an average score of only 2.8 out of five as a partnering and dealmaking hub. Asked what keeps him up at night, Hamza Bokhari, executive director of preclinical strategy and business development at Atrogi, answered: “EU competitiveness on the international scale.”
• Executives also believe that the most important source of future innovation partnerships will come from beyond Europe: 35% from the US, 32% from China and only 14% from Europe.
• China’s role is more complicated than competition alone. Licensing Chinese assets is an opportunity for 41% of European respondents, a threat for 28%, and both for 14%. One anonymous CEO at an EU/EEA-headquartered company described the pressure as “Providing high quality data when constantly being challenged by ‘it can be done cheaper and faster in China’.”

Where capital may go: Oncology and antibody-drug conjugates lead expectations for partnering and investment interest in 2026–27 (62% of respondents). Immunology and inflammation follow at 48%, cardiometabolic disease beyond GLP-1 drugs at 39%, and neuroscience at 36%.

• But expectations about where investors will focus differ from views on underfunded opportunities. Healthy aging and longevity lead the latter question at 33%, followed by mental health and neuroscience, and women’s health, each at 25%. The mismatch is particularly visible in women’s health: a quarter identify it as the greatest underinvested commercial opportunity, but just 10% expect it to attract the most partnering and investment interest.

AI’s reality check: AI biggest current impact is in back-office functions and operations, according to 41% of European respondents. Drug discovery and target identification follow at 28%, while 14% report no material impact yet.

The longer-term expectations are more scientific. In a separate question, 37% of executives expect AI to improve R&D productivity, while 22% expect faster clinical development and another 22% expect a competitive advantage for companies with proprietary data. 17% think that AI’s impact is currently overstated.

Bottom line: This is a small survey dominated by CEOs and privately held companies, with substantial representation from preclinical and early clinical businesses, but their answers offer a rare snapshot of executive sentiment from the ground and should be seen as potential signals of what’s to come.