VC investments rise nearly 71% in Q3 2025

GlobalData reports that biotech venture capital funding rose from US$1.8bn in Q2 2025 to US$3.1bn in Q3 2025. The information provider interprets this increase as a sign of improving investor sentiment despite political uncertainties.

Biotech financing recovery despite political headwinds

According to the analyst firm, a recovery in biotech financing had already been visible in 2024 as a result of interest rate cuts. However, this effect was initially offset by the Trump administration through pharmaceutical tariffs, pressure on US drug prices, budget cuts for the NIH, and mass layoffs at the FDA and CDC. Nevertheless, the sector has remained resilient, says Alison Labya, Senior Business Fundamentals Pharma Analyst at GlobalData. “The total deal volume increased by 36.7% to US$43.2bn.”

Interest rate cuts boost investor optimism

Interest rate cuts by the US Federal Reserve in September 2025 further boosted investor optimism. Lower capital costs could facilitate larger venture capital investments in biotech.

Series D leads growth in financing

According to the Pharmaceutical Intelligence Center Deals Database from GlobalData, Series D financings showed the strongest growth compared to Series A, B, C, and E. They increased 60-fold from Q2 2025, reaching a total of US$832m. This indicates a shift in capital flows away from early-stage investments towards later-stage growth and expansion financing of existing portfolio companies.

Advanced programmes drive investments and M&A

A similar trend was observed in the Biopharma Licensing and Venture Report by Dealforma for JP Morgan. It identified investments “mainly in advanced programmes” with a total value of US$5.8bn across 86 financing rounds, down from US$6.6bn in Q3 2024.. M&A activity remained robust in both sectors in Q3 2025, with biopharma completing 35 transactions worth a total of US$30bn. Licensing also showed a clear trend towards larger, later-stage deals in Q3 2025. Biopharma licensing deals reached an announced quarterly value of US$63.7bn and a cumulative annual value of US$183.7bn, according to JP Morgan.

Outlook for biotech investment trends

Labya believes the durability of this trend will depend on how well the biopharma sector can mitigate Trump-era tariffs and drug price pressures, as well as the continued commitment of the US Federal Reserve to interest rate cuts.