ARTICLE SUMMARY:
Challenges to biotech financing continue to increase, but medtech financing, already fragile, is holding steady, with interest in cardiovascular and neurotech devices gaining traction in the first half of 2025. More than ever, risk-averse investors favor later-stage companies that have established commercial track records, while they persist in shunning earlier-stage companies, particularly those that are raising money to start their first clinical trials.
The times, they are particularly turbulent for life sciences industry investors. Reasons are clear: federal government policy; budget cuts, real and proposed; and continuing reimbursement pressures; all of which are somewhat offset by the simultaneous promise of artificial intelligence, which is already impacting medical care but also comes at a cost and raises important, rate-setting questions about quality and value. Underlying these man-made trends is demographics—the world’s aging population.
Biotechnology financing dominates the sector by far, and its woes are particularly serious, as the subsector continues to grapple with a three-year-old financing drought, the effects of which have rippled across the entire ecosystem (see Box, “Biotech Woes”). Public and private “frothiness” led to cycle highs in deals, investments, and M&A from 2020 through mid-2022, before collapsing in 2023, according to HSBC’s Venture Healthcare Report: Mid-Year Report 1H 2025, published July 16. Valuation uncertainty and a lack of exits have dampened interest in deals and financing, and although a few companies managed to complete mega-rounds at attractive valuations, many, many more, particularly early-stage, preclinical start-ups, are struggling.
The medical devices subsector, a stepchild to biotech, with a much smaller piece of the life sciences pie and a long history of struggling to gain funding and do deals, seems to be on a steady course—treading water—even as biotech continues a multiyear downward spiral
