UK Biotech Funding Finishes On High Despite Difficult 2025

UK biotech had a difficult year in 2025.

Funding was tighter, investors were hesitant, and deals took longer to get done. But it ended on a high.

According to the BioIndustry Association’s UK biotech financing 2025 report, the sector held its ground and ended the year in a much better place than it started. And now, going into 2026, it’s clearly picking up again.

A Strong Finish For VC Deals

For most of 2025, raising money in biotech was hard work. Investors were backing fewer companies, which led to a drop in funding. Venture capital investment fell 13.2% year on year, reaching £1.79 billion across 58 deals.

Even so, the UK remained Europe’s biggest biotech market, accounting for 30% of all biotech venture funding across the continent. That alone shows the sector didn’t lose its footing, even during a difficult cycle.

The mood changed towards the end of the year. In the final quarter, 22 deals were completed, the highest number in any quarter of 2025. That late increase shows that investors were starting to feel more comfortable putting money back to work, setting a more positive tone for 2026.

A large share of the year’s funding came from two big early-stage deals, with investments into Isomorphic Labs and Verdiva Bio doing a lot of the heavy lifting.

Those rounds pushed the average deal size up to £30.8 million, compared with £18.7 million the year before, and showed that when investors do commit, they’re still willing to write serious cheques for UK biotech.

Transactions Show Positive Investor Appetite

Venture funding wasn’t the only bright spot. Big deals also sent a clear signal that interest in UK biotech hasn’t gone anywhere.

MSD’s £7.5 billion takeover of Verona Pharma was one of the biggest biotech exits seen globally in the past few years. It happened in a year with no IPOs, which makes it even more impressive.

Other acquisitions, including Sanofi, told the same story. Even when public markets are quiet, global pharma is still looking to the UK for companies worth buying.

Turning Policy Into Action

Going into 2026 looks better than it did a year ago. Markets are stronger, with the Nasdaq finishing 2025 at a record high, and the UK-US pharmaceutical trade deal is helping generate interest.

That said, overseas investors are still doing most of the heavy lifting.

International companies still make up 68% of Series A investors and nearly 90% of Series B and later-stage investors.

The quality of UK opportunities are not in question, but there’s clear opportunity for more participation by UK investors, 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.”