David Moss, Co-Founder and Chief Executive Officer, INmune Bio, Inc.
Healthcare is our most important asset, yet drug development receives relatively small investment compared to technology, as the time, cost, and regulatory hurdles make returns less competitive. For small biotech companies, capital constraints mean partnerships must occur earlier and often be more back-ended with cash-rich large pharma.
Chris Ehrlich, Chief Executive Officer, CERo Therapeutics, Inc.
We’ve seen a shift in recent years from both big pharma and biotech investors from ‘show me the timeline’ or ‘show me the market size’ to ‘show me the data.’ It is no longer sufficient in this industry to be fundraising or strategizing on the potential for good, quality patient data. The bar has shifted to requiring positive clinical data, even if its early and focused mainly on safety. Our approach at CERo Therapeutics has focused not on big clinical readouts but on keeping our investors as in tune with the status of our cell therapy patients almost weekly, to showcase that the drug has been well-tolerated, without toxicity, and is showing early, positive signs of cell expansion and efficacy. From our experience, this is what the major players in this industry are requiring. This is no longer a nice-to-have but a necessity to make it in this market.
Michael Kadan, Ph.D., MBA, Chief Operating Officer, Vector BioMed
We’re noticing capital constraints creating (mostly) a negative rippling effect for both developers and service suppliers. However, it’s opening doors to innovative approaches and business models that push through this constriction. Reduced investment in the CGT sector has been evident through established companies cutting programs and smaller private equity investments. Investors are more risk averse. Strategic partnerships that might normally arise around promising technologies being developed by small companies are now subject to a more demanding proof-of-concept to de-risk investor decisions. Sometimes the expectation for prior clinical data exceeds the ability of small companies to advance development, and product candidates and/or companies die on the vine. Fewer products in development has a knock-on effect of lower demand for CDMO services and the whole industry suffers.
At the same time, it’s placing specific forces on the global CGT sector. These forces are creating new consortia and modes to accelerate therapeutic development and modularize solutions, so therapies reach the clinic. This will turn the conversation back around to either a) have advanced therapeutic production and administration happen differently or b) give the advantage to smaller and/or properly structured organizations — to hold momentum.
The service supplier network has taken notice, yet only a select few CDMOs have shifted their mindset around strategic alliances and partnerships. This will produce a capacity reconfiguration and a formative trend toward decentralized manufacturing workflows.
Sean Lannan, Chief Financial Officer, eClinical Solutions
Closing out 2025, the economic environment is experiencing a broader shift where capital constraints are driving more deliberate growth strategies. These include outsourcing, strategic consolidation, and capability-focused acquisitions, allowing companies to expand efficiently, while managing economic risk.
The shift is attributed to the arduous process of raising new capital for both small and mid-size biopharma companies, slowing the deal making and buyout processes. The deals that are moving forward are more financially conservative, as companies adapt their growth strategies and turn to M&A or partnerships to access desired capabilities without the high cost of building net-new infrastructure.
As a result, the deals occurring are targeted and incremental rather than large-scale greenfield investments that require substantial upfront capital. CDMOs are also accelerating consolidation to create positive scaling effects, expand capabilities, and meet customer demand under tighter budgets.
Even as mega-deals return across markets, most CDMO and mid-size biopharma sectors will continue to remain focused on disciplined, lower-risk moves due to a historically high failure rate of acquisitions in creating enterprise value. M&A moving forward will be approached as a method to strengthen existing capabilities rather than chase large-scale, high-risk transactions.
Patrick Meyer, Ph.D., Global Head of Business Development, Rentschler Biopharma
Higher interest rates and tighter credit markets are reshaping M&A and partnership dynamics. Large-scale acquisitions have slowed, while heightened market volatility and unmet valuation expectations are making sellers more cautious and buyers more selective, resulting in delayed or restructured deals. This is particularly visible in early phase projects where well-funded assets can suddenly fall short due to reshaping or reprioritization of existing deals. The current situation has heightened the importance of strategic partnerships, risk-sharing, and financial discipline, particularly among niche and smaller players. Looking ahead, we do see signs of a cautious market recovery, which is encouraging.
Andrew Gray, Ph.D., Chief Executive Officer, CellEcho Biotech
The post-pandemic collapse of early-stage biotech venture capital has created an ecosystem filled with haves and have-nots. Investors have flipped to “risk-off” mode, exemplified by the increase in median upfront payments for late-stage (phase II/III) assets increasing from $130 million in 2019 to $200 million in 2024. At earlier stages, the “flight to quality” manifests quite differently: Multiple top-tier VCs coalesce around a handful of $100+ million “too big to fail” mega-rounds involving seasoned founders. Such deals represent two-thirds of venture funding, up from 35% pre-COVID. A great example is Abbvie’s $2.1 billion acquisition of Capstan Therapeutics, co-founded by Carl June (developer of Kymriah, the first CAR-T therapy), Drew Weissman (Nobel Laureate), and Adrian Bot (former CSO of Kite Pharma). Meanwhile, more traditional biotech founders — professors and postdocs spinning out of universities — struggle to get funded. Those that do tend to raise less capital, forcing them into less favorable pharma partnerships: Upfront payments dropped from 13% of deal total in 2019 to 5% in 2024, the remainder being “biobucks” that will likely never be paid. For CDMOs, this creates opportunities with two distinct client bases: well-funded mega-round companies with plenty of choices, and traditional startups with limited capital but less negotiating power.
Joshua Koo, Head of Strategy, Adragos Pharma
Capital constraints are fundamentally reshaping M&A by giving rise to a transaction model where strategic facilities are being divested. In this new paradigm, large pharmaceutical companies are striking long-term supply deals with CDMOs, who in turn are acquiring the pharmaceutical companies’ manufacturing sites.
This model is a direct and elegant solution to the capital pressures facing both sides.
For the pharmaceutical company, it is a powerful act of capital reallocation. Under pressure to streamline operations, they can divest an underutilized or non-core manufacturing asset. This immediately offloads a capital-intensive cost center while securing a long-term supply agreement with predictable operational expense.
For the CDMO, this model provides instant capacity to meet soaring demand, bypassing the prohibitive costs and timelines of a greenfield build. The transaction is often de-risked by the accompanying long-term supply contract, which provides a steady revenue stream from an anchor client from day one.
We see this symbiotic relationship continuing in the current CDMO M&A climate – a unique dynamic where one company’s non-core asset becomes another’s strategic foundation.
Kelly McGinnis, President, Business Operations, Biopharma Services, Thermo Fisher Scientific
This year, pharma investment surged, driven by onshoring capacity and a wave of M&A and new project announcements across the industry. In fact, according to a fourth quarter report, 2025 was a transformative period for the life sciences industry, which remains poised for growth going forward. However, capital scarcity is still a reality for many.
This constraint has set the stage for strategic partnerships with contract development and manufacturing (CDMOs) and contract research organizations (CROs) that enable biopharma companies to stay focused on bringing innovative therapies to market. Instead of building capabilities in-house, choosing a CDMO/CRO partner who can bring a multidisciplinary approach into a single, connected supply chain offers biotech and biopharma companies speed and efficiency while navigating the journey from discovery to clinical development and commercial manufacturing. In fact, a study by the Tufts Center for the Study of Drug Development (CSDD) at Tufts University recently found that new, life-changing medications could be developed up to 34 months faster if done with a single, integrated service provider.
In short, capital constraints are steering the market to strategic, integrated partnerships that marry CRO insight with CDMO execution, unlocking cost efficiency and accelerating therapies to patients.
Eytan Abraham, Ph.D., Chief Commercial & Technology Officer, Minaris
Capital constraints are changing how companies think about everything, especially partnerships. With funding tighter than ever, biotechs are reducing headcount and prioritizing clinical activities while becoming far more selective about the CDMOs they choose. They need partners who can deliver on time, reduce costs and cost of goods sold (COGS), and help them get more out of every dollar. Innovators are under pressure from their boards to hit milestones with fewer resources. At the same time, they must consider longer-term needs: which CDMOs can scale, manufacture globally, support commercial production, meet regulatory scrutiny, and enable innovation that drives scalability and COGS reduction.
We are also seeing the ripple effects in M&A. CDMOs with older or inefficient facilities are divesting, while others are investing in modern, scalable infrastructure. The priority is shifting toward assets that can support long-term growth and away from those that cannot.
This environment is redefining partnership itself. It is no longer enough to simply provide a service. Companies want CDMOs that think creatively with them, optimize processes, and help lower the costs. In a constrained environment, efficiency, transparency, and true technical depth matter more than ever. Companies that deliver this progress will be best positioned to support innovators and their patients.
Yann D’Herve, Chief Executive Officer – CDMO Business, Cohance Lifesciences
Capital constraints are not stopping deals, but they are forcing CDMOs and pharma companies to be more selective and more return driven in both M&A and partnerships. With the increased complexity and diversification of modalities, pharma companies and CDMOs are becoming more targeted in their acquisitions, focusing on assets that complement or extend their technical capabilities. M&A is shifting toward fewer, larger, and more capability driven transactions, often structured with staged consideration and strong integration theses rather than speculative roll ups. Private equity and strategics are concentrating capital on “must have” platforms in biologics, CGT, and complex modalities, where there is clear visibility on both cash flows and capital expenditure requirements.
Tom Sellig, Chief Executive Officer, Adare Pharma Solutions
Capital constraints are making both pharma companies and CDMOs more deliberate about where and how they invest. Rather than pursuing broad, transformative acquisitions, many organizations are prioritizing targeted investments that expand specific capabilities, technologies, or regional access while preserving flexibility. This environment favors strategic partnerships that deliver immediate operational or technical value without the balance-sheet burden of large-scale deals. For CDMOs, it also reinforces the importance of being properly scaled: large enough to support complex programs while agile enough to adapt as sponsor needs evolve. As a result, we’re seeing greater emphasis on relationships built around long-term collaboration rather than growth driven purely by consolidation.
Aedan Coffey, Director, Gender Affirming Care, Oregon Health & Science University
From a public funding perspective, particularly in a constrained capital environment, the emphasis shifts away from ownership and toward enabling system performance. At relatively modest investment levels, public capital is more often deployed to reduce friction by supporting workforce development, shared infrastructure, and readiness activities that improve reliability and resilience but are difficult to finance through private returns alone.
Health systems and hospitals align well with this approach. While they are not typically acquirers, relatively small public or quasi-public investments can generate outsized impact when directed toward research infrastructure, data and quality systems, or training pipelines that connect care delivery to manufacturing needs. In this context, capital constraints tend to push the ecosystem toward collaboration over consolidation, with targeted public investments acting as catalysts that lower execution risk and align incentives across industry, health systems, and academic partners.
