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鈥檚 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 拢1.79 billion across 58 deals.
Even so, the UK remained Europe鈥檚 biggest biotech market, accounting for 30% of all biotech venture funding across the continent. That alone shows the sector didn鈥檛 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鈥檚 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 拢30.8 million, compared with 拢18.7 million the year before, and showed that when investors do commit, they鈥檙e still willing to write serious cheques for UK biotech.
More from Funding
- Refiant Raises $5M To Make AI 80% More Energy-Efficient
- Lucida Medical Raises 拢8.7 Million To Supercharge Same-Day AI Cancer Diagnosis
- Deaku Raises 拢480K To Build 鈥淢issing Infrastructure鈥� For The Creator Economy
- Silverflow Raises $40 Million Series B As Cloud-Native Payments Platform Scales Globally
- Plurio By Elly Analytics Raises $3.5M To Automate Up To 90% Of Performance Marketers鈥� Daily Work
- Smart Bricks raises $5M led by Andreessen Horowitz (a16z) to Build the AI Infrastructure Layer for Global Real Estate
- Stacks Raises $23M Series A To Automate Enterprise Finance With Agentic AI
- Maternal Health AI Startup, Matresa, Secures 拢315,000 In Pre-Seed Funding In An Effort To Combat UK Crisis
Transactions Show Positive Investor Appetite
Venture funding wasn鈥檛 the only bright spot. Big deals also sent a clear signal that interest in UK biotech hasn鈥檛 gone anywhere.
MSD鈥檚 拢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鈥檚 clear opportunity for more participation by UK investors, such as pension funds.
Jane Wall, Managing Director of the BIA, said: 鈥淚f 2024 was marked by a rebound, 2025 has been a year of caution and strategic maturation. While the headline venture capital figure of 拢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.
鈥淗owever, 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.
鈥淭he 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鈥檚 resilience and a roadmap for the breakthrough decade ahead.鈥�
James Costine, CFO (UK) and Finance Partner of SV Health Investors, said: 鈥淲hilst 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鈥� lives and will continue to support the growth of these companies as they scale.
鈥淭he ability of UK biotech companies to attract international聽funding聽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.鈥�
Rosie Rodriguez, SVP Growth at Relation Therapeutics, said: 鈥淭he 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.鈥�
