The public biotech universe has shrunk by more than 20% since 2021, yet financial stress remains entrenched across the sector, according to a report from EY Tuesday.
Hundreds of public biotech companies have disappeared from the landscape through acquisitions, mergers, restructurings and failures since the pandemic-era boom sent a wave of biotechs onto the public markets. Yet a smaller industry has not translated into a healthier one, according to new data from consulting and accounting firm EY.
EY reported on Tuesday that the number of publicly traded U.S. and EU biotech companies fell from 977 in 2021 to 758 in 2025—a decline of more than 22% that continues years of consolidation across the sector. Nevertheless, some 33% of these remaining companies had less than one year of cash runway at the end of 2025.
That number is improved slightly from 2024, when 39% of public biotechs had less than one year of cash runway—the highest-level EY had recorded in at least six years. Arda Ural, EY Americas life sciences leader, said the fact that there are fewer companies overall tempers this positive data point.
“It’s not as bright as it looks,” Ural said during a June 3 exclusive roundtable event. “There is some cleaning up going on,” after non-traditional capital spawned “some companies that got ahead of themselves,” he added.
Survival through consolidation—and capital
In many ways, biotech remains a story of winners and losers, Ural said. Revenue climbed 13% to $232 billion in 2025, according to EY’s report, while a record 72 companies generated more than $500 million in annual sales. This divide between the “haves and have-nots” continues to be a theme, Ural noted.
Ashwin Singhania, principal in EY-Parthenon’s life sciences practice and co-author of the report, agreed with Ural that the improvement in the cash-runway metric in part reflects the year-over-year decline in the number of public biotech companies. Still, he added that the shift cannot be explained by consolidation alone.
“The rest of that decline, or change, is really being driven by rounds on existing companies where we got another round of investment to extend the cash runway,” Singhania said. The result is a sector increasingly defined by the widening gap between biotechs that can attract capital and those that cannot.
Venture capital investors continued to favor later-stage assets last year, EY said. Late-stage venture financing reached a record $10 billion across 254 rounds, while early-stage financing declined in both value and volume, according to the industry report. Just 50 financing rounds accounted for half of all 2025 venture investment in biotech.
The pattern reinforces what many biotech executives have experienced firsthand: capital remains available, but only for a relatively select group of companies.
There is some reason for optimism, however. Rich Ramko, EY Americas life sciences sector and biotechnology leader, expects some of the capital to flow back into earlier-stage biotechs as M&A activity improves and more biotechs return to the public markets. “As we continue to see M&A, we continue to see companies go public, we’ll see that money get reinvested.”
“You’ll start to see a rotation back into some of the earlier stage [space],” Ramko said.
Recovery is real—but uneven
In 2025, fundraising outside commercial leaders—those with revenues over $500 million annually—reached its highest level since 2021, with a total of $58.9 billion, according to EY. Follow-on financings rebounded 34% in 2025, after falling to $19.9 billion at the end of 2024. M&A activity totaled $100 billion for 2025, with dealmaking accelerating in the first quarter of 2026 as companies announced another $36 billion in transactions. The IPO market has also begun showing signs of life, though activity remains below historical norms.
Once again, however, the benefits of that recovery remain concentrated. Outside biotech’s commercial leaders, the new report shows that only 45% of emerging companies had more than two years of cash runway by the end of 2025.
Ural stressed that the pressure remains especially acute among smaller companies and early-stage biotech companies with unproven, but promising, technology. “We are absolutely not out of the woods.”
