With demand for pharma services historically lagging changes in biotech funding, analysts expect CDMOs to experience an uptick in activity in late 2026 or early 2027.
Rebounding biotech investment and the AI-driven expansion of early-stage drug development pipelines should translate into stronger demand for biopharma services, according to PitchBook.
Last month, PitchBook reported that quarterly biopharma venture capital deployment topped $10 billion for the third time since early 2022, driven by Isomorphic Labs’ $2.1 billion series B financing round. The quarter also featured exits of VC-backed companies collectively worth $34.4 billion as Eli Lilly and Gilead struck multibillion-dollar takeovers of biotechs.
Now, PitchBook has outlined the implications of the rebound in biotech VC funding for pharma service providers, including contract development and manufacturing organizations (CDMOs). The market data company noted that the recovery in biotech funding has yet to fully reach the pharma services sector.
The lag between the uptick in biotech funding and demand for pharma services is consistent with prior ebbs and flows in VC activity, leading PitchBook to predict that CDMOs will experience stronger demand over the next two to four quarters. If the historical pattern repeats, the resurgence in biotech funding that began in the second half of 2025 will translate into demand for services in late 2026 or early 2027.
PitchBook’s prediction aligns with CDMO commentary on the link between biotech funding and demand for services. After seeing an uptick in biotech investment in the first half of 2024, Lonza CFO Philippe Deecke told investors, “There’s always a time lag of roughly six to nine months before you would see any funding impact being reflected in our financials.”
The resurgence in biotech funding may benefit some companies more than others. PitchBook predicted that CDMOs focused on complex modalities such as cell and gene therapies, antibody-drug conjugates and radiopharmaceuticals will lead the recovery in demand for pharma services.
PitchBook sees deal activity in the second half of 2026 being affected by how quickly increased biotech funding “shows up in service provider revenue lines.” Activity in the first half of the year suggests an inflection is underway, PitchBook said, with the annualized deal count outpacing the level reported in 2025. The potential inflection followed four years of contraction in private equity pharma service deals.
The firm tracked 27 manufacturing and distribution deals worth $1.9 billion over the first half of the year. The uptick in activity was supported by deals involving manufacturers of pharma ingredients, such as CordenPharma’s acquisition of AmbioPharm and Apothecon Pharmaceuticals’ $270 million funding round. Generics was another active subsegment, led by Apotex’s initial public offering.
