Biotechs will need to be strategic to achieve “tariff-era success” as the sector enters an “America-first resurgence,” according to a new report from PitchBook. Companies focused on AI integration and manufacturing innovation are expected to win out, according to the firm.
The new note from PitchBook’s senior research analyst for biopharma Kazi Helal, Ph.D., provides a forecast for biopharma companies and their investors amid an environment of uncertainty caused by U.S. President Donald Trump's import tariffs.
In the last five years, the biotech sector has undergone three distinct phases. The first was an unprecedented capital influx tied to the COVID-19 era that began in 2020, followed by a market rationalization known as the post-COVID correction. Now, the "America-first resurgence" is upon us, according to the analyst.
The emerging era will be defined by improved domestic capabilities driven by protectionist trade policies and AI use for R&D and manufacturing processes.
However, M&A activity may temporarily decline because of Big Pharma’s focus on bolstering its manufacturing infrastructure, Helal wrote.
The M&A suppression could prompt a continued market correction, but “biotech’s fundamental resilience suggests sustained growth regardless of these short-term pressures,” Helal writes.
Helal recommended that VC investors target opportunities in AI platforms that streamline drug discovery and regulatory compliance, such as Isomorphic Labs and Weave Bio. He also recommended financing companies that are building compact, automated biomanufacturing tech, such as Cellare, Cellino and Elevate Bio.
Companies in these fields are focused on improving efficiency as domestic labor costs rise and offer significant potential for growth, the analyst wrote.
Of vital consideration for U.S. biotech companies are domestic capital sources. The U.S. biotech sector currently leans heavily on funding—whether via investors, licensing deals and asset acquisitions—from other countries.
However, restrictions on international deals may emerge, raising important questions about the volume and sustainability of U.S. capital deployed to biotech VCs, Helal concluded.