The biotech market is entering a new phase of stability and growth. After several years of normalisation of valuations and increased financial discipline, the sector is returning to a healthier dynamic.
After several years of high capital costs, pressure on valuations and strong risk aversion, the environment has stabilised since last year. Financing conditions have become more predictable, the fundamentals of many companies have improved and the market is increasingly refocusing on clinical substance, strategic relevance and operational execution, rather than global sector allocations.
This focus on quality and differentiation was clearly visible in 2025. BB Biotech generated a total return of +53.7% in USD terms, while the Nasdaq Biotechnology index gained +33.4%. This momentum was also reflected at NAV level, accompanied by a reduction in the discount. It underlines the growing importance of rigorous selection in an increasingly differentiated environment.
Mergers and acquisitions as an indicator
This structural trend is reflected in a recovery in merger and acquisition activity. The biopharmaceutical industry is approaching a major expiry in the number of patents between now and mid-2030. As a result, the pressure to replenish pipelines through external innovation continues to grow. Acquirers still have significant financial capacity and are increasingly willing to acquire differentiated, clinically validated assets at attractive premiums.
This has resulted in a number of acquisitions in our portfolio in 2025, including Intra-Cellular Therapies, Blueprint Medicines, Avidity Biosciences, as well as Akero Therapeutics and Amicus Therapeutics. These transactions illustrate the strategic demand within the sector, but also implicitly indicate the effectiveness of an investment approach focused on scientific differentiation, clinical maturity and industrial relevance.
Regulatory visibility remains limited
At the same time, the regulatory environment remains a key influencing factor. Political and regulatory uncertainties persist. In the US, discussions on affordability, supply chain resilience and industrial policy continue to shape the environment. The Inflation Reduction Act is having a structural impact on price dynamics, particularly for more mature products. On the other hand, differentiated therapies addressing unmet medical needs generally remain viable from both a regulatory and reimbursement perspective.
Regulatory authorities also operate in a complex context characterised by resource constraints, changes in management and evolving political priorities. Decisions remain selective and sometimes difficult to predict.
Outlook for 2026
The outlook for 2026 is guided by a clear principle: innovation remains strong, capital is deployed more selectively and value creation is focused where clinical progress and strategic execution converge in a compelling way.
BB Biotech enters 2026 with a clear strategic positioning. Several portfolio companies are approaching key clinical, regulatory and commercial milestones that should significantly influence their future value creation.
In immunology, for example, Argenx and Viridian are progressing key phase III programmes and indication extensions, while Celldex expects preliminary phase III results in chronic urticaria in the second half of 2026. In oncology, Revolution Medicines faces a succession of registration-relevant events in several KRAS-focused programmes, complemented by regulatory milestones at Nuvalent.
Catalysts are also intensifying in rare diseases, with Ionis set to publish phase III results and regulatory milestones later this year. Wave Life Sciences is tackling highly relevant neuromuscular indications with RNA-based programmes. Vertex is pursuing the commercial roll-out of new therapies as well as additional registration programmes.
This clinical and regulatory visibility, combined with persistently attractive valuations, particularly in the mid-cap segment, creates an environment in which growth potential, validation and strategic relevance are increasingly converging.
The long-term growth drivers for biotechnology remain intact. Therapeutic needs continue to rise, driven by demographic change, the growth of chronic diseases and increased demand for precision therapies. At the same time, technological advances in RNA-based therapies, gene therapy and targeted protein degradation are considerably expanding therapeutic possibilities and increasing the likelihood of success.
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