Biotech Market Trends Reflect Both Pressure and Opportunity
When one hears about trends within an industry, one usually also hears that ubiquitous two-initial acronym: AI.
And while artificial intelligence has certainly charged into and changed the biotech sector — as it has many others — it is only part of what is influencing and shaping today’s market.
Catherine Pearce, founder and CEO of JucaBio in Cincinnati, discussed AI’s influence on the industry.
“Right now, some of the hottest areas in biotech include AI-enabled drug discovery and optimization,” Pearce said, as well as “AI integration into clinical trial recruitment, partnerships with China on both the innovation side and study execution, antibody-drug conjugates/bi-specifics, T-cell engagers, and inflammation and immunology, and build-to-buy companies.”
That is a lot. Yet there is a flip side.
“At the same time,” Pearce said, “early-stage oncology and vaccines feel less active.”
Flexible Space Becomes a Priority for Biotech Companies
That is one quick take on what is happening in a vast, complicated and data-driven industry, but Pearce also discussed what she hopes to see during the next six to 12 months.
“I’m hoping the initial public offering market continues to show signs of improvement and will enable more opportunities for companies to raise money, expand pipelines and allow more financing options,” she said. “That will increase the value of merger and acquisition deals, and offer more favorable financing terms from venture capital and private equity concerns.”
Pearce is also hoping for stronger support from the federal government.
“I also hope that the Food & Drug Administration will continue to staff up,” Pearce said, “and provide more stability in responding and interacting with biotech.”
She is not alone in that thought.
Doug Edgeton, CEO of Durham, North Carolina-based NCBiotech, said, “One of the currently challenging facets of our current environment, and I think this is true across the country, is that federal funding for some academic research has slowed down. Typically, that funding is the lifeblood for companies that spin out of university labs.”
“We’re hoping,” he said, “that this is temporary.”
As for merger and acquisition activity, Pearce expects more consolidation among small biotech companies.
“You will see more consolidation of small biotech, as companies that were funded during the 2020-ish boom reach the end of their cash and need to find suitable partnerships to continue,” she said.
She also expects more precision medicine, greater reliance on biomarkers, less emphasis on platform plays, continued innovation in large-market disease areas and more sourcing of innovation outside the U.S.
Overall, the current environment for biotech financing is “very much a story of the haves and the have-nots,” Pearce said.
“Successful, proven teams with good pipelines will definitely get funded, and those without track records or solid teams with early-phase ideas that are less competitive or lack commercial potential will struggle.”
From a real estate perspective, leasing has dropped tremendously in well-known biotech regions such as Boston, and spaces continue to sit empty.
“Biotech companies are looking for flexible work environments — think WeWork-type models — that allow collaboration,” Pearce said, “but don’t require a long-term commitment. Cash preservation is important for startup biotech and leasing space is not paramount.”
Workforce dynamics are also shifting, with companies seeking the best talent that may or may not be available in a given location.
“When companies cannot afford top-tier salaries, sometimes giving an employee flexibility is a way to bridge that gap,” Pearce said. “As some companies lay off employees because of a failed drug program, taking the ‘team’ from that organization is also attractive to employees who want to continue to work with their same colleagues, and will prioritize opportunities that allow them to stick together.”
That can also benefit the company, she said, because the skill sets are often complementary and the working dynamics have already been established, resulting in greater efficiencies.
Biotech and Life Sciences Investment Surges
Brad Lindquist, an independent consultant based in Chicago, also addressed the investment field, pointing to “a huge uptick in investment in the bio/life sciences industry in just the past few months.”
“While the total number of net new projects announced may not be setting any records,” he said, “the capital investment reflected in these new projects is immense.”
Lindquist also noted “a wide discrepancy” within the industry concerning where that investment is going.
“The built manufacturing environment is leading the way for both capital investment and job creation,” he said. “Meanwhile, AI is making its way into R&D, while capital for R&D remains stable. Heavily influenced by the current administration’s domestic policy incentives and tariff pressures for imported drugs, the largest global companies are investing heavily into the U.S. market.”
This investment has resulted in several significant trends, Lindquist said. Markets already well established and with a strong presence of life sciences operations are the primary beneficiaries of these new facilities, as well as many expansions of existing operations.
However, not all markets are seeing the same benefits.
“It’s the manufacturing hubs, as opposed to the more traditional R&D markets — Boston, San Diego, etc. — that are seeing nearly all of the benefits,” he said.
Lindquist also pointed to many multibillion-dollar projects that have been announced and/or are in development, primarily owner-occupied manufacturing operations.
“More than $300 billion has already been committed to these projects, with net new jobs estimated to be well more than 100,000,” he said.
A large majority of these projects will be located in states with established life science manufacturing presence already in place, such as North Carolina, Pennsylvania, Ohio, Indiana and Texas, with several of these states announcing multiple projects simultaneously.
Life Science Manufacturing Markets Offer High Capital, Low Risk
In addition to having a skilled workforce at existing facilities, most of these states also have well-established programs for additional workforce training.
However, these huge investments in manufacturing could divert resources away from research and development in the near term.
“Indeed, markets that have primarily focused on R&D activities have a totally different real estate profile, often with leased office, lab and incubator spaces the primary beneficiaries from a real estate perspective,” Lindquist said. “Market conditions for this type of space in core R&D cities are seeing flat activity and many are still struggling from an overbuilt market coming out of COVID-19.”
His perspective of the big picture centers on established markets for life science manufacturing, which he expects will continue to be the primary winners.
“These high capital projects are seeking low-risk environments to deploy,” Lindquist said. “Those markets that have already shown an ability to provide the workforce, infrastructure and community support will be perceived as lower-risk markets.”
However, creating so many similar jobs in already established markets may lead to other issues, including additional cost inflation, specifically for wages.
“It will be interesting to see how many companies are willing to find the next set of emerging markets seeking labor cost relief,” he said.
Overall, Lindquist believes R&D will continue mostly in already established markets, with a few notable breakouts seeking new partnerships with emerging educational institutions or with technology and AI leaders.
Massive Biopharma Projects Reshape the Market
Andrew Shapiro, managing director of BLS & Co.’s Walnut Creek, California, office, spoke about the early days of the Trump administration, the market bouncing back and where the biopharma industry is heading.
“The U.S. biopharma industry experienced significant fluctuations in 2025. Federal policy developments were prominent during the start of the second Trump administration. Early in the year, investment markets faltered amid uncertainty surrounding updated FDA regulations and potential tariffs,” Shapiro said, “but rebounded strongly in the latter half.”
At the same time, companies faced continued layoffs due to reductions in gene and cell therapy, looming patent cliffs for key drugs and post-pandemic adjustments among vaccine manufacturers.
Still, there was significant news on the investment front. Many of the sector’s major players revealed plans for multiple, massive capital projects totaling hundreds of billions of dollars in 2025, tied to agreements with the Trump administration over Most Favored Nation pricing and tariff exemptions.
For instance, Eli Lilly announced six new projects that will create $26 billion of investment and almost 3,500 new jobs in Texas, Virginia, Alabama, Indiana, Wisconsin and Pennsylvania.
Novartis has also committed to investing $23 billion in 10 U.S. sites through 2030, Shapiro said.
Other major announcements in 2025 were made by Amgen, AstraZeneca, FujiFilm Diosynth, Merck, GSK, Johnson & Johnson, Regeneron and Roche/Genentech.
Regarding the current administration’s policies “of encouraging the onshoring of really all manufacturing,” Edgeton said they have “certainly not held back these announcements.”
However, he added, these announcements are years in the making.
“The pharmaceutical companies that have announced large investments in North Carolina have made careful calculations over most likely five to seven years before deciding to locate their new or expanded facilities here,” Edgeton said.
While Shapiro does not expect ground to break on as many projects this year, he said, “We will continue to read about noteworthy investments and job creation in the biopharma sector.”
These pronouncements will be due, in no small measure, to the need to rebuild drug pipelines as blockbuster medicines such as Entyvio, Xarelto, Keytruda, Xeljanz and Eliquis lose, or are poised to lose, patent protection.
Shapiro said much of this new activity will likely occur in specific therapeutic areas, most notably obesity and diabetes, oncology, heart disease, immunology, antibody-drug conjugates and radiopharmaceuticals.
As for AI and machine learning, Shapiro is taking a wait-and-see approach.
They “have demonstrated significant early promise accelerating drug discovery and development,” he said. “While we will continue to hear more about the importance of AI to the human health sector over the coming year, its near-term potential remains speculative.”
As the human health ecosystem evolves, so too will the competitive landscape for the manufacture and distribution of these medicines.
“While a substantial share of this new, and projected, growth will land in established biopharma hubs, such as North Carolina’s Research Triangle, central Indiana and eastern Pennsylvania,” Shapiro said, “we’re witnessing several new markets emerging as viable competitors, including Montgomery County and Frederick, both in Maryland; Richmond, Virginia; central Ohio; Houston; and Denver, among others.”
Speaking of the Research Triangle, Edgeton said NCBiotech is seeing “more and more interest from out-of-state venture capital firms looking to invest in startups and early-stage biotech companies in North Carolina.”
NCBiotech has an investment group that provides initial funding to startups.
“Most of the companies in our portfolio get serious looks from VCs providing follow-on funding,” Edgeton said.
He also noted that, based on NCBiotech’s research, for every $1 in loans, NCBiotech Loan Portfolio companies have subsequently raised an additional $124 from other funding sources.
Emerging Biotech Markets Compete Through Flexibility
While massive industry expansion is ongoing, even in the face of layoffs and a temperamental economy, many companies are still moving forward, though perhaps in a more meticulous fashion.
“Companies are being a lot more thoughtful. They want flexible space, smaller footprints and often something that’s already built out so they can get started quickly,” said Michelle Gregory, executive director of Life Science Oklahoma.
Gregory noted that Oklahoma City and other smaller markets “can offer more affordable space and room to grow” without as much cost pressure.
As for the current role of AI, Gregory said it is “still a big focus, but people care less about the buzz around the word and more about whether it improves outcomes.”
“For places like Oklahoma, that’s a good thing; we don’t have to be in a coastal hub to compete,” she said. “You just need strong research, a path to commercialization and a place where companies can operate efficiently.”
That is critical for early-stage companies.
Companies that do not have clear data or a path forward “are getting pushback right now,” Gregory said. “Investors are being more selective, especially with anything that’s capital-intensive or takes a long time to develop.”
“You’re also seeing a reset in lab space,” she added. “Some of the bigger markets overbuilt, so now demand is a little more cautious and intentional.”
Advanced Biomanufacturing Strengthens State-Level Competitiveness
Kelly Schulz, CEO of the Rockville, Maryland-based Maryland Tech Council, took an all-encompassing view of what can eventually equate to long-term success in the biotech sector.
“As we move through 2026, we have seen increased activity on advanced biomanufacturing, specifically cell and gene therapy,” Schulz said.
“Maryland already has a strong research base, so adding the new biomanufacturing supply chain diversifies and strengthens our position. You are seeing this in other parts of the country as well,” she said. “Nationally, during the past year, there has been a rebound in biotech merger and acquisition activity and venture capital investment, particularly for CAR-T therapies.”
Like many of her contemporaries, Schulz has questions about what lies ahead for the second half of the year.
“Much will depend on national and state-level policymaking,” she said. “Proposals in Washington like Most Favored Nation and March In Rights would create headwinds on the investment front. Additionally, the continued growth of China’s biotech sector should send policymakers a clear message that we have to protect and strengthen America’s innovation ecosystem.”
Such a call to action signals the importance of proactivity, whether an entrepreneur, investor, company or corporation is thinking locally, nationally or globally.
“In Maryland, or any state,” Schulz said, “the key is to align industry, research institutes, private capital, and a strong talent pool to scale innovation.”
Biotech’s Next Phase Will Reward Prepared Markets
The biotech sector continues to navigate uncertainty, from policy shifts and funding pressures to lab space resets and workforce challenges.
At the same time, the industry is seeing massive investment in life science manufacturing, renewed interest in domestic production, increasing activity in advanced biomanufacturing and continued momentum around AI-enabled discovery and development.
For economic developers, the message is clear: markets that can offer flexible space, skilled talent, strong research partnerships, infrastructure, and a path from discovery to commercialization will be best positioned to compete.
Biotech may be rolling with the punches, but the industry continues to rise.
About the Author
Mark R. Smith is based in Odenton, Maryland, and joined Expansion Solutions after writing about site selection among the many topics he has covered in the business universe.
That part of his career began in 1993 when he joined The Daily Record, a Baltimore business and legal publication, where he covered economic development, commercial real estate, and numerous other industries.
In 2003, he was named editor-in-chief of The Business Monthly, another Maryland publication that covers the business scene in the Baltimore-Washington Corridor counties.
Concurrently, he has written extensively about the film and video industry for a variety of publications, as well as about his other interests, including music, sports, and leisure.
