US Biotechnology: State of Biotech: Biotech is Back!

We believe the biotech sector has a strong outlook ahead, driven by three key tailwinds: (1) regulatory uncertainty is largely behind us, (2) a strong M&A environment, and (3) a robust financing and capital markets window to provide the lifeline of cash for biotech. We believe M&A will continue as big pharma companies continue to voice steady appetite for more tuck-in deals, and the balance sheet firepower is strong (we estimate $500-600B in total pharma firepower). 2026 biotech M&A has already reached ~$120B YTD, surpassing FY25 and setting a new record pace, underpinned by ~$400B+ in loss-of-exclusivity over the coming decade. The IPO market is opening up and we could see 30-40 IPOs this year;