“For months, the biotech sector was languishing. The US interest rate cut isn't the only factor that has given the industry renewed optimism. Experts see a positive environment.
The days of the coronavirus pandemic, when all eyes were on biotech companies like BioNTech, Moderna, and others, are long gone. Back then, the stock prices of pharmaceutical and biotech companies that offered vaccines, medications, or other products to combat the virus skyrocketed. The hype was followed by disillusionment, which was also reflected in the stock markets. Now, however, market observers are once again expressing optimism.
"Positive results from clinical trials and product launches underscore that the biotech sector remains a center of innovation," says Daniel Lyons, portfolio manager at Janus Henderson Investors. In an analysis, he writes that while biotech companies suffered between the US presidential elections last November and the beginning of April this year, experiencing a significant decline in the stock markets, they have since recovered. This is also evident in the Nasdaq Biotechnology Index and the S&P Biotechnology Select Industry Index.
The Nasdaq Biotechnology Index lost a good 21 percent between the US election on November 5, 2024, and April 8, 2025, and has since recovered by a good 30 percent by the beginning of September. The S&P Biotechnology Select Industry Index fell even more sharply during the same period, by more than 30 percent, but has also recovered strongly since April, by a good 37 percent. The LifeSci Biotechnology Clinical Trials Index, an index that reflects the market performance of US biotech companies with drug candidates in clinical trial phases 1, 2, and 3, fell by more than half and has gained a good 75 percent since spring.
Trump's trade policies, in particular, had led to considerable uncertainty in the economy. Biotech companies are very capital-intensive and subject to high risks, as the development of new drugs is a lengthy process and success is not guaranteed until the very end. They could fail. The American president's healthcare policies, in particular, worried the industry, as Trump is demanding, among other things, lower drug prices.
"Although there could be short-term volatility in the final pricing of pharmaceuticals, the acute phase of political uncertainty for the biotech industry is likely largely over," believes Janus Henderson analyst Lyons. The recent increase in M&A activity also suggests that the industry shares this assessment.
For example, the Swiss pharmaceutical company Novartis announced at the beginning of September that it would acquire the New York-based biotech company Tourmaline Bio for approximately $1.4 billion. Novartis aims to strengthen its drug pipeline with this acquisition. Tourmaline is developing a promising treatment for systemic inflammation, a driver of cardiovascular disease [1].
Back in April, Novartis had already announced the acquisition of the American biotech company Regulus Therapeutics, another multi-billion dollar deal. A few days ago, the US company Pfizer announced that it would acquire the startup Metsera, which has a weight-loss drug in its pipeline, for at least nearly five billion dollars.
Analyst Lyons sees considerable potential for such acquisitions: "Given that large pharmaceutical companies face numerous patent expirations in the coming years, we expect this trend to continue – especially in a more accommodating interest rate environment." Furthermore, past experience has shown that increased mergers and acquisitions have often been "a catalyst for the recovery of the biotech sector." It is also promising that the FDA, the American drug regulatory authority, has already approved 36 new drugs this year, which is in line with the pace of the previous year.
A lower interest rate environment, ushered in by the US Federal Reserve's interest rate cut in September, is also considered a market driver. "With the possibility of further interest rate cuts, we will see further easing, especially with regard to the biotech sector, for which sentiment is improving." "It has," says Hartaj Singh, partner at Tecumseh Partners. After all, the industry is particularly capital-intensive.
Last but not least, positive signals have also recently come from Europe. Local biotech companies typically aim for a listing on the American technology exchange Nasdaq. The Belgian company Argenx SE has been listed for more than a decade. However, the company, valued at 38 billion euros, has now made the leap into the Euro Stoxx 50 – according to the Bloomberg news agency, it is the first biotech company to do so since at least 2002.” [2]
1. Tourmaline Bio is developing pacibekitug (TOUR006), a promising anti-IL-6 antibody targeting systemic inflammation in atherosclerotic cardiovascular disease (ASCVD) and other conditions, leading to its acquisition by Novartis in a $1.4 billion deal announced in September 2025 to bolster Novartis's cardiovascular pipeline. Pacibekitug shows potential for significant inflammation reduction (like lowering hs-CRP) with convenient dosing, positioning it as a "Phase 3 ready" asset for Novartis.
Key Details:
Drug: Pacibekitug (TOUR006)
Mechanism: A long-acting monoclonal antibody that blocks Interleukin-6 (IL-6), a key cytokine driving inflammation in heart disease.
Target: Atherosclerotic Cardiovascular Disease (ASCVD).
Status: Phase 2 trials showed strong CRP reduction, making it ready for Phase 3 development.
Acquisition: Novartis agreed to acquire Tourmaline Bio for $1.4 billion in September 2025, aiming to integrate pacibekitug into its cardiovascular portfolio.
Benefits: Potential for reduced inflammation, convenient quarterly dosing, and addressing a critical unmet need in cardiovascular care.
2. Biotech nimmt wieder Fahrt auf. Frankfurter Allgemeine Zeitung; Frankfurt. 04 Oct 2025: 30. Von Ilka Kopplin, Frankfurt
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