Hundreds of public biotech companies have disappeared from the market through acquisitions, mergers, restructurings, and failures since the pandemic-era boom, yet a smaller industry has not led to improved financial health, according to new data from consulting and accounting firm EY on June 9.
EY reported that the number of publicly traded U.S. and EU biotech companies dropped from 977 in 2021 to 758 in 2025—a decline of more than 22%. Despite this reduction, about 33% of these remaining companies had less than one year of cash runway at the end of 2025. This figure is an improvement from 2024, when 39% faced similar shortfalls—the highest level recorded by EY in at least six years. Arda Ural, EY Americas life sciences leader, said during a June 3 roundtable event that “it’s not as bright as it looks,” adding that “there is some cleaning up going on,” after non-traditional capital resulted in “some companies that got ahead of themselves.”
Ural said biotech remains a story marked by winners and losers. According to EY’s report, revenue climbed by 13% to $232 billion in 2025 while a record-high number—72 companies—generated more than $500 million each in annual sales. However, Ural noted the divide between successful firms and those struggling for capital continues to be a theme across the sector.
Ashwin Singhania, principal in EY-Parthenon’s life sciences practice and co-author of the report, agreed with Ural that improvements in cash-runway metrics are partly due to fewer public biotechs but also result from additional investment rounds for existing firms. “The rest of that decline, or change, is really being driven by rounds on existing companies where we got another round of investment to extend the cash runway,” Singhania said.
Late-stage venture financing reached a record $10 billion across 254 rounds last year while early-stage financing declined both in value and volume. Just fifty financing rounds accounted for half of all venture investment into biotech during this period. Rich Ramko, EY Americas life sciences sector and biotechnology leader, expects some capital will flow back into earlier-stage biotechs as merger-and-acquisition activity improves: “As we continue to see M&A [mergers & acquisitions], we continue to see companies go public; we’ll see that money get reinvested.”
In summary, data for fundraising outside commercial leaders—companies with over $500 million annual revenue—reached its highest level since 2021 at $58.9 billion for fiscal year ending December 31st 2025; follow-on financings rebounded by thirty-four percent; M&A activity totaled one hundred billion dollars; IPO markets showed signs of recovery though remained below historical norms. Yet only forty-five percent (45%) of emerging biotechs had more than two years’ worth of cash runway at year-end, according to EY’s latest report.
