Is today’s capital discipline strengthening biotech at the expense of future growth?

Today, investors are favoring later-stage, de-risked assets because they are more likely to succeed and to succeed sooner. So, the returns are easier to model.

But have we sufficiently weighed the unintended consequence?

If we provide less capital to early-stage science, we might be depleting our pool of potential breakthrough therapies. So, we could face a revenue gap when we reach the next patent cliff. Even though incremental innovation has tremendous value, it is unlikely to generate blockbusters.

It is today’s risky ventures that spawn future M&A targets.

Our industry has faced patent cliffs over the past three decades. Companies have replenished their lost revenue through a combination of internal R&D, licensing, and M&A.

Have we allocated enough capital to bold innovation to ensure that our pipelines stay healthy when today’s patents expire?

References
1. https://www.drugpatentwatch.com/blog/the-patent-cliff-revisited-predicting-stock-impacts-of-patent-expiry
2. https://www.bcg.com/publications/2025/patent-cliff-threatens-biopharmaceutical-revenue