AI/ML investment strong as UK biotech weathers economic strain

The first three quarters of 2025 saw strong UK venture capital investment growth (£1.41 billion), a figure exceeding the total raised in all of 2023, according to BioIndustry Association (BIA)’s new Q3 2025 UK biotech financing report.

However, in Q3 2025, investment levels decreased overall by 72 percent from last year. Fifteen deals were completed, with later-stage rounds accounting for most of the capital raised.

Citing the continued lack of UK biotech IPOs in this quarter and the subsequent “scale-up capital gap”, BIA advocated for urgent structural market reform.

While biotech’s longest global funding drought has negatively impacted UK venture capital activity, companies leveraging artificial intelligence (AI)/machine learning (ML) continue to drive deal volume and interest from investors, the report found.

Within the TechBio sector, three of the top five deals in Q3 2025 involved platform technology, “reinforcing the UK’s leadership in integrating computational power with biological discovery to accelerate drug development”, BIA remarked. 

In June, UK government announced an £86 billion investment in key industry sectors including life sciences, intended to boost innovation and economic growth. The following month Sanofi acquired ViceBio for £1.18 billion, which represented “clear validation of UK science”, according to Jane Wall, Managing Director, The BioIndustry Association (BIA).

However, Wall cautioned that “overall Q3 figures reflect a fragile sector under strain from the prolonged global headwinds,” and BIA stated that investment is “now characterised by caution and heightened selectivity.” For example, with capital increasingly concentrated in later-stage, lower-risk assets. 

As such, as the Autumn Budget approaches, she called for the UK government to accelerate the delivery of the Industrial Strategy and the Life Sciences Sector Plan.

BIA summarised that its report findings “suggests a gradual improvement in investor sentiment toward public biotech equities globally, with increased appetite for follow-on offerings in established markets and among companies demonstrating late-stage clinical or commercial progress”.