, /PRNewswire/ -- The 34th edition of the Ernst & Young LLP (EY US) report finds US and European biotech companies are seeing early signs of a thaw in the financing and dealmaking environment. Change in fiscal policy by lowering the interest rates in the months ahead can accelerate this positive shift within the second half of the year. In addition, the pressing need to replenish the revenue of big pharma to counteract the loss of exclusivity of products totaling more than , and continued scientific innovation, will drive the sector forward by meeting unmet medical needs.
For the last two years, the industry saw significant challenges around a constrained financing environment, leading to many emerging and early-stage biotechs having to restructure their operations by cutting staff, merging with other companies or narrowing R&D focus by shelving some of their pipeline assets. Arda Ural, PhD, EY Americas Life Sciences Sector Leader, says: "Despite the Federal Reserve delaying action on interest rates, biotechs still have grounds for continued cautious optimism. The combination of record-level dealmaking capacity seen throughout 2023, firepower of big pharma and the healthy innovation capacity of the sector, including possibilities from artificial intelligence, will ultimately help the biotech sector to not only survive but thrive in the mid- to late-term.
" While the aggregate sector revenue was down for a second consecutive year, historically it trended upward at 4.8% per year.