Biotechs Must Face Reality To Succeed in Today's Funding Environment

The biotech industry needs to stop waiting for a rebound and adapt to the new market realities.

Mar. 24, 2026 at 4:52am by Ben Kaplan

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The biotech industry has undergone a fundamental transformation since the pandemic, and the pre-pandemic era is not coming back. Companies that can articulate a commercially viable plan and demonstrate realistic development timelines and risk profiles are finding success in the current funding environment, while those still clinging to pre-pandemic assumptions are struggling.

Why it matters

The biotech industry has traditionally relied on a venture capital model that is no longer aligned with current capital allocation priorities. Companies need to shift their focus from developing billion-dollar blockbusters to products with more modest but commercially viable sales potential, and they must work backwards from market requirements to their development strategy.

The details

The pandemic triggered a massive influx of capital into some biotech sectors, creating an illusion that the fundamentals of drug development had been suspended. However, this was followed by a prolonged funding drought that has reshaped the landscape. The companies attracting capital today are those that can articulate not just what their molecule does, but why a specific development budget is commercially appropriate and offers competitive risk-adjusted returns. Issues such as overlooking new market entrants, developing combination regimens for minor subpopulations, and launching high-priced products with only marginal improvements over generics continue to plague the industry.

  • The pandemic changed the biotech funding landscape in 2020-2021.
  • Since 2022, a prolonged funding drought has reshaped the biotech industry.
  • The 2026 J.P. Morgan Healthcare Conference revealed the early contours of a new biotech funding model.

The players

Treehill Partners

A firm that met with executives from more than 170 biotech companies and hosted seven structured roundtable discussions at the 2026 J.P. Morgan Healthcare Conference.

Chinese pharmaceutical industry

The Chinese pharmaceutical development industry is maturing and now reportedly matches or exceeds the quality of programs from established Western companies in certain therapeutic areas, accounting for approximately 20% of all drugs in global development.

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What they’re saying

“The world that biotech knew before the pandemic is not coming back, and the sooner the sector accepts this, the sooner we can build something better.”

— Ali Pashazadeh, Founder, Treehill Partners

“The market will not fund hope. It will fund plans and the skills needed to implement them.”

— Ali Pashazadeh, Founder, Treehill Partners

The takeaway

Biotech companies must shift their focus from developing billion-dollar blockbusters to more commercially viable products, work backwards from market requirements to their development strategy, and demonstrate realistic development timelines and risk profiles in order to succeed in the current funding environment.