What are the most up to date trends in Life Science companies, and what operational and financial challenges are they facing?
On Thursday, February 20, 2025, The Sunrise Sip Club, hosted by Expandable Software and Mirador Software Group, was pleased to host Mike Rose, Co-Founder and CEO of Engine Room. Engine Room is a completely outsourced, completely integrated infrastructure for growing life science and technology businesses. Engine Room’s capabilities include finance and accounting, information technology, human resources, and even facilities. Engine Room provides all the non-core talent and processes you need to focus on and flourish, minus all the head count, headaches and inefficiency.
Life Science Overview
Life Sciences companies tend to segregate into four major industry sectors
- Biotechnology: Using biological systems to develop products like medicines, vaccines, and alternative fuels
- Pharmaceuticals: Creating medicines that generally have a chemical basis
- Medical devices: Creating products like medical technologies and digital health
- Diagnostics (DX) and tools
By scientific discipline, they are focused around
- Biology: The scientific study of life
- Anatomy: The study of the form and function of plants, animals, and other organisms
- Genetics: The study of genes and how they are passed from one generation to another
- Cell biology: The study of cells, the basic structural and functional units of life
- Developmental biology: The study of how multicellular organisms grow, develop, and differentiate
Trends in Life Sciences Businesses
Over the last 3 to 5 years, the Life Sciences industry has had a slight shift in focus from pure drug development to more medical devices. Whether this is due to market demand, funding availability or capacity or the long (and costly) development cycles for development of new drugs is unknown.
New Challenges and New Requirements
As companies shift towards Medical Devices, new challenges appear. Scientists familiar with project research face the prospect of managing procurement, inventory, production, and logistics, as well as issues related to product returns and warranty. The companies involved now have an ongoing search for partners who can provide these services in a manner compliant with FDA requirements – or create these functions internally, requiring a whole new set of skills.
These new functions also create a demand for more sophisticated systems and financial support compared to basic functionality for project tracking of development expenses. Once again, it becomes a matter of finding appropriate outsource partners or building internal capabilities, with cost, as well as resources and skill sets, as primary drivers.
Funding Cycles
As businesses have begun to change, so have the funding cycles.
- BioPharma (Early Stage – Seed / Series A) have seen a shift towards fewer but larger funding transactions, including more mega-deals, with the total transactions increasing from $3.8B in 2023 across 156 deals to $7.7B in 2024 with 137 deals – doubling invested dollars in one year.
- BioPharma 100% All Venture Financing deals have also grown, but at a lesser rate. 2023 saw $21.2B distributed over 573 deals while 2024 delivered $28.1B over 569 deals – over a 30% increase.
- M&A transactions in this sector were over $1B, and 2025 projects 20 to 25 IPOs
- Med Devices (Seed/ Series A) recorded $727M in investment over 105 deals while 2024 yielded $971M over 106 deals, an increase of 33%.
- All Venture-backed investment for Med Devices totaled $6.5B across 430 deals in 2023 compared to $7.5B over 421 deals, a more modest 15% year over year increase.
- To date in 2025, Med Device First Financings are projected at $1B for a few large Series A investments, but overall, at $7B. M&A activity is expected to be robust, but few IPO’s will be completed.
Relationship with Government Funding
It is far too early in the current Federal Administration to predict what the next four years will portend for Life Sciences. To date, we have seen wild swings in spending and staffing cuts (and re-hiring) across a wide range of government agencies. Conversely, it may spur more investment from the private sector. Suffice it to say 2025 will be eventful if not chaotic.
With thanks and credit to Mike Rose for his research and insight for the Sunrise Sip Club.
Mike Rose is the CEO and Co-Founder of Engine Room. He has spent over 30 years observing first-hand the class of support life science and technology start-ups need to survive and win and has helped dozens of young life science and tech companies grow, get funded, and grow some more.
Jeff Osorio is a Consulting CFO with over 30 years of experience in operationally oriented companies ranging from pre-Revenue to $4B with 40 ERP implementations in his portfolio. He is also an Adjunct Professor in the MBA program of the Leavey School of Business at Santa Clara University.