Five months on from our December note (“Biotech is back!”) the sector’s re-rating has continued, despite only 25bps of further cuts each from the Fed and BoE and forward markets now pricing “higher for longer”. The XBI is up c. 8% YTD and our SCM Biotech coverage universe is up c. 14%. The patent cliff and M&A theme is playing out as expected (24 deals worth c. $65bn YTD, already 56% of 2025’s full-year total), the US regulatory backdrop has proved more bark than bite, and the IPO window has definitively reopened with c. $3.2bn raised across 10 life sciences listings, already double the whole of 2025. The fact that the sector can re-rate inside a higher-for-longer regime tells us this is being driven by risk-appetite and fundamentals rather than just cheaper capital, reinforcing our optimistic outlook for the rest of the year.
