2 days Ago
Niven R. Narain, Ph.D.
, President & CEO, BPGbio . AI continued to be a theme at this year’s J.P.
Morgan Health Conference and the first quarter of 2025, with Nvidia’s collaborations with Iqvia and Illumina and Amazon Web Services’s partnership with venture capital firm General Catalyst . Even still, the pharma deals announced out of the event brought a clear message for the biotech industry. Technology buzzwords and hype have lost their shine in pharma, and the spotlight is now back on tangible outcomes and the ability to efficiently establish and de-risk late-stage assets.
While technology has accelerated drug discovery, it has also increased the production volume of candidates that have failed validation or proven to be novel. Discovering 100 drugs in two months may sound impressive, but the true test is how many of those progress into meaningful INDs and successful clinical assets. This dichotomy highlights an inconvenient truth: The same advancements that have sped up innovation have also amplified inefficiencies.
Despite biopharma R&D investment reaching astounding heights in 2021, the industry has seen fewer drug approvals relative to the capital invested. It is indeed true that we are innovating faster, but are we more efficient per dollar of outcome? Private equity firms and pharmaceutical companies are sitting on substantial reserves of cash, but only one large-scale M&A deal materialized from this year’s conference . This is indicative of a broader sense of caution and skepticism; investors are increasingly selective about where to allocate their funds, and they may have been unimpressed or not fully convinced by the opportunities leading up to or at the conference.
In all fairness, the bar has also risen significantly in the past two years due to more scrutiny following a post-pandemic period of volume versus quality. Recent high-profile disappointments in AI-led drug discovery , where clinical trials failed to deliver meaningful results, have prompted a more critical examination of AI’s role in advancing medicine, and many AI biotechs have switched to putting more resources and efforts on understanding biology. On top of that, DeepSeek’s disruptive emergence in the AI landscape is another example that today’s AI technology could be replaced tomorrow.
The only constant that cannot be replaced is biology—the foundation for drug discovery and development, AI-powered or not. We must heed the reality and complexity of biology. Biotech companies should focus on deeply understanding the biology behind their assets, ensuring that AI serves as an enabler of scientific rigor, rather than its replacement.
Investors are looking for companies that acknowledge this reality and integrate AI thoughtfully into drug development, and pharma dealmakers are far more impressed by meaningful clinical data than AI-derived assets that have not yet shown promise in the clinic. There is much more discernment on the value that AI actually contributes to an asset’s development process. Many of the investors at this year’s conference weren’t interested in lengthy presentations and abstract overviews.
Instead, they cut straight to the chase: What does the clinical data show, or how soon are you to an inflection point? This shift reflects a broader frustration with the lack of clarity around technologies like AI. For example, there are several different types of AI, but there’s very little research describing how the different models—such as causal, generative or neural—translate into actionable insights for drug development. Faced with this ambiguity, investors are gravitating toward evidence-backed decisions.
Amid the broader economic uncertainty in the past few years, valuation models are shifting from speculative technologies to measurable outputs and validated assets. Looking at the largest pharma deals in 2024 , it’s clear that companies with robust pipelines and clinical milestones are increasingly attracting the attention of pharma leaders and investors alike. For pharmaceutical companies, the ultimate priority remains the same: serving patients by bringing effective, validated and impactful drugs to market.
Whether developed using AI or traditional methods, treatments must deliver real-world results. In light of all of this, biotech companies should be prepared to clearly articulate how their innovations translate into clinical outcomes, rather than relying on broad, unsubstantiated claims. Governance plans, operational readiness and corporate hygiene were also top-of-mind for investors at this year’s conference.
Weaknesses in governance or operational readiness don’t show up in glossy board presentations or quarterly reports, but they become painfully obvious when the cracks derail partnerships. Worse yet, whispered warnings about a company’s lack of excellence in these areas can quietly kill future opportunities. A great example is the German pharma conglomerate Bayer.
Since its acquisition of Monsanto in 2018, Bayer has faced billions of dollars in payouts in a decades-old toxic mess that came with Monsanto, and its stock price hit a 20-year low in 2024. Strong governance and operational rigor are no longer assumed or encouraged—they’re critical and perfunctory to earning investor confidence and ensuring sustainable growth. In 2025, building investor confidence and creating long-term resilience in an increasingly scrutinized industry means biotech leaders must prioritize robust governance, clear processes and meaningful transparency.
It’s great to see the shift away from hyped technology to tangible assets in 2025. This shift signals the beginning of greater accountability for biopharma companies, for which the goal has never changed: deliver new treatments for diseases efficiently and responsibly. Forbes Technology Council is an invitation-only community for world-class CIOs, CTOs and technology executives.
Do I qualify?.
