The life sciences investment landscape has experienced a dramatic shift in recent years. Following a period of intense investment during and following the pandemic, today’s market is far more selective, cautious, and focused on execution. As capital becomes harder to access, biotech and pharmaceutical companies are facing a new reality—one in which capital efficiency, clinical progress, and investor trust are more important than ever.
To understand how private equity is responding, we spoke with Bob Girton, Managing Partner at Edgewater Capital and Chairman of the Board at GL CHEMTEC INTERNATIONAL. As both an investor and a board member across multiple life sciences and advanced materials companies, Girton brings a unique perspective on some of the major themes shaping investment decisions in 2025 and beyond.
The Evolution of Life Sciences Funding
The pandemic's impact on life sciences funding followed a dramatic arc that few anticipated.
“In late 2019, we were heading into an industrial recession—everything was slowing down and supply chains were being leaned out," Girton said. “Then COVID happened, things stopped, and then took off. We went from thinking we wouldn't do any deals that year to struggling to find diligence partners to handle the volume.”
That surge defined the 2020–2021 period: a wave of pandemic-driven urgency led venture capital and private equity firms to raise record funds and deploy capital at unprecedented speed and valuations. Optimism around drug innovation fueled a torrent of investment, often well ahead of clinical validation.
“We extrapolated this megatrend that all these therapies would hit the market,” Girton said. “And everybody was just funding, funding, funding.”
But by mid-2022, that euphoria had faded. Interest rate hikes triggered a sharp market correction, and liquidity dried up across public and private markets. Since then, capital has slowed considerably—and investor expectations have shifted just as dramatically.
Today, many VC funds are struggling to raise new capital, with pressure cascading down to biotech companies, who are now laser-focused on conserving cash, extending runway, and demonstrating near-term value.
This recalibration has brought new scrutiny to how life sciences opportunities are evaluated.
New Investment Criteria in Today's Market
According to Girton, several key shifts in investment criteria have emerged:
- From Dreams to De-risked Reality
During the pandemic boom, investors readily backed ambitious concepts with limited proof of concept. Now, they require substantial evidence before committing capital, prioritizing near-term milestones like INDs and Phase 1/2 data over preclinical promises.
“The era of funding the dream has given way to funding the de-risked reality,” Girton said. “Now, I would rather see a path to commercial revenue within 24 months than a concept. I care much more about commercial results and measured progress than the big idea.”
This shift has led to structured financings and milestone-driven raises, requiring companies to demonstrate both technical merit and a credible de-risking plan.
- Capital Efficiency Takes Center Stage
Rising interest rates and scarce venture capital have created an efficiency mandate, and with liquidity tightening, burn rate and disciplined capital deployment have become investor priorities.
“Everyone is incredibly burn-rate conscious,” Girton noted. “Biotech companies are focused on pushing out their next funding round for as long as possible.”
Companies must now demonstrate not just scientific potential but operational discipline, with investors scrutinizing expenses and expecting management to extend runway through careful resource allocation.
- Management Maturity and Execution
Investors now favor experienced management teams with proven track records who can navigate complex development pathways without costly delays. This demand for operational maturity also emerges much earlier in the company lifecycle, with a premium placed on leaders who have previously delivered results in similar settings.
“There's no six-month learning curve anymore—you need to be ready to go from day one,” Girton said.
- Strategic Shifts in Drug Development
Pharmaceutical companies are increasingly making calculated bets on specific therapeutic approaches rather than broad, speculative investments.
“We're seeing more targeted rifle shots with early discovery,” Girton said. “Large drug companies have become more active with their venture capital funds, creating more focused pathways to clinical development and sustained demand for specialized CDMOs.”
- The Accelerating Outsourcing Trend
In a past article, we looked at the pharmaceutical industry’s growing reliance on external development and manufacturing partners—and that reliance is only deepening.
“This outsourcing trend has been building for 20 years,” Girton said. “And it’s increasingly true that pharma will continue to externalize more of its development and manufacturing needs.”
As companies double down on their core discovery and commercialization capabilities, they’re looking to CDMOs for specialized chemistry, process development, and manufacturing expertise—particularly in areas that require speed, flexibility, and technical depth.
- Private Equity’s Shift Toward Specialization
At the same time, investors are gravitating toward smaller CDMOs that combine differentiated capabilities with strong customer relationships.
“Private equity values businesses like GL CHEMTEC that pair technical excellence with a highly customer-centric culture,” Girton said. “Those traits drive loyalty and pricing power—exactly what you want in today’s uncertain environment.”
This emphasis on specialization over scale marks a meaningful shift in how investors assess CDMO opportunities—creating space for focused players with clear differentiation and resilient operating models to outperform.
Strategic Value Over Scale: What Sets High-Performing CDMOs Apart
For today’s life sciences companies, outsourcing isn’t just a cost-saving measure—it’s a strategic lever for accelerating timelines, managing technical risk, and accessing specialized expertise. CDMOs that deliver on those fronts are earning lasting trust from both clients and investors.
“Speed to market is essential—we need to get clients to an answer faster and better than competitors,” Girton emphasized.
In a tighter funding environment, compressing development timelines can be a decisive advantage. But speed must be paired with quality execution. “Technical risk mitigation comes from writing better scopes, delivering better results, and having better engagement from the beginning,” Girton explained.
What further distinguishes forward-thinking CDMOs is their willingness to invest against the market cycle. “While everyone else is pulling back, we're leaning in and building out capabilities,” Girton said. “We're adding firepower, not reducing it.”
This investment-led approach reflects a broader shift in how success is measured. Where scale once dominated the conversation, the emphasis today is on smart growth—rooted in:
- Technical depth — especially in early-phase and complex therapeutic development
- Customer intimacy — strong, collaborative relationships that drive loyalty and trust
- Execution agility — the ability to adapt quickly without compromising on quality
- Specialized capabilities — GL CHEMTEC, for example, provides a unique combination of small molecule and custom polymer expertise, enabling the production of integrated solutions that most competitors cannot match.
Ultimately, what distinguishes high-performing CDMOs is the ability to act as a true partner throughout the development journey.
“The best CDMOs today aren't simply executing a plan,” Girton said. “They're helping clients improve formulations, optimize synthetic routes, innovate new solutions, and move smarter through development hurdles.”
GLC: Your Trusted CRO/CDMO Partner
GL CHEMTEC is passionate about your success and committed to solving your most complex chemistry challenges. We offer fast, flexible, cutting-edge solutions to take your medicinal chemistry and early-stage small-molecule routes to the next level. Our commitment to a collaborative partnership means we scale and adapt precisely to meet your evolving needs.
GL CHEMTEC provides:
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