In 2025, biotechnology stocks had their best year since the pandemic, with the market sector’s two major indexes – the SDPR S&P Biotech ETX (NYSE:XBI) and iShares Biotech ETF (NYSE:IBB) – returning between 28% and 36%, more than double the S&P 500’s roughly 18%. That came after three consecutive years of underperformance. Was biotech’s strong 2025 a fluke or part of a sustained rebound? A few key trends might offer direction.
As biotech stocks staged their comeback in 2025, private investment in longevity science more than doubled, hitting $8.49 billion across 325 deals. The Food and Drug Administration (FDA) approved 50 new drugs in 2024 and 46 in 2025, including the first drug class that researchers have labeled potential longevity therapeutics. Big pharma spent more than $65 billion acquiring biotech companies through October 2025, surpassing full-year totals for 2024, 2022, and 2021.
Demographics serve as a strong foundation for potential growth in biotech and longevity. The global population aged 60 and older will reach 1.4 billion by 2030. The number of people aged 80 and older will nearly triple by 2050. The patients are here, and more are coming – and biotech stocks are increasingly the companies building the treatments they will need.
Biotech stocks staged a 2025 comeback
After three years of flat or negative returns, biotech stocks broke out in 2025. The biotech trends discussed above and throughout suggest that reversal could be more structural, meaning driven by lasting forces like an aging population and a mounting patent cliff, rather than cyclical, meaning just a temporary bounce.
- Biotech indexes outpaced the S&P 500 by a wide margin in 2025. The SDPR S&P Biotech ETX returned 35.9%, the iShares Biotech ETF returned 28.0%, and the Nasdaq Biotech Index (NASDAQ:NBI) gained 31.5%, compared to the S&P 500's 17.9%.
- Merger and acquisition (M&A) activity more than doubled 2024 levels. Biopharma M&A deal value through October 2025 hit $65 billion to $70 billion, exceeding full-year totals for 2024, 2022, and 2021. At least seven deals topped $8 billion.
- Big pharma faces a patent cliff. More than $300 billion in branded drug revenue faces patent expiration between 2025 and 2030. When a patent expires, cheaper generic versions can enter the market. When that happens, the original drug's sales can collapse quickly, so large pharma companies try to replace that revenue before it disappears. Biotech companies develop more than 70% of newly approved drugs, up from around 50% a decade ago, which makes acquiring a biotech one of the fastest ways to fill that gap.
