Biotech Challenges: 3 Barriers Affecting Industry Progress

Biotechnology stands at the forefront of scientific innovation, driving breakthroughs in healthcare, agriculture, and environmental sustainability. From CRISPR gene editing to AI-powered drug discovery, the biotech industry challenges how we understand and treat disease, produce food, and manage natural resources.

Despite its transformative potential, the biotech industry faces persistent obstacles that could slow its momentum. Addressing these barriers is essential for stakeholders aiming to navigate the complexities of the sector and unlock new scientific breakthroughs.

The Current State of the Biotech Industry

Within biotech, the road to success is paved with scientific uncertainty and financial risk—but this hasn’t stopped industry leaders from driving innovation forward. Reports from GlobalData show that in 2024, 32% of drugs approved by the FDA were from biotech companies and there were 8,684 investigative drugs under active development by emerging biotech organizations.

But this doesn’t mean that everything’s rosy. According to the EY 2025 Biotech Beyond Borders Report, the industry is navigating a challenging environment characterized by high interest rates, inflation, constrained access to capital, as well as other difficulties.

Their data also shows that 2024 still had companies operating at a deficit, reporting an aggregate loss of $26.8 billion. Another sign of the downturn is a decreasing number of licensing agreements for pharmaceutical companies (from an average of 429 deals between 2015-2020, to 308 deals in 2023 and down to 257 deals in 2024.)

So, what’s caused the slowdown?

3 Biotech Challenges Impacting Progress

Although biotechnology is continuing to innovate, these challenges have created barriers for the sector to reach its full potential.

1. Financial Constraints

As far as finances go, the biotech industry has faced a series of unfortunate events:

Increasing cost of biotech innovation: The average cost of bringing a new drug to market now exceeds $2 billion when accounting for the expense of failed candidates.
Less access to sufficient funding: According to a report from HSBC, “first financings” for biotech startups fell from a total of $2.6 billion in the first quarter of 2025 to $900 million over the following three months — the lowest total in five quarters.
Decreasing investments: Overall venture funding for biotech firms fell from $7 billion to $4.8 billion. Private investments continue to shrink while biopharma R&D spending is expected to increase by 11% year-over-year.
Freezing of new grants: Due to administration regulations, NIH has frozen issuing new grants and has reduced funding so far this year by about $3 billion compared with the same period in 2024.

Because of this, early-stage funding has become increasingly competitive, with investors preferring companies with established scientific validation and commercial appeal. This shift has created a more difficult environment for early-stage companies still developing proof-of-concept data—also known as the “pre-seed gap.”

Another factor in financial pressures is due to the looming patent cliff, with more than $300 billion in sales at risk through 2030 due to expiring patents on high-revenue products. This is likely to drive interest in mergers and acquisitions, with 77% of surveyed executives expecting M&A to increase in 2025.

To address these financial constraints, biotech companies must focus on pipeline diversification, lifecycle management, and strategic acquisitions. Success, as always, for biotech companies will come from balancing scientific opportunity with financial sustainability.

2. Manufacturing Complexities

Unfortunately, there are many hurdles to overcome for the actual manufacturing portion of the drug development lifecycle as well.

Approval Delays

The FDA approval process is a critical gateway for biotech products entering the U.S. market, and in 2024, the FDA only approved 38 new molecular entities for therapeutic use—a decline from 47 approvals the year prior.

This decrease underscores the growing complexity of the approval landscape, with clinical trials now facing increased data requirements, diversity mandates, and more rigorous evaluation criteria.

To combat this, the regulatory landscape has undergone changes during this year, with a renewed focus on deregulation and accelerated approval processes at the FDA. While this aims to shorten approval timelines and reduce barriers to market entry, it’s crucial for biotech companies to maintain product safety and efficacy in the midst of these changes.

International Regulatory Misalignment

The lack of standardized approaches within international regulatory environments—with differences in approval requirements, timelines, and compliance standards (particularly within clinical trials)—creates redundancies in testing and documentation, leading to increased costs and delayed market access. This especially impacts smaller biotech companies with limited resources.

Long Time-to-Market

Another challenge within the manufacturing portion of biotech is extended development timelines, with the timeline from initial discovery to market approval often exceeding a decade.

This extended period creates numerous complications, including increased costs, greater competitive risks, and complex financial planning needs. The process involves extensive testing and data collection, with many compounds ultimately failing to reach the market despite substantial investment.

Trial Design Complexity

Within this timeline, clinical trials are both the most critical and most time-consuming phase of development—and must overcome complications such as increasingly sophisticated endpoints, larger patient populations, and expanding data collection requirements.

3. Talent Shortages

According to CBRE’s 2025 U.S. Life Sciences Talent Trends report, life sciences employment hit a record 2.1 million in March 2025 before declining in April, reflecting the fragility of growth in the sector. Despite layoffs, the demand for specialized talent remains high, particularly in biotech hubs like Boston-Cambridge, San Francisco, and New York-New Jersey.

This disconnect between layoffs and labor availability is a unique barrier to overcome. Companies are downsizing due to financial pressures, yet still struggling to fill critical roles—especially in clinical operations, regulatory affairs, and AI-driven R&D.

Additionally, the rise of AI and digital transformation has created a demand for hybrid skill sets that blend biology, data science, and regulatory expertise. However, talent pipelines remain underdeveloped, with demand for AI scientists and data engineers in life sciences trippling since 2020 and supply not keeping pace.

The biotech workforce is also undergoing demographic shifts. Gen Z and millennial professionals are entering the industry with different expectations around flexibility, purpose, and career mobility—while highly-qualified experts continue to age out of the labor force.

To address these challenges, biotech firms are investing in strategic pre-hiring, functional service partnerships, and workforce development initiatives. The National Security Commission on Emerging Biotechnology (NSCEB) is also trying to strengthen the U.S. position in biotech talent, calling for increased funding in STEM education, immigration reform for skilled workers, and public-private partnerships to build a resilient workforce.

Where the Future of Biotech is Heading

Even in the face of these challenges, the future of the biotech industry remains bright. According to Deloitte’s 2025 Life Sciences Outlook, 75% of global life sciences executives remain optimistic about the year ahead.

While M&A activity and venture funding have slowed, companies are doubling down on platform technologies, strategic alliances, and operational efficiency.

According to the Biotechnology Market Analysis by Polaris Market Research, the global biotechnology market is expected to reach $5.85 trillion by 2034, with a CAGR of 13.6% from 2025-2034. This growth is driven by demand for personalized medicine, digital health platforms, and scalable therapeutic modalities.

Advances in AI, synthetic biology, and personalized medicine are opening new frontiers. Companies are leveraging data-driven insights to accelerate drug discovery, optimize clinical trials, and enhance patient outcomes.

These trends will continue to play a role in the future of the industry. If you want to cement your organization’s reputation as a leader in biotechnology, it’s important to integrate these trends before getting left behind.

Address Biotech Challenges with Insight Global

As biotech companies confront these barriers, partnering with a trusted functional service provider can make all the difference. Insight Global brings deep expertise in life sciences staffing, regulatory compliance, and digital transformation.

We help biotech firms overcome talent shortages, streamline operations, and accelerate innovation. Whether you need a single lab technician or an entire clinical trials team, Insight Global delivers the people and solutions to keep your business moving forward. Contact us to get started.