Chart to Watch: Biotech bounces back
Optimism is returning to the biotech space as clinical successes, a pickup in M&A activity, and easing regulatory concerns have driven a substantial performance turnaround.
2 minute read
Key takeaways:
- While biotech stocks saw a steady drawdown from the U.S. presidential election through early April, the Nasdaq Biotechnology Index has fully recovered from its post-election low and development stage biotech stocks are up over 75% since April 8.
- Biotech stocks have gained traction due to positive clinical trial data, new product launches, and a strong pace of FDA drug approvals. Increasing merger and acquisition (M&A) activity and the prospect of lower interest rates also bode well for the sector.
- We believe durable performance drivers are in place as policy overhangs on the sector lift and innovation and medical advances continue.
| Drawdown | Recovery | Full period | |
| Nasdaq Biotechnology Index | -21.4% | 30.5% | 2.6% |
| S&P Biotechnology Select Industry Index | -30.6% | 37.2% | -4.7% |
| LifeSci Biotechnology Clinical Trials Index | -52.5% | 75.8% | -16.5% |
Source: Bloomberg. Cumulative total return as of 11 September 2025. Drawdown = U.S. election on 5 November 2024 through April low on 8 April 2025. Recovery = 8 April 2025 through 11 September 2025. Full period = 5 November 2024 through 11 September 2025.
Though we remain mindful that there could be near-term volatility as drug pricing policy is finalized, we believe the most acute phase of policy uncertainty for biotech may be behind us. And, given the recent uptick in M&A activity, the industry seems to agree. With Big Pharma facing numerous patent expirations in coming years, we’d expect this activity to continue, particularly in a more accommodative interest rate environment. It’s worth noting that, in the past, a resurgence of M&A activity has been a catalyst for recoveries from biotech downturns. Also of promise is the fact that the FDA has approved 36 new medicines in 2025, on pace with 2024, and positive clinical trial data and product launches highlight that the biotech sector remains a hub of innovation.
NASDAQ Biotechnology Index is a stock market index made up of securities of NASDAQ-listed companies classified according to the Industry Classification Benchmark as either the Biotechnology or the Pharmaceutical industry.
S&P Biotechnology Select Industry Index represents the biotechnology sub-industry portion of the S&P Total Markets Index. The S&P TMI tracks all the U.S. common stocks listed on the NYSE, AMEX, NASDAQ National Market and NASDAQ Small Cap exchanges. The Biotech Index is an equal weighted market cap index.
LifeSci Biotechnology Clinical Trials Index is an equal-weighted index comprised on US-listed biotechnology stocks with a lead product in human clinical trials but not yet approved for marketing. The index is reconstituted semi-annually and is provided by LifeSci Index Partners, LLC.
IMPORTANT INFORMATION
Equity securities are subject to risks including market risk. Returns will fluctuate in response to issuer, political and economic developments.
Health care industries are subject to government regulation and reimbursement rates, as well as government approval of products and services, which could have a significant effect on price and availability, and can be significantly affected by rapid obsolescence and patent expirations.
Volatility measures risk using the dispersion of returns for a given investment.
All opinions and estimates in this information are subject to change without notice and are the views of the author at the time of publication. Janus Henderson is not under any obligation to update this information to the extent that it is or becomes out of date or incorrect. The information herein shall not in any way constitute advice or an invitation to invest. It is solely for information purposes and subject to change without notice. This information does not purport to be a comprehensive statement or description of any markets or securities referred to within. Any references to individual securities do not constitute a securities recommendation. Past performance is not indicative of future performance. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested.
Whilst Janus Henderson believe that the information is correct at the date of publication, no warranty or representation is given to this effect and no responsibility can be accepted by Janus Henderson to any end users for any action taken on the basis of this information.
2 minute read
Key takeaways:
- While biotech stocks saw a steady drawdown from the U.S. presidential election through early April, the Nasdaq Biotechnology Index has fully recovered from its post-election low and development stage biotech stocks are up over 75% since April 8.
- Biotech stocks have gained traction due to positive clinical trial data, new product launches, and a strong pace of FDA drug approvals. Increasing merger and acquisition (M&A) activity and the prospect of lower interest rates also bode well for the sector.
- We believe durable performance drivers are in place as policy overhangs on the sector lift and innovation and medical advances continue.
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