Overview
At our European Health and Life Sciences Symposium, discussions about financing highlighted a clear shift: As the pace of innovation increases, and in the face of market constraints, life sciences capital is becoming more flexible, specialised, and strategic.
During an event panel, McDermott partner and European head of finance Aymen Mahmoud discussed emerging and existing trends with heavy hitters in the industry: Thomas Baetz, chief financial officer at Genfit; Nadiya Ishnazarova, principal, venture investments at Johnson & Johnson Development Corporation; Maureen Planchard, director at Capza; and Rodolphe Roch, senior managing director at Teneo.
The panelists brought forward several key points about the life sciences financing landscape:
More diverse capital is creating more nuanced financing options
Life sciences innovation has historically followed the relatively linear path of venture capital, strategic partnerships, and public markets. While that model still exists, the landscape of alternate options has expanded significantly.
Today, a wider range of investors, including private credit funds, structured capital providers, and royalty investors, are active across the ecosystem. The result is not just more capital, but a more nuanced set of financing options, enabling companies to better align funding with their stage of development and risk profile.
Capital and risk are becoming better aligned
As capital is deployed with increasing precision, equity remains critical for early-stage innovation, where scientific and clinical risks are highest. Structured and non-dilutive capital is playing a growing role as companies mature, while blended financing approaches enable companies to fund different assets or stages in parallel.
This more targeted approach reflects a maturing sector, where scientific advances (such as improved biomarkers and more efficient trial designs) are helping to de-risk parts of the innovation life cycle and attract a broader range of investors.
A shift to long-term funding is improving stability
Rather than raising capital incrementally, companies are increasingly seeking to fund through meaningful value inflection points, such as clinical proof of concept or strategic partnering readiness. This shift allows for greater stability and supports more deliberate, value-driven decision-making.
Flexible structures are gaining traction
Innovative financing structures are becoming a more established part of the funding toolkit. In particular, royalty and revenue-contingent financing are gaining traction because they reduce dilution, make repayment contingent upon performance, and offer flexibility beyond traditional debt or equity.
These structures are not universal solutions, but they reflect a broader move toward more tailored, situation-specific financing models.
Private credit is taking a growing, but still clearly defined, role
Early-stage innovation remains predominantly equity-funded. However, credit providers are engaging earlier than before in companies that demonstrate revenue visibility, strong unit economics, or a clear path to scale.
This is creating a more layered financing environment, where different forms of capital are applied at different stages.
Europe’s funding gap remains a challenge
Despite strong scientific foundations, Europe continues to face a funding gap, particularly between early discovery and clinical proof of concept.
Addressing this gap will be critical to ensuring that promising innovation can progress to later stages of development and attract broader pools of global capital.
Capital strategy is becoming a differentiator
Capital is now a strategic lever, not just an input. Life sciences companies that succeed will be those that can select the right financing structures at the right time, combine multiple sources of capital effectively, and align their funding strategy with their long-term growth objectives.
Bottom line
The life sciences funding model is no longer linear. It is flexible, multi-layered, and increasingly central to value creation. In this more complex and selective environment, the ability to navigate capital strategically is becoming a core driver of success.