The biotech industry has experienced a dramatic shift since 2022. After the pandemic-era boom, the sector entered a “tumble” marked by slashed budgets, reduced headcounts, and cautious financial stewardship (6 Predictions for Healthcare and Biotech in 2024｜Audacity Health). Small to mid-sized biotech companies – from early-stage startups to publicly traded micro-caps – now face a far more challenging environment. What follows is a comprehensive look at the top 10 challenges confronting biotech CEOs in this new landscape, illustrated with real examples and insights from industry leaders and publications.
Challenge: Raising capital has become exceptionally difficult for small biotechs since 2022. After years of easy funding, venture capital and public investors have pulled back, leaving many startups scrambling to extend their cash runways.
In 2022, biotech financing hit a wall – venture funding, IPOs, and other financings “decreased significantly,” with the biotech IPO market plummeting 93% from 2021 levels 1. By late 2022, nearly a third of public biotechs in the U.S. and Europe had less than one year of cash on hand 1, forcing drastic measures. For example, Tome Biosciences, a high-profile gene-editing startup, halted its lab work in 2023 and sought a buyer after burning through $213 million. The three-year-old company failed to secure a needed third funding round and was “running out of money” 2. Such stories have become common as investors demand more proof-of-concept before opening their wallets.
Insights: Industry experts say CEOs must adjust their financing strategies to survive. “If you don’t get realistic [about fundraising], you’re going out of business; you’re going to run out of money,” warned investment banker Ira Leiderman in late 2023 3. In practice, this means pursuing creative financing (royalty deals, venture debt, partnerships) and squeezing more milestones out of every dollar. Biotech CEOs now spend enormous effort pitching to investors, often with repeated down-rounds or bridge financings. As one Forbes analysis noted, by 2022 the funding free-for-all was over – companies now face “unsustainable fundraising-based investment models” and will be expected to operate more efficiently with far shorter runways 4. In short, securing capital is a constant, white-knuckle challenge in the post-2022 biotech world.
Challenge: With funding scarce, biotech CEOs must aggressively control costs to extend their company’s runway. This has led to widespread budget cuts, project prioritization, and painful layoffs to conserve cash until the next inflection point.
The years 2022–2023 saw an unprecedented wave of belt-tightening across small biotechs. “Massive waves of layoffs” swept the industry as companies shifted to “doing more with less” to survive 4. In fact, 2023 saw 187 biotech companies announce layoffs – a 57% jump from the 119 companies in 2022 5. Many firms cut 30–60% of staff and shelved all but their lead programs. For example, Arbutus Biopharma (a small-cap biotech) laid off 57% of its workforce in Q1 2024, retaining only a core team to focus on its lead hepatitis B program 6. CEO Lindsay Androski said in the restructuring announcement that these moves would “improve our financial and operational efficiency” 6 – a euphemism for drastic cost-cutting to stave off insolvency. Similarly, BioAtla reduced headcount by ~30% in 2023, aiming to stretch its cash “beyond key clinical readouts” while prioritizing its most promising cancer programs 6.
Insights: Biotech CEOs now routinely face gut-wrenching decisions to trim payroll, pipeline, or both. Many have had to kill promising early projects and focus resources on one or two “killer experiments” that could attract investors or partners. As Fierce Biotech reported, the imperative is to “stretch cash” into 2025–2026 and reach value milestones on minimal spend 6. This cost discipline is a stark shift from the growth mindset of a few years ago. Leaders must also manage morale and productivity amid cuts. Those who communicate a clear plan – e.g. narrowing to a lead asset and outsourcing other functions – can sometimes retain investor confidence through austerity. Nevertheless, maintaining scientific momentum under tight budgets is an ever-present struggle. As one CEO quipped, biotech management in 2023 means “turning off the lights as late as possible each day” – all to buy a few more months of runway.
Challenge: Traditional exit routes for biotech (IPOs or acquisitions) have largely dried up since 2022. Startup CEOs find it difficult to go public or sell the company, prolonging their dependence on private funding and making investors restless.
During the 2020–21 boom, dozens of biotech startups IPO’d and Big Pharma acquisitions were common. Post-2022, that changed dramatically. The IPO window essentially slammed shut – biotech IPO activity in 2022–2023 fell to a trickle after the record highs of 2020 1. “Startups that could postpone being acquired or going public [have] quietly accumulated value, holding out for a market revitalization and better prices,” Forbes reported 2. Many young biotechs chose to delay IPO plans, waiting (so far in vain) for market conditions to improve. On the M&A front, deal-making also slowed for smaller players. Large pharmas became more selective and often favored later-stage or de-risked assets. Companies with strong Phase 2 data could still strike deals, but early-stage startups found it harder to attract buyers. For instance, many venture-backed biotechs in 2023 pursued mergers-of-equals or asset sales as alternative exits, since few could IPO and big acquisition offers were scarce.
Insights: This exit logjam poses a strategic challenge for CEOs and their boards. Without a clear path to liquidity, investors grow anxious. Venture firms that expected an IPO in 18–24 months now may have to fund the company for much longer or accept a down-round. “With biotech investments at unprecedented lows, we saw organizations holding more cash than their valuation,” illustrating how undervalued many companies became on the market (6 Predictions for Healthcare and Biotech in 2024｜Audacity Health). One consequence is a rise in creative deals: joint ventures, licensing out pipelines, or reverse mergers with cash-rich shells. CEOs must keep these options open. Additionally, regulatory headwinds have made big acquisitions harder – the U.S. FTC has signaled a tougher stance on pharma mergers, which industry leaders warn could “stifle innovation by restricting [biotech] acquisitions” (Beyond Borders 2023: Biotech is facing a complex path forward, says EY report | EY – US). This uncertainty further chills M&A appetite. In short, biotech chiefs today must run their companies longer as standalone entities, carefully balancing the need to show progress with the reality that a lucrative exit may not come quickly. Patience and prudent cash management have become essential virtues.
Challenge: New regulatory and policy developments are creating additional hurdles for biotech companies. CEOs must navigate an evolving landscape of drug pricing reform, stricter antitrust scrutiny, and changing approval standards – all of which have emerged or intensified since 2022.
Context & Examples: Two U.S. policy shifts in particular loom large: drug price controls and tougher merger reviews. In August 2022, the Inflation Reduction Act (IRA) was enacted in the U.S., empowering Medicare to negotiate prices on top-selling drugs. This is already changing R&D strategy across the industry. Because the law lets Medicare negotiate prices after 9 years for small-molecule drugs vs. 13 years for biologics, companies are rethinking what to develop (Focus: Drug companies favor biotech meds over pills, citing new U.S. law | Reuters). “The difference between a nine- and 13-year product life is about 50 or 60% of the value,” explained Eli Lilly’s CEO Dave Ricks, predicting far fewer small-molecule drugs will be developed as a result (Focus: Drug companies favor biotech meds over pills, citing new U.S. law | Reuters). Lilly even dropped a planned pill for cancer, saying “we just couldn’t make the math work” under the new pricing rules (Focus: Drug companies favor biotech meds over pills, citing new U.S. law | Reuters) (Focus: Drug companies favor biotech meds over pills, citing new U.S. law | Reuters). For small biotechs, this means certain programs (especially pills for chronic diseases) may struggle to find investors or partners, since future revenue could be capped by law.
At the same time, antitrust regulators have cast a wary eye on pharma acquisitions. In 2023, the U.S. Federal Trade Commission (FTC) moved to challenge or closely review multiple biotech buyouts by large pharma. This unprecedented scrutiny – for example, the FTC’s attempt to block Amgen’s acquisition of Horizon Therapeutics – sent a chill through the biotech M&A market. The concern is that forbidding big companies from buying innovative startups could trap those startups without the resources to commercialize breakthroughs. An Ernst & Young report noted “major concerns that [new FTC] regulation will stifle innovation by restricting [therapies’] ability to scale through acquisitions” (Beyond Borders 2023: Biotech is facing a complex path forward, says EY report | EY – US). Globally, regulatory complexity is also a challenge: Europe has been rolling out new clinical trial regulations and debating its own drug pricing controls, while in China regulatory crackdowns and export controls (on biotech data and materials) have added uncertainty for cross-border collaborations.
Insights: For CEOs, these policy changes mean strategic recalibration. Many are now prioritizing diseases or modalities that fit the new incentive structure – for instance, focusing on biologics or rare disease drugs (less likely to be subject to price negotiation). Companies developing small-molecule therapies must plan for a shorter commercial window or pursue orphan indications exempt from price controls. Regulatory affairs expertise is more crucial than ever in the C-suite. Leaders must stay abreast of FDA guidance shifts, too. (Notably, FDA approval rates dipped in 2022 amid agency staffing shortages (Beyond Borders 2023: Biotech is facing a complex path forward, says EY report | EY – US), and expectations for clinical evidence are rising post-COVID.) In summary, the policy headwinds of 2022–2025 – drug pricing reforms and aggressive antitrust enforcement – add another layer of risk. Successful biotech CEOs engage proactively with policymakers (often via industry groups like BIO) and build business plans that can withstand these external pressures. As BIO’s CEO John Crowley remarked about new reforms, “we need to be mindful of the negative consequences” even as we adapt (Proposed tariffs threaten biotech supply chain, innovation, BIO survey warns).
Challenge: Getting drugs through clinical trials has become more complex and costly, posing a major challenge for resource-constrained biotechs. CEOs must find ways to design and execute trials efficiently despite obstacles like patient recruitment difficulties, new regulatory requirements for trial diversity, and lingering pandemic disruptions.
Context & Examples: A recent industry survey showed that for one-third of biotech executives (32%) “clinical trials [are] one of the biggest challenges” in bringing new therapies to market (Biotech companies to increase R&D spend but highlight complexity of clinical trials – ICON | ICON plc). There are several reasons why. First, patient recruitment and retention continue to be tough, especially for rare diseases or niche populations. The pandemic left a legacy of trial delays and a backlog of studies competing for patients; many companies in 2022–2023 struggled to enroll trials on time. Second, regulators and society are rightly demanding more diverse and inclusive trials, which, while important, can add complexity. In the U.S., Congress passed the DEPICT Act in late 2022, requiring sponsors to submit diversity action plans for pivotal trials (Diversity Action Plans Will Soon Be Mandatory for Clinical Trials). Small biotechs now must allocate resources to community outreach and sites in diverse locations, which can strain a tiny team. For example, a startup planning a Phase IIB oncology trial today must consider a broader range of sites and perhaps provide transportation or telemedicine options to ensure minority patient participation – tasks they might not have budgeted for a few years ago.
Moreover, trial operations are expensive, and missteps can be fatal for a biotech’s timeline. Many startups rely on Contract Research Organizations (CROs) and external partners to run trials due to their lean staff. However, this outsourcing model has downsides. “Under financial constraints [biotechs] often use ad-hoc outsourcing contracts that can be costly and may not offer the continuity needed,” observed Chris Smyth, President of ICON Biotech, in 2023 (Biotech companies to increase R&D spend but highlight complexity of clinical trials – ICON | ICON plc). In practice, small firms might switch CROs or juggle multiple vendors, leading to inefficiencies or data hiccups. A real-world illustration came in 2023 when a small pharma had to pause its Phase II trial because its manufacturing partner fell behind, demonstrating how fragile trial logistics can be for those without in-house infrastructure.
Insights: To overcome these challenges, CEOs are pursuing creative trial strategies. Some are implementing adaptive trial designs and remote monitoring technologies to reduce patient burden and cost. Decentralized trial elements (like home nursing visits or digital data collection) can help reach wider populations, though they require tech savvy. Partnerships are also key: many biotechs are teaming up with larger companies or academic networks to run trials they couldn’t handle alone. The importance of planning is higher than ever – regulatory experts advise startups to engage the FDA early and map out clear development pathways to avoid surprise requirements later (for example, planning that pivotal trials will need a diversity plan and sufficient sample size for subgroups). Despite these efforts, clinical development remains a chokepoint. It is telling that 47% of biotech leaders in one survey said the rising cost of capital will most impact their operations, and 35% cited cost management as the biggest barrier to innovation (Biotech companies to increase R&D spend but highlight complexity of clinical trials – ICON | ICON plc) – often, those costs and barriers manifest in the clinical stage. In summary, CEOs must be both strategists and problem-solvers in trial execution, finding ways to hit milestones efficiently. Every delay or trial failure can be existential in this environment, so this challenge sits at the heart of biotech leadership post-2022.
Challenge: Biotech is a human-capital-driven industry, and CEOs now face a paradoxical talent challenge – managing layoffs and morale during downturns while still competing for specialized talent. Retaining key scientists and executives has become harder amid constant restructuring, and attracting new talent can be difficult for cash-strapped startups.
Context & Examples: The recent cycle of hiring and firing has been dizzying. During the 2020–21 boom, startups proliferated and competition for experienced talent (e.g. drug development experts, lab scientists, computational biologists) was fierce. Then came the bust: as noted earlier, nearly 200 biotech companies slashed staff in 2023 alone (Fierce Biotech Layoff Tracker 2024: 37% cuts at Carisma; Mustang Bio lays off employees – RamaOnHealthcare). These layoffs hit all levels – from research associates to senior leadership – and often happened abruptly. The result is a workforce experiencing whiplash. Many skilled employees found themselves looking for jobs in a tighter market, while those remaining at companies wear multiple hats. Recent layoffs have even “depleted companies’ expertise,” leading some biotechs to out-license programs they no longer have the staff to develop (Biotech Gets Creative to Avoid Bankruptcy in 2024 – BioSpace). An example is Inspirna, a New York biotech which wound down operations in 2024 after a trial setback; the sudden loss of jobs also meant loss of institutional knowledge, and the company’s promising cancer drug had to be handed off to a partner for further development (Gilead, Sail, Carisma and More Slash Headcounts – BioSpace).
At the same time, certain specialized roles are still hard to fill. Biotech CEOs report challenges hiring experienced regulatory affairs managers, GMP manufacturing experts, or AI/ML specialists – fields where demand outstrips supply. And even when talent is available (due to big pharma or tech layoffs), small biotechs must offer compelling vision and culture to lure them, since they often can’t match the salaries of larger companies. There is also the challenge of maintaining morale and company culture through volatile times. Employees at startups are aware that if lead programs fail or funding runs dry, more layoffs could come, which can hurt productivity and engagement.
Insights: Effective CEOs are addressing talent challenges by being transparent, mission-driven, and flexible. Frequent communication helps – many leaders hold regular “all-hands” meetings to update the team on progress and runway, trying to temper uncertainty. Companies are also finding creative ways to compensate and motivate teams when cash is low: for instance, increasing equity grants, offering flexible working arrangements, or providing career growth opportunities internally. There’s a sense that the industry’s correction, while painful, could ultimately concentrate talent into stronger teams. As venture capitalist Vijay Pande observed, the easy-money period led to “a dilution of talents distributed among many companies”, whereas now we may see “great new companies founded, [with] amazing teams put together” in the tougher environment (Biotech Leaders Discuss Therapeutic Breakthroughs at the WuXi AppTec Global Forum). In other words, the shakeout could allow the best people and ideas to regroup at the most promising ventures. Still, this is cold comfort to CEOs trying to keep their scientists inspired amid hiring freezes or to convince a star engineer to join a startup with a short cash runway. Ultimately, navigating the human side – from tough layoff decisions to inspiring the survivors – is a test of leadership. Many biotech CEOs now spend as much time on HR and team-building as on science, recognizing that without an engaged, resilient team, even the best molecule will falter.
Challenge: Biotech CEOs must ensure their company’s science clearly stands out. In popular therapeutic areas and modalities, dozens of startups may be vying for attention. Since 2022, investors and partners have become far more selective, so only truly differentiated, data-driven stories are breaking through.
Context & Examples: The past decade’s biotech boom led to a crowded landscape. In oncology, for example, there are countless startups developing CAR-T cell therapies or KRAS inhibitors; in gene editing, multiple companies are pursuing CRISPR-based cures. During the funding frenzy, many could get funded on a compelling idea alone. Now, post-2022, the bar for novelty and proof is much higher. Investors often joke about the “Series A slide deck from 2021 that wouldn’t get a seed meeting in 2023.” This reflects a flight to quality: platforms or drugs must show concrete validation (strong preclinical data, a clear mechanistic edge, or early clinical signals) to merit funding. As noted in Nature Biotechnology, “precision financing” has replaced broad enthusiasm – “the IPO window will only be open for proven winners, and large private rounds only available to companies with compelling clinical data or a highly productive platform,” (#Biotech: How to Thrive in 2023’s Precision Financing World – Optimum Strategic Communications). In practice, this means a biotech that might have gone public on mouse data in 2021 now might need human data or a big pharma partnership to achieve the same.
For CEOs, one real challenge is positioning: articulating why your approach is unique among a sea of similar-sounding players. Take the field of AI-driven drug discovery – by 2023, dozens of startups claimed to use AI to find new therapies. Those that succeeded in raising money (or signing deals) did so by differentiating their technology or focusing on niche targets. Another example is geographic differentiation. Some investors in 2023 pointed out that European biotech startups are undervalued relative to their U.S. peers. “The 2023 story is about Europe,” said Naveed Siddiqi of Novo Holdings, noting it “offers great value for the science it’s producing,” even though many European startups eventually relocate to the U.S. for better funding (#Biotech: How to Thrive in 2023’s Precision Financing World – Optimum Strategic Communications). This suggests CEOs outside of major hubs might highlight their cost advantages or local talent, while those in crowded hubs like Boston must double down on what makes their science first-in-class.
Insights: To address this challenge, CEOs are focusing on data, data, data. The best way to prove differentiation is by generating evidence: for instance, showing that your therapy works where others failed, or that your platform can deliver drug candidates ten times faster than traditional methods. Many companies are narrowing their focus to excel in one area rather than pursuing multiple indications. As one biotech executive put it, “We have to be the leader in a sub-field rather than one of many generalists.” This often means making hard choices to abandon programs that don’t support the core thesis. Another strategy is communicating clearly and often. Biotech leaders are spending more effort on thought leadership – publishing papers, presenting at conferences, and engaging with patient advocacy groups – to build credibility for their unique approach. The upside of the current climate is that truly innovative biotechs can still thrive; their smaller peer set just means more attention if they succeed. In summary, CEOs must constantly sharpen their company’s value proposition. The question “Why is your drug different (and better)?” resonates louder than ever. Those who answer it convincingly, backed by solid results, will find not only funding but also pharma partners and patients rallying to their cause, even in this lean period.
Challenge: Biotech CEOs are racing to integrate new technologies – like artificial intelligence (AI), machine learning, and advanced lab automation – into their R&D. Keeping up with the tech revolution is crucial to stay competitive, but it’s challenging to separate hype from reality and invest wisely, especially with limited resources.
Context & Examples: In recent years, AI and computational tools have been touted as game-changers for drug discovery and development. Dozens of collaborations have formed between tech-driven startups and more traditional biotechs. For a CEO, it may feel like “AI or die” – pressure is high to have a data strategy and show that your company is leveraging modern techniques. Indeed, AI-focused biotech deals surged around 2020–2021. However, the payoff of these technologies is still emerging. According to an analysis in Nature Biotechnology, while **AI tools “continued to attract investment in 2022” and are accelerating R&D tasks, they “have not drastically increased success rates or reduced R&D timelines” yet (#Biotech: How to Thrive in 2023’s Precision Financing World – Optimum Strategic Communications). In other words, AI is a powerful tool, but not a magic bullet. Many small biotechs learned this the hard way: simply having a machine-learning platform doesn’t guarantee faster FDA approvals or investor enthusiasm.
An illustrative example is the field of AI-driven drug design. Startups in this space often partner with traditional biotechs to apply algorithms to targets of interest. Exscientia and Insilico Medicine are well-known AI drug firms; they clinched big partnerships (e.g., Insilico’s $1.2B partnership with Sanofi in 2022) that left other CEOs wondering if they too should jump on the AI bandwagon (AI Drug Discovery: Key Trends and Developments in Pharma Industry). Conversely, some biotechs that branded themselves with “AI” saw skepticism when results didn’t materialize quickly. By 2023, there was a bit of an AI hangover – investors started asking for tangible AI-driven outcomes, not just promises. Beyond AI, there’s also rapid change in modalities (e.g. gene editing, mRNA, cell therapy manufacturing). A startup CEO developing, say, a gene therapy must decide whether to adopt the latest CRISPR variant or stick with a proven one; such choices can determine technical success and investor appeal.
Insights: The challenge for CEOs is to harness new tech in a practical, cost-effective way. Those who succeed often follow a few principles: (1) Strategic partnerships – rather than reinvent the wheel, partner with tech-specialists. For instance, a small biotech might collaborate with an AI firm to screen compounds, instead of building an AI team from scratch. This gives access to technology without massive upfront cost. (2) Pragmatism over buzz – leaders are increasingly candid about what AI or any tech can and cannot do. As one analyst noted, AI “alone will not revolutionize drug R&D but is useful when applied with other tools” (#Biotech: How to Thrive in 2023’s Precision Financing World – Optimum Strategic Communications). CEOs echo this by setting realistic expectations internally and with investors. (3) Talent and training – integrating new tech often requires new skill sets. Companies are hiring data scientists or upskilling their biologists to work alongside algorithms. There’s recognition that a cultural shift is needed, merging computational thinking with traditional bench science. (4) Stay focused on the science – technology should serve the scientific objective, not distract from it. A wise CEO will deploy AI to, for example, identify the best clinical trial sites or analyze genomic data faster, but will avoid overhauling their entire strategy around an unproven tool. In sum, while emerging technologies hold promise to boost productivity (and indeed are starting to – e.g., some AI-designed molecules are now in clinical trials), the CEO’s challenge is to be an early adopter without being an early fool. The companies that strike this balance can gain a competitive edge in discovery speed or success rate, whereas those that chase every new gadget may waste time and money. It’s a delicate tightrope in an era where Moore’s law meets drug development.
Challenge: Global supply chain disruptions and geopolitical tensions have introduced new risks for biotech operations. CEOs must contend with potential shortages of key materials, reliance on international partners (for manufacturing or trials), and policy moves that could restrict cross-border collaboration.
Context & Examples: The COVID-19 pandemic first highlighted how fragile medical supply chains can be – from lab reagents to protective equipment. By 2022–2023, additional factors came into play: the war in Ukraine, rising global inflation, and growing U.S.–China trade friction. Small biotechs, which often outsource manufacturing or R&D services overseas to control costs, found themselves vulnerable to these disruptions. A BIO industry survey in 2025 revealed that nearly 90% of U.S. biotech companies depend on imports for at least half of the components in their products (Proposed tariffs threaten biotech supply chain, innovation, BIO survey warns). This is a huge dependency. Whether it’s a specialized enzyme made only in Germany or peptides synthesized in China, many experimental drugs rely on a global network. Tariffs or export restrictions can therefore hit biotechs hard. In fact, the survey warned that proposed new U.S. tariffs on China, the EU, and Canada “threaten the biotech supply chain,” risking increased costs and delayed treatments (Proposed tariffs threaten biotech supply chain, innovation, BIO survey warns). CEOs have voiced concern that finding new suppliers or moving production is not trivial – 80% of firms said it would take at least 12 months to qualify alternative suppliers if needed (Proposed tariffs threaten biotech supply chain, innovation, BIO survey warns).
Geopolitical issues with China are a prime example. China is a major player in biotech research and manufacturing (home to leading CROs/CDMOs like WuXi AppTec). Recently, U.S. lawmakers introduced the BIOSECURE Act, aiming to limit or ban government partnerships with certain Chinese biotech firms on security grounds (US House committee advances bill to restrict BGI, WuXi AppTec). If enacted, this could force companies to shift critical research services out of China. Even before any law, mere uncertainty has an effect – some biotechs have preemptively diversified away from China to avoid being caught in sanctions or trade restrictions. Additionally, the high-profile war in Ukraine and sanctions on Russia have had more modest biotech impacts, but did complicate clinical trials in Eastern Europe and contributed to higher costs for raw materials (e.g., the cost of certain chemicals and energy spiked).
Insights: In response, CEOs are increasingly adopting a risk-management mindset regarding supply and geopolitics. This includes actions like: building inventory of critical reagents, qualifying multiple suppliers across different regions, and even “on-shoring” certain activities despite higher base costs. There’s also a push (supported by policy incentives) to strengthen domestic manufacturing of essential biotech ingredients. John Crowley of BIO highlighted the need to “re-onshore key parts of the biotech supply chain” for national and economic security – but he cautioned it “will take years” and warned against sudden trade barriers in the interim (Proposed tariffs threaten biotech supply chain, innovation, BIO survey warns). Biotech CEOs are thus lobbying for graceful transitions rather than shock therapy on supply chains. Another strategy is tighter supply chain monitoring: executives now pay closer attention to their vendors’ stability and geopolitical exposure, something that used to be an afterthought.
Geopolitical risk also means staying nimble with global clinical development. If a region becomes unviable (due to conflict or sanctions), companies need contingency plans to move trials elsewhere. For example, a biotech running trials in Asia might ensure they also have sites in Europe or Latin America as backup. Overall, this challenge has expanded the CEO’s role – they must be part supply-chain manager and diplomat, not just a drug developer. The key is resilience: those companies that can keep their research and production on track despite external shocks will have a big advantage. Conversely, those caught unprepared by a sudden export ban or shortage could see their timelines blown up. In a world where, as one report put it, “nearly all biotech firms are vulnerable to trade policy shifts” (Proposed tariffs threaten biotech supply chain, innovation, BIO survey warns), managing these unseen risks has become an essential leadership duty.
Challenge: Finally, biotech CEOs face intense pressure to manage their stakeholders – from venture capitalists and public shareholders to boards and patient communities. In a volatile post-2022 climate, maintaining investor confidence and clear communication is more challenging than ever.
Context & Examples: Small and mid-sized biotechs often live or die by investor sentiment. When stock prices plunge (as many did in 2022), CEOs must field hard questions and sometimes fend off activist investors pushing for drastic actions (like liquidation or asset sales). Even privately held startups see investors demanding “more bang for the buck”. The era when VCs would fund moonshot science with a distant payoff has waned. By late 2023, a culture shift was evident: companies that continuously rely on new fundraising will have “much shorter runways before they are expected to operate in the green,” observed a Forbes piece on biotech’s outlook (6 Predictions for Healthcare and Biotech in 2024｜Audacity Health). In other words, investors now expect a credible plan toward either self-sustainability (via revenue or licenses) or a value-creating event, rather than indefinite R&D spending. This puts CEOs in a tough spot: they must articulate how each dollar invested will create value, and often sooner than the science would naturally allow.
Publicly traded biotechs also have to comply with listing requirements (avoiding delisting if shares trade too low) and manage earnings calls or shareholder meetings with little to no revenue to show. For example, in 2023 23andMe, a genomics/biotech company, saw its stock become a penny stock and faced the risk of Nasdaq delisting (23&Me is collapsing: turns out, all that precious DNA data is worthless. | OVALmedia) – a scenario many small biotechs have experienced. CEOs in those situations often have to resort to measures like reverse stock splits to prop up the share price, all while trying to reassure shareholders about the pipeline’s prospects.
Insights: Strong communication and transparency are the CEO’s allies here. The best biotech leaders treat their investors as partners in the journey, regularly updating them on both progress and setbacks. In times of setback, frankness can maintain credibility (e.g., openly discussing why a trial failed and how the learnings will be applied to the next program). Many CEOs have also honed their storytelling skills – not in a misleading way, but to clearly articulate the unmet medical need, the potential patient impact, and the company’s strategy to get there. This narrative, backed by data, helps rally stakeholder support even when numbers (like quarterly earnings) are bleak. Another aspect is expectation management: setting realistic milestones and then delivering on them. Hitting a promised timeline or clinical endpoint goes a long way to building trust with investors.
Additionally, governance and oversight have become prominent. Boards of small biotechs are taking a more active role in strategy, and CEOs must balance board input with day-to-day execution. Sometimes this leads to changes at the top – in a few cases since 2022, investor pressure has led to CEO ousters or changes in leadership to reset market confidence (for instance, when a flagship trial fails). Engaging with patient advocacy groups and the scientific community is also important; a CEO who can show broad stakeholder buy-in (patients waiting for the drug, scientists validating the approach) can bolster investor belief in the mission. Ultimately, this challenge boils down to earning and keeping trust. As one survey noted, optimizing funding requires not just science but strategic investor engagement (Biotech companies to increase R&D spend but highlight complexity of clinical trials – ICON | ICON plc). In practice, that means frequent communication, prudent use of funds, and aligning company goals with shareholder interests. In the current climate, a biotech CEO’s job is not just to discover drugs, but to continuously sell the vision of those drugs to the people writing the checks.
The role of a biotech startup CEO has never been more demanding. The period since 2022 has tested these leaders with a convergence of scientific, financial, and operational trials. From scraping together funding in a risk-averse market to cutting costs while still advancing high-risk science, from navigating policy shifts to inspiring teams through uncertainty, the challenges are as complex as the therapies these companies strive to create. Yet, this tough environment is also forging a new generation of resilient, savvy biotech leaders. As venture investor Vijay Pande noted, “these types of times are sometimes the very best times to build companies” (Biotech Leaders Discuss Therapeutic Breakthroughs at the WuXi AppTec Global Forum) – the constraints are forcing focus and ingenuity that can ultimately drive innovation.
Biotech CEOs who confront these top 10 challenges head-on – with clear strategy, adaptability, and stakeholder empathy – will position their companies to survive and even thrive. The stakes are high: not just company success, but the promise of new medical breakthroughs is on the line. In the end, the relentless focus on overcoming these challenges is aligned with the ultimate goal: delivering life-changing therapies to patients. And that, above all, is what keeps biotech leaders pressing forward despite the headwinds.
Author: Alan Vanderborght
CEO
KYBORA
alan@kybora.com
Sources:
