Investment Outlook: Farzad Abdi-Dezfuli, Sarsia Management

What do you predict will be the dominant market trend within life sciences this year?

“More use of AI [artificial intelligence] and digital simulations to speed up drug discovery and improve success rates. We also expect a greater focus on cutting-edge treatments like gene editing and cell-based therapies tailored to individual patients. More breakthroughs are likely in genetic testing and diagnostics for greater personalized treatments and better outcomes. Finally, sustainability is no longer optional but a “must-have” that will build trust and improve long-term value.”

A compelling competitive advantage, TPP (Target Product Profile), value proposition, and strong founding team are the highest priority for investors right now.

How would you describe the current venture funding landscape in the Nordics?

“Economic and geopolitical uncertainty. There is limited access to capital and a lack of exits in the current market. Most investors are working hard to keep investment levels steady, but deal flow is predicted to increase and at best, valuation is stable. A compelling competitive advantage, TPP (Target Product Profile), value proposition, and strong founding team are the highest priority for investors right now.”

From your perspective, how has the life science sector developed since the COVID-19 pandemic?

“We’ve had a greater adoption of digital health and there’s an increased global orientation today, with stronger pipelines and international partnerships. There are also more medtech startups, especially those focused on diagnostics and remote care. Finally, there are more national life science strategies, innovation funding, and public-private collaboration and cross-border cooperation.”

Whilst, historically, collaboration with European and North American partners have been more attractive than China-centric strategies, it remains to be seen what impact the current geopolitical uncertainty will have on this picture.

Due to current global events, for example the new Us administration, have you noticed a shift towards strategic near-shoring and a greater focus on the European (or Chinese) life science ecosystem?

“Ever since COVID there’s been an increasing tendency for near-shoring operations to increase supply chain resilience, not least also amid the current geopolitical uncertainty. There has been growing investment in local manufacturing, R&D, and clinical infrastructure within Europe and the EU is looking at greater self-sufficiency and regulatory unity. Companies are interested in China but are equally cautious due to regulatory, IP, and geopolitical risks. Some companies are also exploring South-east Asia and India for growth and production. Whilst, historically, collaboration with European and North American partners have been more attractive than China-centric strategies, it remains to be seen what impact the current geopolitical uncertainty will have on this picture.”

How does the Nordic/European market compare to the US?

“As usual, the US dominates global life science VC funding, with larger rounds, more late-stage capital, and faster exits, whilst the Nordics/Europeare seeing smaller funding rounds and more conservative valuations, but also growing interest from international investors due to strong innovation and lower burn rates. In the USthere is a high concentration of life science hubs (e.g. Boston, Bay Area, etc), fast-paced product development, and well-established commercialization pathways whilst in the Nordics/Europe the strength lies in early-stage innovation, especially in precision medicine, digital health, and diagnostics. This is, however, accompanied by slower scaling due to regulatory and funding complexity.” 

In the US there is a broad focus, with significant investment in oncology, cell and gene therapy, and AI in drug discovery whereas in the Nordics/Europethere is leadership in diagnostics, digital health, personalized medicine, and public-private partnerships.

“In the US one sees deep talent pools in biotech, business, and regulatory fields, and there is intense competition for talent and high salary expectations whilst in the Nordics/Europe one sees a strong scientific base (especially in Sweden and Denmark), more collaborative ecosystems, and an attractive work-life balance for R&D professionals. In the US there is a broad focus, with significant investment in oncology, cell and gene therapy, and AI in drug discovery whereas in the Nordics/Europethere is leadership in diagnostics, digital health, personalized medicine, and public-private partnerships. The US is a single large market with high potential returns but tough payer negotiations whereas Europe is a multi-country bloc with complex access dynamics often used as a testbed for health innovation and pilot programs.”

What do you predict when it comes to M&A activity in the Nordic life science industry this year?

“I would say that we could expect a moderate upturn in M&A activity. Exits via IPOs will remain challenging, so M&A will likely become the preferred exit strategy for many Nordic life science startups and scale-ups. Companies with platform technologies (e.g., AI-driven drug discovery, therapy-enabling technologies such as biomarker platforms, companion diagnostics) are likely to be high-priority M&A targets. Continued challenges in the public markets (especially for smaller life science firms) will prompt distressed or undervalued companies to consider acquisition.”

Don’t forget to make a clear development plan with achievable, near-term milestones, and approach strategic investors and apply for non-dilutive funding.

What advice do you have for small and mid-sized Nordic life science companies looking to raise capital? 

“Create a compelling investment narrative with a strong TPP, clear value proposition, and competitive advantage. Highlight the capabilities and experience of your team to build investor confidence. Also, consider smaller, realistic valuations with milestone-driven funding rounds and exploit the Nordic investment ecosystem through syndication and partnerships. Don’t forget to make a clear development plan with achievable, near-term milestones, and approach strategic investors and apply for non-dilutive funding. Last but not least, be transparent about risks and show how you are reducing economic and geopolitical uncertainties.”

Anything you would like to add when it comes to predicting the life science financial landscape in 2025?

“I think in 2025 continued valuation contraction and ongoing funding scarcity are going to push many companies to consider acquisition as a viable path forward. International players, particularly from Asia and the US are going to show more strategic interest in entering the European market through targeted acquisitions, drawn by the region’s strong innovation base. The broader shift toward healthcare digitization, coupled with big pharma’s increasing reliance on specialized, external innovation, are going to further drive demand for Nordic technologies and platforms.”