To Biotech and CDMO Leaders: I Don’t Take Your Struggles Lightly. I’m Pushing Hard Because I’m on Your Side.

I See You. The CGT Paradox Is Real - And We Still Have to Build

Look, I know how I sound sometimes. Like I’m the guy barking “scale up,” “build academies,” “automate,” “invest in modalities,” and “push capital into infrastructure” while you’re sweating payroll, watching cleanrooms sit idle, or praying a financing round actually closes.

Let me be crystal clear: I see you. I hear you. I get you. I started with nothing. I’ve stared at numbers that didn’t add up. I know what it feels like when every dollar needs a business case and a backup plan. So when I push for investment, it’s not cavalier. It’s because patients are still waiting—and some don’t have the luxury of time.

This is the paradox we’re living in:

• Macro: CGT looks unstoppable. Forecasts stretch to a ~$117B market by 2034. FDA comfort is growing. Big Pharma is all-in. The science is real.
• Micro: The ground truth is brutal. ~39% of biotechs entered 2024 with <12 months of cash. IPOs froze. Many small CDMOs are underutilized, stuck with aging equipment and COVID-era cost structures. Talent is scarce. Timelines are long. Costs are punishing.

Both stories are true. And if we don’t reconcile them, therapies stay trapped in bottlenecks instead of reaching the people they’re meant to save. This is a deep dive into why the mixed signals exist—and what small/midsize biotechs, CROs, and CDMOs can actually do about it.

The Mixed Signal, Explained

1) The Bullish Narrative (And It’s Not Hype)

• Market growth: Global CGT projected from ~$21B (2024) to ~$117B by 2034; gene therapy alone from ~$9.5B (2024) to ~$59B by 2034. North America leads with ~45–50% revenue share; APAC is the fastest-growing region (projected ~19% CAGR).
• Regulatory momentum: FDA approvals and comfort with complex modalities are rising. The pipeline is thick with CGT programs, and ASGCT/Citeline data show sustained trial activity and breadth.
• Adoption drivers: Rare disease urgency, personalized medicine, and better capitalized strategics continuing to place big bets.

That macro picture is real. But it doesn’t automatically trickle down to healthier P&Ls for smaller players—at least not yet.

2) The Ground Truth (Where You Live Daily)

• Funding cramps: Post-COVID, capital shifted to “quality.” Later-stage, de-risked assets get the bigger checks; preclinical innovators fight for scraps. Result: ~39% of biotechs had less than a year of cash in 2024; workforce shrank ~5% as companies triaged pipelines to a single lead.
• IPO & crossover retreat: COVID-era IPO boom turned to 70% median stock drawdowns in 2024, pushing crossovers out and slamming the early-stage window shut.
• CDMO pain: Despite CGT CDMO market growth, the top players consolidated share (top 8 capturing ~51% of revenue; controlling ~80% of market value). Smaller CDMOs report soft demand, underutilized suites, and capex they can’t justify.
• Manufacturing economics: Autologous complexity, manual processes, and stringent QC drive prices that can hit $4.25M per dose—a brutal commercialization barrier that loops back into payer friction and slow uptake.
• Timelines: 10–15 years from discovery to approval; only ~7.9% Phase 1 drugs make it. For CGTs, median Phase 1→filing ~9 years; Phase 2→approval success ~14% vs ~43% for small molecules. Translation: capital has to survive a long desert.

This isn’t contradiction. It’s market maturation: a shift from easy money to hard discipline. Growth is concentrated at the top. Survival requires precision.

Post-COVID Whiplash: How We Got Here

COVID (2020–21) pumped unprecedented cash into biotech. Generalists flooded in, IPOs skyrocketed, valuations soared. Then rates climbed, sentiment snapped back, programs stumbled, and by 2022–24 we got the correction: VC tightened, IPOs froze, “tourist” money left. Early-stage dried up. Meanwhile, many CDMOs scaled for pandemic demand that evaporated—leaving cost overhang just as startups cut spend. That’s the “hangover.”

Now, a re-alignment: capital is selective, late-stage favored, M&A expected to relieve congestion, but it’s uneven across regions and company sizes. The pipeline’s intact, approvals are creeping up, and strategics still have dry powder—just not for everyone.

The Data You Need — Right Now

1) Funding Reality Check (Global, and by Region)

Global trends (2024–2025):

• Total financing dipped ~10% in 2024 vs prior peaks; Q1 2025 saw weaker early-round activity; “first financings” lagged as investors demanded human data. Flight to quality is the rule.
• CGT investment fell sharply from the 2021 highs into 2023, then showed uneven recovery—megarounds up, but for fewer, later assets. Venture debt usage rose as a stopgap.

United States: Dominant market share (~45–50% revenue) but with sharp post-boom normalization. Many 2020–21 IPOs now stranded; down-rounds and asset triage common. M&A is the pressure valve.

Europe: VC inflows slowed; policy headwinds and budget cuts (EU programs) created more caution. Some sponsors explore EU/UK/Australia for earlier trial starts amid FDA uncertainty.

Asia-Pacific: Fastest growth region; APAC deal activity and manufacturing capacity are expanding. China, Japan, Singapore continue building hubs; Korea/Southeast Asia rising.

What it means for small/midsize biotechs:

• Lead with human data and crisp value milestones.
• Expect milestone-based and non-dilutive structures (royalty deals, venture loans) to dominate.
• Pursue strategic alliances earlier; don’t “wait for perfect” internal capability.

2) Workforce & Talent (The Constraint No One Can Ignore)

The skills gap is real—and structural.

• Precision roles in GMP, QC, manufacturing, and data/AI are chronically short. Traditional academic pathways simply don’t produce CGT-ready operators at scale. Training can take 2–5 years to full competency for complex modalities.
• Industry response: bootcamps, certificates, academies (MIT, UC Davis, Drexel, internal CRO/CDMO academies). Some programs compress to 3–5 days for targeted upskilling; others (e.g., GMP immersion models) run months. It’s a patchwork catching up to demand.

Why this hurts smaller players more:

• Training cost + time + turnover risk is asymmetric. Big firms can absorb $100k-plus per head and create internal pipelines; smaller orgs can’t easily.
• Result: hiring takes months; roles stay open; projects slip; burn goes up.

Practical move: Treat workforce as infrastructure, not overhead. Build micro-academies with partners, co-fund seat-based training with CDMOs or universities, and formalize retention incentives tied to credentialed progression.

3) CDMO Capacity & Utilization (Why “Build More” and “No Work” Coexist)

Headline data:

• CGT CDMO market projected ~28% CAGR through 2034, reaching ~$75B. About 90% of biotechs rely on CDMOs for early-stage and commercialization support.
• But the market is top-heavy: the largest providers absorbed share and capital, while many small/midsize CDMOs report softening demand, older equipment, and high opex. Utilization in 2024–25 hovered ~60–70% in many places—below healthy thresholds—despite the bullish long-term forecast.

Why the disconnect?

• Sponsors de-risk by choosing scaled, integrated CDMOs with proven regulatory track records.
• Smaller CDMOs often lack the funds to upgrade lines, digitize QA/QC, or hire senior tech ops talent—creating a vicious cycle that keeps them out of higher-value programs.

Bottom line: The sector doesn’t just have a capacity problem; it has a capability problem. Sponsors pay for predictability, compliance maturity, and speed—not square footage.

4) Timelines & Risk (The Math Behind Investor Behavior)

• Time to market: 10–15 years.
• Phase 1→Approval success: ~7.9% overall; for CGTs, Phase 2→Approval ~14% (vs ~43% for small molecules).
• Median Phase 1→filing for CGT: ~9 years.
• Manufacturing/CMC-driven setbacks: a large share of CRLs and clinical holds stem from quality and manufacturing issues—not safety.

Investors aren’t cynical; they’re rational. Longer timelines + higher CMC risk = later-stage bias. That’s the “flight to quality” you’re feeling.

Region-by-Region Snapshot (Why Strategy Must Be Local)

United States: Largest revenue share; deepest capital pools; increasingly selective. FDA throughput improving overall, but sponsors worry about CMC scrutiny and variability. Medicare’s outcomes-based models (e.g., CMS CGT Access Model) could help uptake if pricing aligns.

Europe: Funding pressure + staffing mobility issues + differing HTA dynamics. However, regulatory harmonization trends and strong clinical sites make EU a serious option for certain early trials and manufacturing niches (especially for allogeneic or vector work).

Asia-Pacific: Fast growth, ambitious capacity builds, and cost advantages in parts of the value chain. Strategic for vector manufacturing, certain analytics, and scaling mature processes; sponsor diligence still critical for tech transfer and QA/QC harmonization.

Why This Is a Paradox (Not a Contradiction)

1. Timing mismatch: Bullish 5–10 year forecasts vs. 12–24 month survival windows.
2. Scale economics: Infrastructure, regulatory maturity, and workforce depth reward the biggest balance sheets.
3. Capability premium: Sponsors buy risk reduction; that favors integrated players.
4. Capital behavior: Later-stage bias and megarounds concentrate oxygen at the top.

So yes, the industry is exploding—and yes, many of you are fighting for oxygen. Both can be true.

The Playbooks (Built for Small/Midsize Biotechs, CROs & CDMOs)

For Small/Midsize Biotechs

• Design your financing around milestones, not vanity rounds. Stage-gate your capital so you’re never raising just for the sake of raising.
• Outsource earlier, but choose partners like you’d choose a cofounder. Transactional vendor relationships will kill you in this environment.
• Build a “data spine.” If you can’t show investors and regulators a clean story in 10 slides, you don’t have a shot.
• Treat workforce as a product feature. Your ability to staff, train, and retain is part of your value story.

For Small/Midsize CDMOs

• Pick a lane — and own it. Stop pretending you can compete head-on with Lonza or WuXi. Find a therapeutic niche, a modality specialty, or a process expertise and dominate it.
• Invest in credibility, not just capacity. Cleanrooms don’t win contracts. Regulatory maturity, QA/QC sophistication, and proven tech-transfer chops do.
• Automate where it actually moves the needle. Don’t chase shiny toys. Invest in automation and digitalization that cut error rates, improve reproducibility, and de-risk sponsor programs.
• Recast yourself as a partner, not a vendor. Sponsors aren’t looking for space rental — they’re looking for someone who will fight regulatory battles with them, problem-solve in real time, and share risk.

The Capital Reality: Why PE Is in the Room (Whether You Like It or Not)

Here’s the part nobody loves to say out loud: private equity and alternative investors are not just “nice-to-have” anymore — they’re becoming the only viable oxygen tank for much of this ecosystem.

• Traditional VC is flight-to-quality. IPOs are closed.
• Big Pharma is cherry-picking late-stage assets and billion-dollar platforms.
• Smaller biotechs and CDMOs? You’re in a funding desert.

PE is stepping in because the sector has hard assets, long timelines, and an inevitable growth curve — exactly the profile they know how to finance. Does that come with strings? Absolutely. But dismissing PE because it feels “too corporate” or “too aggressive” is a luxury no one can afford right now. The reality is that PE capital, structured right, could be what keeps some of you alive long enough to see the upside.

Closing Thoughts

I know I sound like a hardass when I hammer on scaling, academies, automation, and infrastructure. But don’t confuse my urgency with indifference. I see the struggle. I’ve lived it. I know what it’s like when budgets don’t stretch, when payroll feels heavier than your science, when the dream of saving lives is held hostage by runway math.

But here’s the truth we can’t escape: patients don’t care about our cash crunches. They care about whether the therapy exists in time to save them or their child. And right now, too many therapies are stuck in the paradox — a booming market with stalled execution.

So yes, I’ll keep pushing. Because this is do-or-die for the entire sector.

• Biotechs: sharpen your milestones, build alliances, protect your cash.
• CDMOs: stop trying to be everything — go narrow, go deep, build credibility.
• Investors and PE: whether you like it or not, you are the bridge between the science we’ve promised and the patients who need it. Step up responsibly.

We’re all in this together. And if my tone comes off tough, know this: it’s only because I’m on your side. Always.