Cell and Gene Therapy Sector Experiences 30% Investment Surge Amid Market Challenges

The cell and gene therapy (CGT) sector has seen a significant boost in investments, with a 30% year-over-year increase reaching $15.2 billion in 2024, despite facing numerous market challenges. This surge in funding comes as the industry continues to expand, with approximately 3,000 developers and 2,000 clinical trials in the CGT space, reflecting year-over-year increases of 6% and 3%, respectively.

Industry Growth and Pharmaceutical Company Involvement

As of early 2025, 13 of the 15 largest pharmaceutical companies by market cap were actively investing in the development and/or commercialization of cell and gene therapies. Notable players include AbbVie, Astellas Pharma, Bristol Myers Squibb, Novartis, Roche, and Vertex Pharmaceuticals. This widespread involvement of major pharmaceutical firms underscores the growing importance of CGTs in the broader healthcare landscape.

Rita Johnson-Greene, chief operating officer of the Alliance for Regenerative Medicine (ARM), highlighted the sector's progress during the 2025 Cell & Gene Therapy Summit hosted by Charles River Laboratories. She noted that despite the challenges faced by the market in 2024, the substantial increase in investment is a testament to the industry's resilience and potential.

Challenges and Future Outlook

Despite the positive investment trends, the CGT sector faces several hurdles. Johnson-Greene acknowledged issues such as high costs of goods, efficacy and safety concerns, complex treatment regimens, and challenges related to small patient populations, especially in rare and ultra-rare diseases.

However, the future of cell and gene therapies remains promising. Johnson-Greene cited a 2019 prediction by former FDA Commissioner Scott Gottlieb, who anticipated that by 2025, the FDA would approve 10 to 20 cell and gene therapies annually. With nine approvals in 2024 and up to 15 total applications expected this year, the sector appears to be on track to meet or exceed this forecast.

Investor Sentiment and Funding Strategies

The investment landscape for CGTs has evolved since the COVID-19 pandemic. Carl Schoellhammer, associate partner at DeciBio, noted that generalist investors who entered the space during the pandemic's peak are now withdrawing, realizing the complexities of medical innovation.

Carolyn Ng, partner and managing director at TPG Life Sciences Innovations, emphasized the importance of selectivity in investments, stating, "This is not a beta-driven sector. It's an alpha-seeking sector. So, you have to be able to identify the opportunity set that's going to break out, especially in categories where we feel like there might be some headwinds."

For companies seeking funding, experts advise against waiting for market conditions to improve. Ng recommended that companies with strong conviction in their programs should actively pursue funding opportunities, as the timing of the next funding wave is unpredictable. Carter Caldwell, program director at Penn Medicine Co-Investment Program, suggested that companies should allow at least 18 months for fundraising efforts and cautioned against waiting until financial pressures become severe.

Caldwell also highlighted the importance of finding the right investors, stating, "Not every dollar is equal. You want the dollar that's going to come in the door, that's going to roll up their sleeves, that's going to be there for the follow-on rounds." He advised entrepreneurs to consider interest group investors, such as the American Cancer Society's venture fund BrightEdge, which focus on specific areas of medical research and development.