Rebounding biotech funding could lift CDMO demand within a year

Analysts at PitchBook expect contract development and manufacturing organizations (CDMOs) to see stronger demand over the next two to four quarters, potentially beginning in late 2026 or early 2027.

The anticipated recovery follows a rebound in biotech funding that began in the second half of 2025. Historically, demand for outsourced pharma services trails funding changes by roughly six to nine months or longer.

AI-driven expansion of early-stage drug-development pipelines is also expected to support future demand, although investment remains selective and some capital is being diverted from traditional biotech toward AI.

CDMOs serving complex modalities—including cell and gene therapies, antibody-drug conjugates and radiopharmaceuticals—are expected to benefit most from the recovery.

Recent deal activity suggests an inflection may already be developing, with the annualized number of biotech deals in the first half of 2026 reportedly running ahead of 2025 levels.

The outlook remains dependent on whether increased biotech financing converts into new programs and ultimately into revenue for service providers.