Hedge funds with heavy exposure to biotech, including Perceptive Advisors, have posted some of the industry’s strongest returns in 2025, fuelled by a surge in large-cap pharma M&A and the sector’s sharpest rally in a decade, according to a report by the Financial Times.
The New York-based firm’s $4.5bn flagship fund is up 75% year-to-date through November, according to sources. Activist-leaning Caligan Partners has delivered an even stronger 92% gain, marking its best year since launch.
The backdrop has been exceptional: the Nasdaq Biotechnology Index has jumped nearly one-third, its best annual performance since 2014, as big pharma players race to secure next-generation therapies ahead of a looming $180bn patent cliff in 2027–28.
Transactions have ranged from Pfizer’s $10bn takeover of Metsera to Merck’s $10bn purchase of Verona Pharma, the latter producing substantial profits for both Perceptive and Caligan after Verona’s shares surged more than 130%.
Perceptive also scored major wins in smaller-cap names including Praxis Precision Medicines and Celcuity, which soared roughly 250% and 700%, respectively, following strong clinical-trial updates.
Healthcare-focused hedge funds collectively returned 36% through November, making 2025 their best year since 2013, according to PivotalPath.
The M&A cycle shows no signs of slowing. With blockbuster drugs losing exclusivity and the Trump administration signalling a more permissive stance on pharma consolidation, analysts expect deal activity to remain robust into 2026.
The rally also marks a sharp reversal from early-year weakness, when fears over political appointments, cuts to US health-research funding and tight financing conditions weighed on biotech valuations. Perceptive, for instance, was down through April before the sector’s second-half resurgence powered its rebound.
