Gene Therapy Sector: History, Reckoning, and Future Outlook
Gene Therapy landscape for the uninitiated
Executive Summary
Gene therapy – the idea of curing disease by correcting genes – has evolved from a bold experiment many years ago to a nascent medical reality over the past few decades. Early breakthroughs proved the concept’s promise but were followed by high-profile setbacks that nearly derailed the entire field. After regrouping with safer viral vectors and refined techniques, scientists achieved historic milestones in the 2010s, delivering one-time treatments that cured or at least dramatically improved genetic disorders that had been previously incurable. These successes spurred billions in investment and major pharma acquisitions and partnerships, positioning gene therapy as what it seemed it would be a transformative new pillar of medicine.
Recently, however, the gene therapy sector has entered a period of reckoning. Lofty expectations have collided with scientific, clinical, and commercial challenges. This is not uncommon in biotech: a new scientific breakthrough or technology goes through the hype cycle, and companies wanting to raise money need to sometimes inflate the expectations of what they would do with that investment. We may now be in the adjustment part of the gene therapy hype. We’ve recently seen in the news how several leading companies such as Vertex Pharmaceuticals, Pfizer, Takeda, and Roche’s Spark Therapeutics unit, have pulled back from traditional gene therapy approaches, especially those relying on adeno-associated virus (AAV) vectors, amid safety concerns and disappointing clinical or market outcomes. One of the reasons is that recent trials have revealed immune-related toxicities and even sometimes patient deaths, highlighting the technical limits of this first-generation vectors that have been used for this potential new therapies. At the same time, the first wave of approved gene therapies has struggled to reach patients in volume due to hefty price tags, complex delivery, manufacturing bottlenecks, and wary insurers and patients. This is also not uncommon when a new therapeutic avenue is explored: the wave of therapeutic antibodies that started several decades ago also took time to become established. This confluence of issues has humbled the field and led to a pullback in investment, with venture funding for gene therapy and gene editing startups plummeting from a 2021 peak of over $8 billion to under $1.5 billion in 2024. This has taken place even as other sectors like weight-loss drugs attract feverish investor attention.
Venture capital funding in gene therapy (including gene editing) surged to a peak around 2020–2021, then sharply declined by 2023–2024 as the industry confronted safety, cost, and commercialization challenges.
Yet, this reckoning is not a collapse but a turning point. The industry is responding by shifting strategies: moving away from AAVs in favor of more recent delivery methods, such as lipid nanoparticles or other non-viral platforms, as well as embracing ex vivo gene editing and cell therapies, and targeting diseases where gene therapies can be delivered more safely or demonstrate clear value. Major players continue to invest more selectively – for example, Novartis has doubled down on its spinal muscular atrophy gene therapy and related programs, and companies like Roche are funding research into next-generation vectors in order to overcome current limits. Regulators like the FDA are broadly supportive, helping speed groundbreaking therapies to approval, while also pressing for long-term follow-up and manufacturing improvements to ensure safety and reduce costs. Payers and health systems are exploring innovative reimbursement models (such as outcome-based payments and annuities) to accommodate multimillion-dollar one-time treatments. These are innovative methods applied to our real world scenarios, which again, take time to consolidate.
Overall, gene therapy’s potential to cure diseases remains extraordinary, but the field is confronting reality: cures are hard to deliver and even harder to commercialize. This report provides a narrative analysis blending the scientific, business, and regulatory perspectives – tracing the sector’s history, the recent “reckoning” and strategic pivots by leading companies, and the outlook for gene therapy as it strives to overcome current challenges and reach its promise.