US dominates VC investment, report reveals
Therapeutic areas of oncology, neurology and infectious diseases most popular for funding
The US continues to dominate investment by venture capital firms, according to a new report on the venture capital investments of global life science companies.
The report, Investment Criteria of Corporate Venture Capital in the Life Science Industry, is based on the 300 most recent investments of the 19 biggest private equity investment companies over the past decade.
The findings revealed that 189 firms in the US won 67% of the venture capital funding.
Europe also had a good number of investments, especially in the UK (20 companies; 7%) and Switzerland (15 companies; 5%).
Biotechnology and pharmaceuticals were the top areas for investment, with around 30% going to each area.
The therapeutic areas of oncology, neurology and infectious diseases saw the most investment.
Other findings revealed that the preclinical phase received the most funding, with investment of US$22.90m going to 140 firms. Phase III firms received the largest sums (US$73.32m).
Swiss pharmaceutical firm Roche invested the highest amount (US$65m), followed by Takeda ($40m) and Novartis ($36m), while Mitsubishi invested the least (US$11.5m).
Farhang Modaresi and Parhat Hebibul, master students in the Swedish Karolinska Institutet’s bioentrepreneurship programme, were commissioned by Stockholm Business Region to map the last 10 years’ investments globally and interview key individuals to investigate the decision-making process.
According to Modareisi, the conclusion of the research is clear. ‘Small companies in need of venture capital must analyse large pharmaceutical companies’ portfolios, become familiar with their focus and preferences and meet investors before they submit a proposal. Networking is probably more important than many people think.’
The report aimed to identify general success factors, thus supporting the Stockholm region’s life science companies in pursuit of venture capital. None of the investments was made in Sweden during the period, despite the fact that the sector accounts for approximately 20% of Sweden’s net exports.
‘Given the major research campaigns, it is surprising that none of the pharmaceutical companies’ venture capital investments was in Sweden and Stockholm. In many cases, our companies pursue world-leading, cutting-edge research and investors are extremely curious. However, the report clearly shows that experienced leadership with a broad international network is essential,’ added Ylva Hultman Erlandsson, Business Development Manager Life Science at Stockholm Business Region Development.