Venture capital funding for life sciences continues downward trend
Venture capital (VC) funding in the life sciences sector gained in the third quarter but remains down for the year. Venture capitalists invested $1.7 billion in 181 life sciences deals during the third quarter of 2012, according to a new report, "Biotech bounce," that includes data from the PricewaterhouseCoopers (PwC)/National Venture Capital Association's MoneyTree Report, based on data from Thomson Reuters. The life sciences includes the biotechnology and medical device industries.
When compared with the same quarter of last year, that performance represented a drop of 12 percent in dollars and 8 percent in number of deals. Quarter-over-quarter life sciences funding fared better, gaining 16 percent in dollars but declining 2 percent in number of deals. A 64 percent leap in biotechnology funding drove the quarter-over-quarter increase.
“The 16 percent gain for the life sciences sector reversed a four-quarter decline,” said Tracy T. Lefteroff, global managing partner of the venture capital practice at PwC U.S. “Yet the sector won’t outpace 2011 unless it gets a boost during the final quarter. Regulatory uncertainty, capital intensity and investment time horizons remain challenging issues for would-be investors in the sector.”
For all sectors, venture capitalists invested $6.5 billion in 890 deals in Q3 2012, a decrease of 10 percent in dollars invested and a 12 percent decline in deals, compared to $7.3 billion going into 992 deals in the third quarter of 2011. The Life Sciences share of total VC dollars invested rebounded to 26 percent in Q3, a six percent increase from Q2 2012, which was the lowest level since the third quarter of 2002.
Biotechnology investing jumped by 64 percent in dollars and 22 percent in deals compared to the prior quarter, with $1.2 billion going into 116 deals in Q3 2012, which placed it a distant second behind the Software industry in terms of dollars invested during the quarter. On a year-over-year basis, biotechnology investments rose 7 percent in both dollars and the number of deals.
In Q3, medical device investments dropped to the lowest dollar level since 2004 and fell to sixth place among all industries for the quarter, a big drop from being the second largest industry category in the prior quarter. With $434 million going into 65 deals in Q3, investments into the medical device industry dropped 37 percent in dollars and 27 percent in deals from Q2 2012. On a year-over-year basis, dollars invested fell 42 percent in dollars and 27 percent in deals.
A full copy of the report is available for download.
Editor
Editor Beth earned a bachelor’s degree in journalism and master’s in health communication. She has worked in hospital, academic and publishing settings over the past 20 years. Beth joined TriMed in 2005, as editor of CMIO and Clinical Innovation + Technology. When not covering all things related to health IT, she spends time with her husband and three children.