A recent report released by PwC’s Pharmaceuticals and Life Sciences Industry Group indicates that life sciences venture capital funding has shrunk for the fourth straight quarter.
On medcitynews.com, contributor Arundhati Parmar writes that “the decline was 39 percent in amount invested and 22 percent in number of deals in the second quarter from the same quarter in 2011. Total money invested in the sector that includes biotechnology and medical devices was $1.4 billion in the second quarter and the number of deals fell to 174. What’s more, the results show a four quarter slide.”
He continues,
“Both biotech and medical device venture funding took a hit. A total of 84 deals brought in $800 million for the medical device industry, but the numbers represent drops of 11 percent in deal volume and 17 percent in amount invested year over year. Biotech took a much bigger hit with a 52 percent decline in funding to $697 million and a 30 percent drop in number of deals to 90 deals in the second quarter.” Read more at medcitynews.com.
However, there is still cause for hope. As global managing partner of the venture capital practice at PwC US Tracy T. Lefteroff explained,
“The pace of venture-backed exits we saw for life sciences companies during 2011 should encourage investors. If M&A activity picks up during the second half of this year, investors should continue to see a clearer path to returns, which potentially could attract more money to be invested in this sector.
“Additionally, the new Jobs Act could spur more confidential IPO filings, creating the opportunity for more exits. This act makes it easier for start-ups with under $1 billion in annual revenue to go public by relaxing Sarbanes-Oxley requirements for five years.”
He continued,
“Finally, the recently passed user fee legislation contains some incentives for companies to develop breakthrough therapies for infectious and rare diseases. These include extended market exclusivity for qualified infectious disease products and expedited FDA review for therapies that address unmet medical needs to treat rare and life-threatening diseases and conditions. Such incentives could pique the interest of investors in companies developing innovative products that might have a shorter path to market.”