BIO Report – Venture Funding for Therapeutic Innovation (2015)
The Biotechnology Industry Organization (BIO) released a first-of-its-kind study on venture financing broken down by disease area and novelty of research over a ten-year period from 2004 to 2013.
“Since venture financing is the lifeblood of our industry, we wanted to better understand trends in venture financing over the last decade by conducting the broadest, most comprehensive study possible,” said Cartier Esham, PhD, Executive Vice President of Emerging Companies. “The aim was to identify funding trends for emerging drug developers within specific therapeutic areas and across varying levels of innovation.”
The report analyzes data from four venture capital databases – Thomson Reuters, BioCentury, Elsevier, and Evaluate Pharm – to investigate investor trends, examine investment in specific therapeutic areas and indications, and identify disease areas that might be struggling for early-stage venture equity financing. The study encompasses $38 billion of venture capital into more than 1,200 U.S. drug companies, receiving more than 2,000 rounds of funding over the last 10 years from 2004-2013.
Key findings include:
- Seventy-eight percent of U.S. venture investment for therapeutics went toward novel drug R&D, suggesting innovation is a core priority for venture investors
- Total venture funding of drug R&D dropped 21 percent, from $21.5 billion to $16.7 billion, comparing five-year periods before and after the recent financial crisis (2004-2008 vs. 2009-2013)
- Disease areas affecting large populations – Diabetes, Psychiatry, Gastrointestinal, Respiratory, Cardiovascular – have seen a decline in novel drug R&D venture funding
- Rare disease funding has seen a large increase over the past decade in terms of both dollars raised and number of companies funded
- There are fewer first-time Series A financings in recent years, down 30 percent from a peak in 2006, but higher dollar amounts for novel drug R&D venture funding
BIO is the world’s largest trade association representing biotechnology companies, academic institutions, state biotechnology centers and related organizations across the United States and in more than 30 other nations. BIO members are involved in the research and development of innovative healthcare, agricultural, industrial and environmental biotechnology products. BIO also produces the BIO International Convention, the world’s largest gathering of the biotechnology industry, along with industry-leading investor and partnering meetings held around the world.