Venture Capital Dollars Invested in Biotechnology and Medical Device Companies
Falls 10% in Fourth Quarter of 2013, Decreases 1% Over 2012 Funding
NEW YORK, February 18, 2014 – Venture capital (VC) funding for the Life Sciences sector, which includes Biotechnology and Medical Devices, declined by 1 percent in dollars invested and 3 percent in number of deals compared to 2012, according to a new PwC US report, “Medtech Slowdown,” which includes data from the MoneyTree™ Report from PricewaterhouseCoopers (PwC) LLP and the National Venture Capital Association (NVCA) based on data provided by Thomson Reuters. VCs invested $6.6 billion into 778 Life Sciences deals in 2013, compared to $6.7 billion in 800 deals in 2012.
On a quarterly basis, Life Sciences investments rose 19 percent to $1.8 billion in the last quarter of 2013, compared to $1.5 billion during the prior quarter. The number of Life Sciences deals rose 21 percent from 188 during the third quarter to 228 during the final quarter of 2013. Despite the quarterly uptick, the Life Sciences share of total venture funding declined from 25 percent in 2012 to 23 percent in 2013.
“The fourth quarter and 2013 year-end numbers show there is continued interest in Biotechnology even as Medical Devices slowed down during the year,” said Greg Vlahos, Life Sciences Partner at PwC. “With the strong exit markets for biotechnology in 2013, 2014 is set up for renewed interest in life sciences. In fact, first-time funding witnessed a strong finish to the year, increasing 48 percent in 2013. The enduring interest in early-stage opportunities will continue to drive investments in the sector.”
Biotechnology companies raised $4.5 billion in 470 deals during 2013, placing it as the second-largest investment sector behind Software, which drew $10.9 billion in 1,523 deals during the year. Investments in Biotechnology for all of 2013 increased by 8 percent in value, while volume declined by 2 percent. Investments in Biotechnology increased 43 percent in dollars and 10 percent in deals with $1.3 billion flowing into 134 deals during the fourth quarter of 2013, compared with $928 million in 122 deals during the third quarter.
In the last quarter of 2013, VCs invested $460 million into 94 Medical Device deals, a 19 percent decrease in dollars, but a 42 percent increase in deals compared to the previous quarter. The Medical Device industry was down overall for the full year, experiencing a 17 percent decrease in dollars invested and a 4 percent decline in the number of deals compared with 2012.
In 2013, first-time funding for Life Sciences companies increased 48 percent in dollars invested to $1 billion going into 154 companies, compared to the $664 million invested into 148 companies in 2012. In the fourth quarter of 2013, $409 million went into 48 companies receiving VC investment for the first time, representing a 161 percent increase in dollars from the prior quarter and a 7 percent increase in deals.
Funding by SubSegment
Four of the eight Biotechnology subsegments displayed growth in Q4 2013 compared to Q4 2012. The biotech animal sub segment rose 122 percent to $35 million, biotech industrial rose 35 percent to $26 million, biotech equipment rose 11 percent to $8 million, and pharmaceutical rose 8 percent to $70 million. Funding for three subsegments decreased while one subsegment, biotech other, received no investments during the final quarter of 2013.
Only one Medical Device subsegment increased in Q4 2013 compared to Q4 of 2012. The Medical Diagnostics subsegment rose 142 percent to $64 million compared to the same quarter in 2012. The two remaining subsegments both experienced a decline with Medical Therapeutics falling 38 percent to $336 million and Medical/Health Products dropping one percent to $59 million, compared to the same quarter of 2012.
Investments by Region
The top five metropolitan regions receiving the most Life Sciences venture capital funding during the fourth quarter of 2013 were San Francisco Bay ($550 million), Boston ($382 million), Seattle ($186 million), San Diego Metro ($95 million) and New York Metro ($83 million).
The top five regions accounted for 73 percent of the dollars invested in Life Sciences companies in the fourth quarter of 2013. Biotechnology investments accounted for 85 percent of the dollars invested in Life Sciences deals in the top five metro regions.
A full copy of the report is available for download at www.pwc.com/us/lifesciencesmoneytree
About PwC's Pharmaceutical and Life Sciences Industry Group
PwC's Pharmaceutical and Life Sciences Industry Group (http://www.pwc.com/us/pharma and http://www.pwc.com/us/medtech) provides clients with audit, tax and advisory services. The firm has extensive experience in delivering industry-tailored solutions on a wide range of strategic, financial and operational issues. The Pharmaceutical and Life Sciences Industry Group is part of PwC's larger initiative for the health-related industries that brings together expertise and allows collaboration across all sectors in the health continuum. Follow PwC Health Industries on Twitter at http://twitter.com/PwCHealth.
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