Report: Biopharma Investments Down in 2016

BIO report measures decade-long investment and acquisition trends for emerging biotech companies.
Jun 27, 2017
By BioPharm International Editors

Small, emerging companies make up more than 90% of the biopharmaceutical industry and have 4186 drug indication programs—or 70% of the global industry pipeline—under development. A report from the Biotechnology Industry Association (BIO) reviewed at the 2017 BIO convention in San Diego in June 2017 measures the state of investments from venture capital, initial and follow-on public offerings, licensing, and acquisitions that are vital to the ongoing development of small biopharmaceutical companies. Investments were tracked from 2007–2016.

The report, Emerging Therapeutic Company Investment and Deal Trends, analyzes investments by phase of development and by disease area, and examines the current clinical pipeline. It also assesses the role of partnering for major disease areas; almost 42% of emerging company programs are partnered with other companies.

Overall, the investment market had mixed results in the past year. In the venture capital arena, $5.5 billion was raised in 2016, down from the record $6.9 billion in 2015; the number of companies receiving financing dropped to a decade-low 258 companies.

Since the enactment of the Jumpstart Our Business Startups (JOBS) Act in 2012, 200 biotech companies filed initial public offerings (IPOs); 23 companies filed in 2016, down from 2014 and 2015. Follow-on public offerings (FOPOs) also declined, reflecting a more difficult public investment market environment for biotech companies; US emerging companies raised 56% less in 2016 compared to 2015.

Licensing deals also declined; the number of R&D-stage licensing deals valued at $10 million or more dropped 19% in 2016, after a three-year uptrend. Upfront payments in 2016 were only half the levels of 2015.

Acquisitions were up, reaching the highest level in eight years; however, the amount paid was only half the level seen in 2015.

Investments were also analyzed by disease type and pipeline status. More than half of the emerging therapeutic company pipeline is in Phase II clinical trials; 16% is in Phase III trials. The late-stage programs are more likely to be partnered than early-stage assets.

Oncology makes up 39% of the emerging company clinical pipeline, and continues to receive the largest percentage of US venture funding.

Investment for chronic conditions were weak; Companies focused on respiratory, gastrointestinal, and cardiovascular diseases raised less money in the 2012–2016 period than the prior than the previous five-year period. 

Source: BIO

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