U.S. Biopharma Sees $115B in Funding Across 609 Deals in First Three Quarters of 2019 as Asian Capital Pulls Back

VCBeat (WeChat Official Account: biobeat1) has learned that a prestigious data firm in Silicon Valley released the financing and investment landscape of the U.S. market for the first three quarters of 2019 the day before yesterday. Although the overall number and volume of financing deals may not surpass those of 2018, Pitchbook analysts believe these figures will still remain close to 2018 levels and exceed those of the same period prior to 2017.

A thriving IPO market and several high-profile acquisitions have helped sustain strong market enthusiasm. According to data from the National Venture Capital Association, this year has been the most lucrative for VC exits in the past decade.

Is the Biopharmaceutical Sector Rife with Bubbles? Katherine Anderson, Head of Relationship Banking for Life Sciences and Healthcare at SVB, believes that while it is not entirely a bubble, some froth does exist. However, amid slowing economic growth and ongoing geopolitical issues, the industry must prepare for a shift into a non-cyclical phase.

Financing Status and Distribution of Financing Rounds as of the End of Q3 2019

In the first three quarters of 2019,A total of 609 investment and financing transactions occurred in the U.S. biopharmaceutical sector, with a total funding amount of $115 billion. The proportion of early-stage financing (primarily Series A and Series B rounds) continued to rise, accounting for more than 50% of all financing deals. However, the overall transaction volume declined compared to the same period in 2018.

On the other hand, biotechnology companies have performed well in acquisitions and IPOs.

Size of Individual Financing Rounds and Valuations of Investee Companies

Although PitchBook’s analysis focuses solely on U.S. venture capital firms, the Chinese market has already drawn their attention, and Anderson discussed China-related topics extensively in her interview. She predicts that investment by Asian institutional investors in the European and American healthcare sectors will decrease by approximately 35% in 2019 compared to 2018, primarily due to stricter scrutiny by the Committee on Foreign Investment in the United States (CFIUS).

She also believes that the STAR Market can prompt other Chinese stock exchanges to implement similar trading reforms, thereby providing innovative companies with more alternatives. “Demand for innovative therapies in China is growing. In the global healthcare sector, China remains a significant contributor and driver of value. With the introduction of new IPO rules on the Hong Kong Stock Exchange and the establishment of the STAR Market, China clearly aims to continue becoming a more attractive market for innovators,” she said.