This sector contains companies that are involved in the discovery, development and manufacture of chemical or biologic products for diagnosis, prevention, or treatment of disease. Funding is the key element to life sciences. US, European and Canadian biotech companies raised $25bn in 2010. The capital is weighted heavily towards the larger biotech companies with 20% raising approximately 83% of all capital in 2010. Total IPO capital raised by biotechs in the two years 2008-2010 equalled $2.3bn versus $5.9bn 2005-07*. Clearly difficult times for the life science sector. Venture funding has steadily declined every year since 2007, with a total of $5.8bn raised by US, European and Canadian companies in 2010. However the weighting of the capital raised is heavily skewed to the US where 81% of capital was raised versus Europe with 17% of the total raise in 2010*. Most of the capital is flowing into Cancer – 23%, Diagnostics and Inflammation – 13% each and CNS – 11%*.
Although the funding market has been very challenging for biotech, revenues have expanded every year to $85bn in global biotech sales last year with R&D spending remaining at a very high rate of approximately $23bn with net income increasing by 30% to $4.7bn from 2009 to 2010*.
M&A in the sector tailed off significantly in 2010 from a peak of 64 deals in 2008 to 46 deals in 2010 with deal values totalling $20bn*.
*statistics from Beyond borders: Global biotechnology report 2011 by Ernst and Young.