Silicon Valley Bank: 2014 medical industry review and 2015 investment and exit forecast

Source: arteria.com on May 23, 2015, Silicon Valley Bank recently released a report on the investment and exit trend of the global medical industry This report is divided into three parts: biopharmaceutical, equipment and diagnostic tools It reviews and forecasts the medical industry from investment, exit and geographical areas The main contents of arterial network excerpt are compiled, please see below The outbreak of medical venture capital and soaring returns in the medical field has pushed the fund-raising, investment and withdrawal in 2014 to the highest level in recent years, actually exceeding our optimistic estimate a year ago The number of IPOs in 2014 was more than double that in 2013, reaching a ten-year high Strong returns accelerate the cycle of capital; in just one year, investors raised 56% more money, which shows that confidence in medical innovation is very high Although we predict that the strong scale of fundraising in the next few years will boost the investment cycle, IPO activities in 2015 may be slightly reduced Main conclusions and forecasts 2014 main conclusions - in 2014, the amount of medical venture capital raised increased by 56% compared with 2013, a record high since 2008; medical venture capital also increased by a large margin, reaching 8.6 billion US dollars in 2014, 30% more than 2013; a large number of non VC investors rushed to prepare IPO In the early stage of VC investment, IPO and M & A activities of biopharmaceutical and potential distribution increased by 60%, reaching a new 10-year high of 20 billion US dollars; the exit speed of IPO and M & A activities in biopharmaceutical field accelerated; after two years of silence, M & A activities in equipment field increased, and IPO also picked up; Large Biopharmaceutical Enterprises are full of interest in late stage diagnostic tools, and invest in better drug R & D tools and companion diagnosis (CD); SVB analysis finds that the key factor of benign exit is capital efficiency; in 2015, it is expected that IPO and M & A activities will continue to increase, and generate substantial returns, stimulating fund-raising and investment Capital cycle of exit; new capital investment and innovative companies will increase compared with 2014; rapid exit activities will continue in 2015, and the successful strategy of late financing of non VC investors will lead to the continuation of rapid exit in 2015; listed activities of the company will decline, especially biopharmaceutical companies, but merger and acquisition activities will be improved; Due to the discount purchase of early equipment companies by large equipment companies, equipment IPO activities will increase in 2015; diagnostic tool companies are expected to obtain high returns, but challenges still exist Technology / big data giants began to focus on the field of diagnostic tools, many of which may have major acquisition strategies; soaring venture capital and investment drive medical innovation 1) the proportion of total medical venture capital slightly decreased The proportion of biopharmaceutical, equipment and diagnostic tools accounted for 18% of all venture capital in 2014, down from 22% last year This decline is due to the exponential growth of venture capital, rather than the loss of interest in this area In fact, the amount of medical venture capital increased by 30% compared with 2013, reaching US $8.6 billion, a new high in seven years 2) Compared with 2013, medical venture capital raising and investment exceeded expectations by 56%, which is a new high since 2008 The total fundraising was over $6 billion, much higher than expected in our report last year Medical investment also increased significantly, reaching US $8.6 billion in 2014 Biopharmaceutical companies received the most investment, reaching US $6 billion 3) In the round a financing, biopharmaceutical companies are the most concerned by enterprise investors in 2014 The investment of enterprise investors in biopharmaceutical companies is concentrated in round a, the transaction volume in round a is increased by 35% compared with that in 2013, and the transaction of equipment and diagnostic tools is not changed much Analysis: what prompted investors to inject capital into the medical market? The successful large-scale biopharmaceutical M & A and IPO Exit activities created a better financing environment As a result, the capital cycle of fund-raising investment exit was also accelerated, so more effective capital could be reinvested 1) Active biopharmaceutical investors focus on the early stage and rapidly withdraw from the biopharmaceutical field Top 5 has invested more than 50% in the biopharmaceutical companies in 2013-2014 compared with the previous two years Among them, the top 5 are OrbiMed, Atlas, Novo A / s, NEA and sofinnova V respectively Among these active corporate investors, Wuxi from China focused almost exclusively on the early stages of us biopharmaceutical companies in 2013-2014 Most biopharmaceutical companies are also increasing their drug R & D projects; however, the field of cancer is much larger than other drug R & D fields, and most of the investment transactions in the field of cancer take place in countries other than the United States, and have been supported by venture capital of enterprises From the perspective of geographical location of investment activities, biopharmaceutical investment mainly takes place in Boston / Cambridge, northern and Southern California, and a large number of transactions take place outside the United States 2) Small investors and angel investors mainly focus on the number of active equipment investors in the field of equipment, which has declined dramatically in the past five years, and the types of investors have changed in the past two years Although some investors began to invest in new areas, such as biopharmaceutical, internet medical and so on There are still a lot of investment institutions that continue to pay attention, such as new Enterprise Associates (NEA), which continues to lead equipment investment, and some small investment institutions, including Biostar, emergent and angel investment institutions, such as life science angels, which are also increasing the interest of investors In terms of equipment treatment projects, the investment in cardiovascular and neurological fields has tripled, and the investment in otorhinolaryngology has also increased significantly In terms of the geographical distribution of equipment investment, California has the largest project financing, followed by foreign investment in the United States 3) Diagnostic tools companies find that biopharmaceutical companies have a great demand for drug development tools More and more enterprises are interested in the field of diagnostic tools, and half of the active investors are enterprises In particular, large biopharmaceutical companies are most interested in developing companion diagnostics and drug development technologies for monitoring clinical trials However, this field has already been commercialized, and more than half of the diagnostic instrument investment transactions in 2014 have been profitable In terms of regional distribution of investment, there are more regional investment transactions in Northern California and the United States, among which the most active countries outside the United States are Germany and Israel, with 5 and 3 respectively 4) In the past two years, a large number of non VC investors have appeared in the market, especially hedge funds, to provide large amount of financing to companies preparing for IPO The white hot IPO market and large-scale M & A bring considerable returns 1) the "pioneer" gets the most returns In 2014, the number of IPOs has reached a new high since 2005, the transaction volume has at least doubled, and the M & A exit activity has soared by 59% There were 83 IPO activities and 43 large-scale M & A activities 2) The number of IPOs in all areas covered by large-scale M & A activities doubled in 2014, and large-scale M & A activities were also very good, with the transaction volume increased by 59% And in 2014, there were large-scale M & A activities in each medical field Analysis: what drives IPO and large-scale M & A activities 1) great progress has been made in the field of biopharmaceutical IPO boom has some interesting phenomena A lot of people have speculated that many companies may be "old enough" to have an IPO In fact, from the exit stage of biopharmaceutical IPO in 2014, it will take at least six years for biopharmaceutical IPO As can be seen from the chart, 44% of IPOs are still in the pre clinical stage or clinical phase I trial stage It can also be seen that investors seem to be more willing to bear the additional risks brought by pre clinical and long-term commercialization From the chart, we can see that the tumor field will continue to rise The central nervous system will also have a lot of activity (M & A and IPO) after the strange quiet in 2013 The withdrawal of anti infective drugs is also likely to exceed in the past few years, especially in the IPO market 2) the exit return of equipment companies is large Although there is no spotlight in this field, equipment companies will also have a good performance, such as the increase of exit activities, capital injection, and multiple capital investment In 2014, there were 18 large-scale acquisition transactions, a ten-year high 3) the later diagnostic tool companies attracted a large number of investors' interest In 2014, the large-scale M & A activities and IPO activities of diagnostic tool increased significantly, with 10 M & A and 7 IPO activities These events have set new highs in a decade And mainly concentrated in the later stage The acquisition methods in 2014 are very diverse, including large pharmaceutical companies, large equipment manufacturers, tools / testing or mdx companies Conclusion we can see that in 2014, the field of medical venture capital reaped a rich report that we have never seen before In 2015, we predict that a healthy pace of investment and fundraising will continue The injection of large amounts of new capital and the start-up of start-ups will equal or exceed the overall situation in 2014 Corporate risk activities will continue to support the biopharmaceutical and diagnostic tools sectors, but the equipment sector will lag slightly While large M & A exits will increase, IPO activity is likely to decline slightly (except for equipment) Stimulated by this environment, non VC investors will pay more attention to companies preparing for IPO In general, 2015 will be another extraordinary year for the medical industry, and the number of exit activities will continue to increase in the next few years Author: Jonathan Norris, Kristina Peralta