Tougher Times May be Ahead for Biotechs: 1H12 Fundraising Slows
ATLANTA, July 9, 2012 /PRNewswire-USNewswire/ -- The amount of capital generated by private and public biotech companies slowed dramatically in the first half of 2012, with $7.9 billion raised, down 40 percent from the same period in 2011, according to analysis by BioWorld Insight.
It was a particularly tough second quarter with biotech companies collectively raising $2.76 billion, 46.4 percent less than the $5.15 billion raised in the first quarter this year and a whopping 62 percent down from the total raised in the second quarter of 2011.
"While it would be easy to explain away the decline in capital raised to date as a function of the sector being flush with cash, I would argue that the sheer magnitude of the drop off of funding is some cause for concern and is pointing to tougher times ahead for biotech," said BioWorld Insight Editor Peter Winter.
Based on BioWorld's data, the first half of 2012 saw U.S. biotech venture rounds bring in $877 million, a far cry from the $1.2 billion seen in same period last year. The number of deals wasn't the problem – there were 48 in each period – but there was a shift from Series B financings to the earlier round, which increased from 13 last year to 19 this year. The number of late round financings – Series C or later – remained the same year over year.
VCs could be cutting their losses early, but a more upbeat possibility is that there just aren't that many companies requiring Series B financing after the last few years of sluggish investments.
Today's edition of BioWorld Insight ‑ which provides behind-the-scenes analysis and commentary on the biotech marketplace ‑ delves into these trends, as well as the current status on the capital markets.
BioWorld Today, and its analytical companion, BioWorld Insight, are the biopharmaceutical industry's most respected news sources for more than two decades. To subscribe, call (800) 477-6307 or, outside the U.S., (404) 262-5476 or visit www.bioworld.com.