Venture capital funding in the Life Sciences sector, which includes the Biotechnology and Medical Device industries, recovered in terms of dollar investments during the first quarter of 2011.
Venture investment for the Life Sciences sector grew by 7 percent in dollars year over year to $1.4 billion. Deal volume, however, declined 8 percent compared to the first quarter of 2010, dropping to 164 deals in Q1 2011. The quarterly deal count represents the lowest number in a single quarter since the first quarter of 2009.
The first quarter investment total sets us on a path for a solid level of investing in 2011. Venture funds are expected to continue being cautious about investing in life sciences as the economic recovery progresses, but their stated interest in the sector is long term. They recognize the potential of an industry that is only beginning to embark on a new era of personalized medicine to deliver more effective and targeted treatments that could improve the health of millions of people in all regions of the world.
During the first quarter of 2011, the share of Biotechnology investments decreased to 57 percent, while the Medical Device industry's share increased to 43 percent. Compared with the first quarter of 2010, the investment split remained unchanged.
For all sectors, venture capitalists invested $5.9 billion in 736 deals in Q1 2011, a 14 percent increase in dollars and a 6 percent decrease in deals, compared to $5.2 billion going into 787 deals in Q1 2010. The Life Sciences share of total venture capital dollars invested slipped slightly to 24 percent in the first quarter of 2011 from 25 percent in the first quarter of 2010.
In Q1 2011, Biotechnology investing grew by 5 percent in dollars but dropped 21 percent in deals year over year with $784 million going into 85 deals. Medical device investments increased 9 percent in dollars and 11 percent in deals in Q1 2011, compared to the same quarter a year ago. With $602 million going into 79 deals, the Medical Device industry ranked behind Software, Industrial/Energy, and Biotechnology in dollars invested.
During the first quarter of 2011, 35 Life Sciences companies received venture capital funding for the first time, capturing $129 million. This represents a sharp decline of 40 percent in the number of companies and a 46 percent drop in dollars invested compared to the first quarter of 2010. First-time deals in the Life Sciences sector averaged $3.7 million in the first quarter of 2011, compared with an average deal size of $6.1 million in the first quarter of 2010.
First-time funding is expected to remain challenging for the sector, with fewer deals and smaller deal size for fledgling companies. Lengthy and costly R&D and uncertainty in the regulatory approval process continue to drive more investors toward follow-on and later-stage deals with companies that are closer to successful product launches or the exit market.
Four of the seven Biotechnology subsegments exhibited growth in the first quarter of 2011 compared to the first quarter of 2010. Dollars invested in the Biotech Research, Biotech Industrial, Biotech Equipment, and Biotech Human subsegments rose 158 percent, 89 percent, 7 percent and 4 percent, respectively. The Human Biotechnology subsegment captured the largest share in the first quarter with $493 million going into 54 deals, a 4 percent increase in dollars and a 16 percent decrease in deals from Q1 of 2010.
Funding for two of the three Medical Device subsegments increased in Q1 2011, compared with the same quarter of 2010. The Medical Therapeutics category accounted for nearly two-thirds of the dollars and 62 percent of the deals during the first quarter with $391 million going into 49 deals. This represents a 26 percent increase in deals and a 30 percent increase in dollars compared to the first quarter of 2010.
About Eagle Summit Corporation
Founded in 2005 and based in Cyprus, the goal at Eagle Summit Corp (eaglesummitcorp.com) is a simple one: to work with talented entrepreneurs and management teams to develop ground-breaking products and build substantial business enterprises around them. We have raised a series of partnerships, with current committed capital in excess of $450 million, and helped build hundreds of companies, 60 of which have gone on to successful IPOs and more than 45 of which have gone on to successful mergers.