VC Funding Trends for Life Science Firms

September 01, 2007

Rob Dellenbach, a corporate partner at Fenwick & West, analyzes the number and value of venture capital investments in the healthcare, medical device and biopharmaceutical sectors.

New records in 2007

The first quarter of 2007 saw the highest venture capital investments in life science categories since Venture Source and Ernst & Young LLP began quarterly reporting in 2000. On an annualized basis, the amount of funding for life science firms this year is approaching $12 billion, which could mean that 2007 venture support in will set a new record. Last year, $8.3 billion was spent on aggregate life science funding.

Companies receiving funding

Biopharmaceutical, biotechnology, and pharmaceutical companies consistently are rewarded about 60% of the dollars from healthcare venture capital firms. The medical device category receives about 40% of the money and 33% of the transactions, and the rest goes to healthcare services and medical software and information technology companies.

Firms receiving the most private support in 2007 include EUSA Pharma, which develops specialty pharmaceuticals focused on European markets, and CardioNet, which provides mobile cardiac outpatient telemetry solutions.

In the last year, Macroflux, a spin-out of Johnson & Johnson's Alza subsidiary that develops transdermal delivery techniques, Zogenix, which focuses on pharmaceuticals to treat central nervous system disorders, and Arete Therapeutics, developer of drugs that will combat cardiovascular, inflammatory and metabolic diseases, each raised large first-round venture capital investments.