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Life Science Venture Funding

By December 16, 2013Commentary

New products and companies in the biotech and medical device industries are highly dependent on venture funding, yet a new PriceWaterhouseCooper report indicates they may be having trouble finding that funding.   (PWC Report)    The report finds that in the 3rd quarter of 2013, $1.4 billion was invested in 188 life science deals, down 15% in value and 2% in number of transactions from the prior year, while increasing in total across all industries.  Life sciences share of funding declined to 18%, compared to 27% in the prior quarter.  But year-to-date, venture funding of life sciences is ahead of 2012’s pace.  Early-stage funding showed a healthy increase in biotech and medical device, but late-stage fell for biotech.  First-time funding was particularly slow.

The reasons for the potential slowdown could be a paucity of innovative ideas, the continuing difficult regulatory, and to a lesser extent, reimbursement environment for medical device and biotech development, uncertainty about health reform or just a comparatively better return opportunity in other industries.  And the statistics can jump around from quarter to quarter.  Fewer new biotech drugs and medical devices may save the system money, as new ones are almost always more expensive than existing treatments and they tend to drive new ancillary medical spending.  But less innovation may also mean lost opportunities for providing better care and higher health status for patients.  And some new life science products do have the potential to lessen overall health care spending.

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