New research published today [14 December] by the Association of the British Pharmaceutical Industry (ABPI) shows that the amount of capital invested alongside CVC into UK companies increased six-fold between 2010 and 2015, marking a fundamental shift in how start-up British biotech is funded.
The report, ‘The rise of Corporate Venture Capital investment in UK biotech’, found that:
- During 2015, financing rounds involving CVC amounted to $647 million of $1033 million invested in unquoted UK life sciences companies (2016: $567m of $965m).
- UK companies closed 68% of European financing rounds involving CVC in 2016, up from about a fifth a decade ago.
Corporate venture capital, where pharma companies invest their own funds in emerging start-ups, is now established as a key source of capital for biotech innovation in the UK.
In recent years, there has been a significant increase in CVC investment in UK biotech. The amount of capital invested alongside CVC into UK companies increased from an average $105m per year in 2008 – 2010 and rose to $647m in 2015, a more than six-fold increase. About 60% of financing rounds in 2016 included CVC.
By being prepared to invest early, take higher risks and stay in investments longer, CVC investors are a critical form of financial support for biotech start-ups at every stage of the company’s development.
Since 2000, over $34 billion of investment has been made by pharma corporate equity investors and their syndicate partners in biotech companies globally.
The report says that action needs to be taken by industry, the research community and government to encourage CVC investors to develop a presence in the UK and to strengthen capacity and networks. The evidence shows that CVC has a multiplier effect, acting as a magnet for other forms of investment.