Over the past 10 years, the U.K. biotech sector has outperformed other European countries, raising $1.4 billion via IPOs and $2.4 billion in venture capital, according to a new report from life science market intelligence firm Evaluate and the U.K. BioIndustry Association (BIA). The rise in optimism has been most evident in 2014, with the momentum continuing into 2015.
2014 was a big turning point for the U.K. biotech sector. In that year alone, nine companies listed on the public market raised a total of £408 million, almost half of the total IPO haul for the past decade.
U.K. venture capital financing also improved in 2014, jumping 71% from the previous year to $430 million, with VC firms doing fewer, bigger rounds at an earlier stage. On the flip side, seed funding of early-stage companies by venture capital has fallen dramatically and highlights the need for alternative funding and the return of specialist investors willing to take a more long-term view of the industry.
Report highlights included:
Strong confidence in the U.K. market is reflected in recent IPO activity reaching $634 million in 2014, with two additional IPOs in 2015.
Good stock market performance of new entrants, including 247% share gain by 4D Pharma since its IPO, helped to highlight the benefits of investing in the sector.
An increase in exits (via IPO and trade sales) -has created a 10-year record in venture funding: Investment in 2014 is up 71% to $430 million (2013: $251 million).
Fewer larger financing deals took place in 2014, indicating a change in investment style.
Venture capital seed funding declined dramatically to one deal in 2014; although the $20 million raised equaled almost the total of the last four years combined.
The U.K. is holding its own against the U.S. outperforming Europe in the past five years for venture funding.
Lisa Urquhart, report author and editor of EP Vantage, the editorial arm of Evaluate, said, “These recent gains have been hard-won. As we enter the second half of 2015, it will be interesting to see if any indicators of the future direction of the U.K. sector can be spotted. What is obvious is that if we are to maintain this momentum, we need to see a big jump in seed funding—crucial to grow and retain U.K. innovation.”
Steve Bates, CEO of the BIA, said, “It is clear that the U.K. biotech funding ecosystem has learned lessons from its history and is doing things differently this time around. We are seeing the development of different forms of investment for innovative U.K. companies. In contrast to the more generalist U.S. investors, the U.K.’s specialist investors understand the need for patience, restocking funds while capital is plentiful, giving well-backed U.K. companies more financial runway to succeed.”
