Trying to understand the driving factors behind the trends of life science investments in 2012, I was wondering if VC & CVCs behave differently or if one determines the trend & other follows it largely - which I realize is putting it too simplistically and perhaps the VC operates as one organism.
However, I believe that, with the genericization troubles looming large, the big pharma started to rationalize the product development strategies by taking into account parameters which hitherto were not given a serious thought.... foremost of which I'd guess is consumer behavior - This new diligence I expect will translate into the way big pharma CVCs have been building their portfolios over past 3+ years.
Based on this premise, I tried to analyse the PVI portfolio & see if the data throws-up any tangible trend. Since I was unable to find the exact value of the funding in most cases (the funding rounds involved more than one VC, hence), I stayed with number of investments & hopefully the trend will still make some sense;
A snap-shot of investment across innovation categories:
Some trends:
- Medical Diagnostic investments equal Drug Discovery numbers (& not in all cases it is merely companion diagnostics related investment)
- Enthusiasm for Medical devices & equipment is much lower than the overall average in 2012 (~50%) - However this I feel is still significant, as logic says a medcines company would be more interested drugs than devices
- Interesting appearance of investments into companies that'd contribute to research /business/ operational advantages for the investing big pharma - surely pro-logical, but interesting nonetheless & showcases the emerging realities in sustaining business
- Drug discovery at 30% only marginally higher than the 23% overall in 2012
Within the drug discovery investment, the innovation sub-categories point to a definite preference to go after platform technologies that'd generate leads in multiple therapeutic domains/ indications;
Overall, very interesting & I will hopefully continue this line of thought with another post or two.
Comments?
it may not be totally connected, but is in some fashion relevant to my post above..... check out the blog post by Bruce Booth @ http://lifescivc.com/2012/06/contrarian-opportunities-in-biotech-venture/ and my comment on the same, reproduced below....
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I know I'm late to the party, but allow me to share a few views nonetheless...
I fully agree with you that VCs tracking (with an eye to invest, sustain & monetize)
small players within the de-emphasized therapeutic domains of big pharma.
Now, while your 'contrarian view' & David Grainger's 'asset favouritism' both are
essentially saying the same & rightly so, I'd opt for the simplistic
reasoning that what a big pharma de-emphasizes, it'd right away or atleast eventually consider for acquisition - just that premise straightaway improves prospects of all
spin-offs & biotechs working in that domain.
I also notice that the domains you are bullish on in a way represent the
'management therapies' than 'curative therapies' - despite the repeated
incidence of late-stage & post-approval bummers in categories like CNS,
Obesity & CV, the big pharma continues to dream (despite the
deemphasization internally...) of an acquisition that'll assure them the large
volumes of business over a long term, assured only by the 'management
therapies'
Given this derisked strategy, big pharma seems to be putting their money in
business-sustaining ventures... almost a paradigm shift from focusing heavily
on drug discovery!! - I'll be happy if you, your readers here can read through
my latest blog post on Pfizer venture Investments & comment. http://vishrasayan.blogspot.in...