First Mover Advantage: The Case for Investing in Life Science

First Mover Advantage: The Case for Investing in Life Science

This report looks at emerging trends in life science investments, referencing the findings of the tandem report, Continued Rebound: Trends in Life Science Investments.

Even with the extensive discussion about tough times in life science venture investing, investors can achieve lucrative returns if they have fresh capital to deploy. While we agree that the number of venture funds and the overall amount of capital deployed must decrease over the next few years, we remain very upbeat about the prospects for the industry.

KEY FINDINGS

The Life Science Industry is a compelling investment opportunity now. 

• Self-selection of proven partners and funds offer competitive advantage for fresh capital
    • Less competition for new deals 
    • Opportunity to invest in later-stage companies at attractive valuations

• Private, venture-backed M&A increasing
    • Three-year trends show continued growth in venture-backed M&A 
    • 2011 was a compelling M&A year 
    • Seven-year high in number of Biotech and Device Big Exits 
    • Seven-year high in upfront value (without milestones) and overall deal value

• Positive Industry Returns (SVB LPI Index) since 2009
    • SVB LPI index measures upfront M&A value of Big Exits (w/o milestones) versus total capital invested 
    • Biotech and Device each positive in 2011 
    • Life Science industry achieves positive SVB LPI between 2009-2011