Silicon Valley Bank Healthcare Exits Report Points to Healthy IPO Environment for Healthcare Companies in 2017

Company news  |  January 5, 2017

Strong Fundraising and Innovation Fuels Healthcare Momentum

SANTA CLARA, CA – January 5, 2017 -- Silicon Valley Bank (SVB), the bank of the world’s most innovative companies and their investors, today released its annual Healthcare Investments and Exits 2017 report, which discusses the top trends in 2016 within the biopharma, device, tools and diagnostics sectors and provides an outlook for 2017. The report delves into venture investing, fundraising trends and exits.

“While overall exits declined in 2016, we expect to see a significant number of M&A transactions and a continued IPO window in line with recent activity as we enter the new year,” said Jon Norris, Managing Director for Silicon Valley Bank’s Healthcare Division. “Robust investor fundraising activity in the past year also highlights the health of the market, and we believe the healthcare sector remains vibrant as it enters 2017.”

Key findings from 2016:

  • Series A activity boomed in the biopharma, device, diagnostic and tool sectors, most dramatically in biopharma due to newly raised venture funds and early-stage exits.
  • Following an exceptionally strong 2015, biopharma M&A activity declined slightly in 2016, and IPOs declined more than 30 percent.
  • For a third year in a row, pre-clinical or phase I companies represented almost half of all biopharma IPOs. Crossover investors were a significant part of this trend.
  • Device M&A remained stable, but IPOs were down. Diagnostic and tool companies saw a decline in overall exits.
  • The slower 2016 IPO market led to lower potential distributions to healthcare investors, off from a record year in 2015, but still above 2013.

“In 2017, healthcare investments will closely match 2016 levels, with biopharma continuing to be the strongest sector in the space,” Norris said. “Following a slow 2016 for device IPOs, we expect the number to double this year. Device M&A activity likely will be stable and include some early-stage acquisitions.” 

Predictions for 2017:

  • Biopharma will continue as the strongest sector for healthcare investments in 2017.
  • SVB expects the IPO window to remain open in 2017, anticipating 28-32 biopharma deals to occur.
  • At least half of the biopharma M&A big exits will be for early-stage companies, with the total number likely between 18-22.
  • SVB predicts Series A investment will remain stable for the device and diagnostic and tool sectors. We do anticipate a slight drop in biopharma Series A as funds turn their attention to supporting Series B and later stage companies that are unable to go public. Potential distributions to healthcare venture capital investors are anticipated to remain at similar levels as 2016.

The Life Science and Healthcare Division of Silicon Valley Bank delivers specialized solutions and market expertise in the areas of biopharma, medical device, tools and diagnostics, digital health and healthcare services, with a focus on helping companies of all sizes grow.

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Julia Thompson                    

Silicon Valley Bank