Biotech industries that were reliant on investment from venture capital firms had a bad year in 2009. Prior to the lamentable global economic crisis, biotech businesses were benefiting from ambitious firms who were eager to cash in on what was becoming an extremely lucrative sector. After a slow start to 2010 however, venture capital firms were starting to show a renewed interest in the area with over $290 million invested in the first two weeks of April for example.
New Trends
So with biotech firmly on the radar of venture capital firms, how do new biotech businesses attract the attention of these wealthy investors? A future trend is likely to be the improvement of drug delivery technology. Taking already approved drugs and making them more effective is always going to be on the agenda. Currently, patients receive medication to alleviate the pain caused by symptoms of the illness. In the future, venture capitalists are looking towards regenerative medicine which focuses on totally eliminating the disease as opposed to merely treating it.
Even in the modern era, infectious diseases are rampant with epidemics still far more common than they should be when advances in modern medicine are taken into account. Any biotech company that deals in vaccines and antiviral are likely to catch the eye of firms. A common problem with modern medicine relates to its expensiveness. This issue is exacerbated when these medicines are prescribed despite doctors not knowing if they will be effective. Physicians are calling for a test which can tell them if a treatment has a chance of being effective before it gets prescribed. Molecular diagnostics can provide just that with investors queuing up to assist any company that dabbles in this form of science.
Important Biotech Venture Capital Firms
There are hundreds of firms renowned for taking the biotech plunge including Healthcare Ventures LLC who was founded in 1985. Since its formation, this company has engaged in 29 deals with 18 biotech companies and have raised over $1.5 billion in eight funds. Polaris Ventures was founded in 1996 and has made 27 deals with 19 different biotech industries. At present, this firm manages more than $3 billion including one fund worth over $1 billion. Domain Associates is synonymous with the world of biotech and has worked with 31 different industries since its formation in 1985. In this time, Domain had raised funds of over $2.7 billion.
Successes And Failures
Despite the fact that 2009 was a relatively barren year for biotech companies in terms of receiving venture capital funding, there were success stories. None was more apparent than that of Clovis Oncology who raised more than $145 million from venture capital firms in 2009. They were helped by the fact that the top executives from Pharmion were on board. Pharmion were bought by Celgene for $2.9 billion so investors had faith in the talents of CEO Patrick Mahaffy and co. That said, there have also been casualties of the recession. Biotech company Vertex are projecting a loss of $750 million for 2010 and are pinning their hopes on a new cystic fibrosis drug in 2011.
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