Banner Default Image

Blog

Life Sciences Investment in 2020 - Why Biotech is Flourishing [Part 1]

27 November 2020

By Jay Freeman

Life Sciences Investment in 2020 - Why Biotech is Flourishing [Part 1]

While thousands of companies are facing a real threat of running out of money this year, there’s one sector that’s bucking all trends: the life sciences. 

Life sciences investment remains on an upwards trajectory, totalling $16.55 billion across 450 deals in the first half of 2020 - compared to $13.4 billion across 600 rounds in the same period of 2019. 

This month, we’re delving deeper into the state of life sciences investment to understand why certain sectors are flourishing and what recent events mean for future developments, with insights from the Laura Rodriguez Bernate, Innovation Analyst at Dealroom.

Let’s begin with biotech.

The state of biotech investment in 2020

Investment in biotech has been record-breaking this year, with over $17.6 billion in Q2 equity funding across IPOs and follow-ons - the largest ever witnessed in a quarter. 

According to Laura, ‘European biotech startups have raised €4.1B of investment in 2020, a new record, up 24% compared to 2019.

Why is biotech attracting so much money during the midst of a global pandemic?

As explored by Laura, ‘while fintech usually reigns as the top sector for European investment, in Q2 2020, it was knocked off it’s top stop by health tech’. 

H1 2020 saw a hesitation in European VC investment as the pandemic caused uncertainty in all markets. Healthtech and biotech clearly were not industries affected, as investments in technologies that can support during the current and any future pandemic have been the focus. European VC investment in biotech for H1 2020 was up 36%, compared to H1 2019. This bodes well for continued growth into 2021.  

Companies working on COVID-19 vaccines and therapies are seeing their valuations skyrocket, attracting investor attention. For example, Moderna, which went public in 2018, now has a public valuation of over $30 billion, following its early positive results for mRNA-based COVID-19 vaccine trials. 

Laura adds: some large rounds contributing to the investment leap are found in biotech companies discovering and developing drugs, such as DBV Technologies (€125M, France) and iTeos Therapeutics (€137M, Belgium); while startups developing tech for biopharma such as Oxford Nanopore Technologies (£84M, UK) and Sophia Genetics (€100M, Switzerland) have also attracted investment. 

Second, the biotech industry is remarkably resilient to economic decline. Early-stage biotech companies trade-in data, meaning macroeconomic factors such as unemployment, consumer demand and GDP growth, rarely affect success or investment activity. We saw this in the 2008 financial crisis where biotech VC funding remained at a steady average of $1.2 billion per quarter between 2007 and 2009, in contrast to the decline in other industries. 


The relevance and resilience of biotech are attracting investment for companies and projects of all shapes and sizes, including cancer immunotherapies, pharmaceutical research and development, cancer diagnostic blood tests, and cell-based immunotherapy - not to mention, a cure for COVID-19.

Notable biotech investments in 2020

So what have some of the most notable biotech investments of 2020 been?

Sana Biotechnology

This summer, Sana Biotechnology raised more than $700 million in one of the largest VC deals in the life sciences industry. 

The one-year-old, 250-employee start-up plans to use the money to develop tools that create and deliver engineered cells to treat diseases including cancer, diabetes and genetic disorders. The funding will support IND-enabling and clinical studies for multiple therapeutic candidates, the build-out of manufacturing capabilities, the development of enabling technologies and additional headcount.

Recursion Pharmaceuticals

Early this autumn, Recursion Pharmaceuticals announced an oversubscribed series D funding round of $239 million alongside a partnership with pharma-giant Bayer.

Based in Salt Lake City, Recursion Pharmaceuticals uses robotics and AI to discover pharmaceuticals at lower costs and faster speeds than usual. The VC financing will boost the clinical development of its therapeutic pipeline and help develop technology, including the rapid testing of COVID treatments and therapies.

Ginkgo Bioworks

Bill Gates-backed Ginkgo Bioworks secured a $700 million investment in May from Illumina and existing investors. 

The Boston-based biotech company is using the funds to build an infrastructure that could enable rapid epidemic responses, using automation and next-generation sequencing technology to deploy widespread testing for COVID-19. 


What does the future hold?

Perhaps one of the biggest questions on the industry’s mind is whether this level of investment into biotech is sustainable, given the future challenges ahead. These challenges include:

The US election

Elections nearly always affect investment in life sciences, with biotech stocks having performed poorly heading into the past four presidential elections, generating an average4.9% return two months following. However, they always recover nicely, with an average return of 34.6% 12 months after election day, regardless of the party elected.

China interest

With China expecting less volatility but tougher restrictions under Joe Biden, it could be good news for EU biotech companies, as Chinese investors continue looking for different countries to invest in. For example, the US-China standoff last year saw Shanghai-based Qianzhan Investment Management invest in EU-based biotech companies, including a $14.5 million investment in Milan-based Genenta Science.

Brexit

The UK’s official decoupling from the European Union might make cross-country collaborations harder, but industry experts see no reason why this should negatively affect UK biotech investment, especially since it is the third-largest bio-cluster. Last year,UK biotech companies raised £1.3 billion and this year, Illumina opened its first accelerator outside of the US in the UK city of Cambridge.

Labour

Alongside investment growth, is employment growth. In the past ten years, biotech jobs have grown at a pace of 19%, compared to 13% in other industries. And the pandemic has done little to burst biotech’s labour bubble, with companies such as AstraZeneca seeing recruitment increase by 47% compared to last year.

Artificial intelligence

Looking to the future, Laura takes note of the imminent trend around artificial intelligence; An interesting area of biotech that also broke a global record is in startups using Artificial Intelligence (AI) in drug discovery and development, which have raised €1.8B investment in 2020, so far. AI has revolutionised many tech sectors and biopharma is one important front-runner beneficiary of the application of this technology. For instance, in January Oxford-based Exscientia became the first company to bring an AI-designed to Phase I human clinical trials.

Remote Monitoring

The next big trend being seen by Laura is in Remote Monitoring. These startups have attracted the most Seed and Series A investment in the last 5 years. Remote monitoring and wearables have the potential to be a game-changer for the entire healthcare value chain, impacting medical decision-making, personalising insurance plans and assisting biopharma and research bodies in optimising patient recruitment for clinical trials. 

This is all in addition to the democratisation of healthcare that comes from a user understanding and owning their medical data and care. Covid-19 has enabled a noticeable digital transformation of biopharma to change the way research is being made, this with the adoption of decentralised clinical trials to support Covid-19 related research on vaccines and therapeutics. Amsterdam-based Castor raised $12M Series A to continue supporting patient-centric, remote trials and enable customers to maximize value from existing and newly generated data throughout the clinical trial process. 

Digital therapeutics (DTx) is an important trend in biopharma, as digitalisation is enabling remote disease management, improving prevention and treatment of chronic diseases, and making treatment delivery direct and personalised via software or complementary medical devices. DTx benefit patients with reliable interventions but also benefit healthcare providers by increasing the use of treatments for unmet medical needs, and informing payers by providing population health data.

Final thoughts

The future looks bright for biotech investments, and if history is anything to go by, a global economic recession shouldn’t hurt the sector either. 

At Panda International, we keep up with the latest development and trends for the sector and do the same for our candidates and clients. 

If you’d like to discuss how the biotech investment boom affects your job search, future career or candidate search, get in touch with our biotech experts today.


Share this article