SAN FRANCISCO, Jan. 5, 2015 (GLOBE NEWSWIRE) -- The biotech industry shattered records for venture investment, IPOs, and M &A in 2014 as growing enthusiasm for breakthrough technologies and rising stock prices drove investment. Overall, the global life sciences industry raised a total of $104.2 billion, up from $92.9 billion in 2013.
It was the second biggest year for total fundraising in the industry's history, bested only by 2009 when the industry raised $108.6 billion. The 2009 numbers, though, were driven by a total of $83.1 billion in global debt financings, much of which was tied to large acquisitions made that year.
"This year the biotechnology industry exceeded expectations in its ability to raise money and that bodes well for the health of the industry and its ability to drive innovative therapies from the clinic to the market in the years ahead," says G. Steven Burrill, CEO of Burrill LLC and Burrill Media. "It was a strong year for new drug approvals, biotech stocks significantly outperformed the major indices, and the industry set records in many key financing categories."
The Burrill Select index ended the year up 26.99 percent, easily beating the Dow Jones Industrial Average's 7.52 percent gain, the Standard & Poor's 500's 11.39 percent rise, and the Nasdaq Composite Index's 13.4 percent advance. The Burrill Small-Cap index, though, was the year's biggest gainer as it recorded a 64.97 percent gain for the year.
It was also a record for life sciences M &A activity as companies' completed a record $355.3 billion in transactions, up from $131.9 billion in 2013 and surpassing the previous record of $235.5 billion. So-called inversions, in part, drove much activity in 2014 as U.S.-based companies acquired foreign-based companies with the intent of relocating their headquarters to countries with lower tax rates. The U.S. Treasury Department sought to crackdown on the practice with the introduction of new rules that limited the benefits of such transactions. The largest acquisition of the year was Ireland-based Actavis $66 billion purchase of Allergan, a deal driven in part by tax benefits. Actavis in 2013 relocated its headquarters from the United States to Ireland after its 2013 inversion when it acquired Warner-Chilcott. A total of eight acquisitions exceeded $10 billion in 2014.A total of 133 life sciences companies completed IPOs on global markets to raise a total of $11 billion in 2014, by far the biggest year for the industry in both the number of offerings and the total raised. That compared to 66 companies that raised a total of $7.6 billion in 2013, a record setting year at the time. Most of the activity occurred in the United States as 106 companies completed IPOs to raise nearly $9.3 billion, up from 52 companies that raised $7 billion in 2013. Catalent, a provider of drug delivery technologies, completed the industry's largest IPO of the year as it raised $871 million in July. As a whole, IPOs on U.S. exchanges in 2014 performed well with these companies ending the year on average up 29.6 percent with advancers outpacing decliners 3:2.
"We may never see another year of IPOs like the unprecedented number we saw in 2014," says Burrill. "The incredible activity bodes well, not just for the companies that raised money, but for venture investors able to realize returns on their past investments, replenish their funds, and have ready capital to finance a new generation of companies."
The strong IPO market brought liquidity to investors and increased confidence in the ability of venture capitalists to generate returns. Venture capital firms raised new funds and made record investment in the industry. Global venture capital investment in 2014 rose to a record $16.5 billion. That compared to the previous record of $12.7 billion set in 2013. The China-based tools and technology company BGI Shenzhen completed the year's largest venture round raising $320. It was one of 14 venture rounds for $100 million or more.
On the partnering front it was the biggest year in four years for the industry as companies announced global partnering deals with a total potential value of $53.1 billion. Though that represented a 23 percent increase from the $43 billion in deals announced in 2013, it was shy of the record level of $61.3 billion announced in 2010. Edison Pharmaceuticals' strategic alliance with Dainippon Sumitomo Pharma for the development of drugs targeting cellular energy metabolism for up to $4.2 billion stood as the largest agreement of the year. A total of 12 partnering agreements carried potential values in excess of $1 billion.
The U.S. Food and Drug Administration's Center for Drug Evaluation and Research approved a total of seven new drugs and biologics in December, after approving no drugs the previous month. For the year, the division approved a total of 41 new drugs and biologics, up from 27 in 2014. It was the most approvals on record in a single calendar year since 1996 when the agency approved 53 new drugs and biologics.
As the year came to a close, the pharmacy benefits manager Express Scripts flexed its muscle when it negotiated an agreement with AbbVie for a discounted price for its newly approved hepatitis C drug Viekira Pak, excluding high-priced competitors from its National Preferred Formulary and casting a shadow over the industry heading into the new year. The controversy over high priced drugs, particular sparked by new therapies for hepatitis C, has been a growing source of public debate.
"The ability to attract capital, excite investors, and drive innovation is inexorably linked to the industry being able to be rewarded for the value they create," says Burrill. "Early in 2014, concern of possible Congressional action on drug pricing triggered a sell-off in the sector. The growing effort by payers to restrain pricing for innovative therapies stands as a threat that will overshadow the sector in the new year."
Burrill's predictions for 2015 can be found online at http://bit.ly/1tCed8u
About Burrill, LLC
Burrill. LLC is a life sciences/healthcare focused firm focused exclusively on company building, using its almost 50 years of experience capital, network capital, and expertise to help build the next generation of life science leaders. Burrill's global relationships with healthcare/life science leaders worldwide is without peer, providing Burrill portfolio companies and clients with sustainable competitive advantage.
Burrill Media is Burrill's information, intelligence, and insight business, publishing monthly, quarterly and annually developments in the life sciences/healthcare ecosystem. Burrill Media also hosts meetings and events for the life sciences/healthcare industry.
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