After a record-breaking year for UK biotech in 2018, the UK BioIndustry Association has revealed overall investment fell to £1.3bn in 2019 – but maintains the sector is still strongly positioned.
Out of that amount, £679m was raised in venture capital, £64m was raised in Initial Public Offerings (IPOs) and £596m in all other public financings.
Despite the sector raising over £1bn plus of investment over the last five years, the amount raised last year is a steep drop from the £2.2bn raised last year.
According to Dan Mahony, partner at Polar Capital, “investor appetite for small companies has evaporated given the uncertainty surrounding Brexit”, and “the well-publicised issues with the Woodford Funds have also had an impact on sentiment”.
Despite funding falling down in the UK in 2019, the BIA noted that this drop in biotech investment was replicated in most regions across the globe.
According to the report, global venture capital deals totalled £14.5bn in 2019, down 12%, with almost all regions experiencing a decline.
Although the US continues to attract most of the global investment for biotech, it also saw a drop of 15% from last year.
The amount of venture capital raised in Europe remained the same at £2.6bn – while the UK remains the leading cluster, making up for 26% of that investment, it saw a reduction compared to 2018 when it attracted 40% of the total.
China also remained the same as 2018 with £2bn raised in venture capital, although the BIA reported this is most likely an underestimate given the rapidly evolving biotech sector in the country.
“The UK biotech sector continues to chart an ambitious global path. With five consecutive years of raising over £1bn and a 400% increase in investments since 2012, the sector is in a very strong position heading into a new decade,” said Steve Bates, chief executive of the BIA.
“However, while we welcome overseas investment, diversifying the domestic life sciences investor base is critical to capturing the full benefits of this key sector of the UK economy.
“Government efforts to leverage new scale-up capital through the British Business Bank and the UK pension funds industry should be stepped up, as should grant funding for early-stage companies through the Biomedical Catalyst,” he added.