New research published 14 December by the Association of the British Pharmaceutical Industry (ABPI) shows that the amount of capital invested alongside CVC into UK companies increased six-fold between 2010 and 2015, marking a fundamental shift in how start-up British biotech is funded.
The report, ‘The rise of Corporate Venture Capital investment in UK biotech’, found that:
- During 2015, financing rounds involving CVC amounted to $647 million of $1033 million invested in unquoted UK life sciences companies (2016: $567m of $965m).
- UK companies closed 68% of European financing rounds involving CVC in 2016, up from about a fifth a decade ago.
Corporate venture capital, where pharma companies invest their own funds in emerging startups, is now established as a key source of capital for biotech innovation in the UK.
In recent years, there has been a significant increase in CVC investment in UK biotech. The amount of capital invested alongside CVC into UK companies increased from an average $105m per year in 2008 – 2010 and rose to $647m in 2015, a more than six-fold increase. About 60% of financing rounds in 2016 included CVC.
By being prepared to invest early, take higher risks and stay in investments longer, CVC investors are a critical form of financial support for biotech start-ups at every stage of the company’s development.
Since 2000, over $34 billion of investment has been made by pharma corporate equity investors and their syndicate partners in biotech companies globally.
Commenting on the report, Dr Shahid Hanif, ABPI’s Head of Health Data and Outcomes, said:
"The UK is an attractive destination for investment in the biotech industry and has a strong reputation in life sciences as a global centre of scientific excellence, second only to the US as a country. The UK is first within Europe.
“Compared with the rest of Europe, CVC investors view the UK as offering better access to experienced senior management as well as to specialist drug discovery and development experts, thanks to the historic presence and links with large pharma companies.
“The UK has the potential to become a global leader in the biotech market with CVC investment as a critical form of funding to enable new start-ups to emerge and develop.”
The report says that action needs to be taken by industry, the research community and government to encourage CVC investors to develop a presence in the UK and to strengthen capacity and networks. The evidence shows that CVC has a multiplier effect, acting as a magnet for other forms of investment.
Deborah Harland, Vice President and Partner at SR One – the CVC arm of GlaxoSmithKline and one of the top-ranked corporate investors in Europe – authored the foreword to the report and said:
“This report highlights the acceleration of corporate equity investing in European biotech over the last decade, and most notably the growth observed in the UK.
“There is a clear opportunity to consider how best to establish the UK as the preferred location for corporates investing in Europe, secure continued growth of CVC as a funding source for early-stage biotech companies and enable the translation of a broader footprint of innovative science into potential new medicines.”
Notes to Editor
What is CVC?
Corporate venture capital is where pharma companies invest their own funds in emerging startups and is a key source of capital for biotech innovation in the UK.
From the perspective of the biotech, CVC investment may bring access to sector-specific expertise, contacts and resources, which other finance routes may not provide. CVC investment is also often more patient than venture capital, as corporate investors recognise and understand the timelines involved in bringing new medicines to the clinic, and often have strategic rather than purely financial drivers for investment.
ABPI Press Office Email: firstname.lastname@example.org Telephone (24hrs): +44 (0)20 7747 7147
About the ABPI
The ABPI represents innovative research-based biopharmaceutical companies, large, medium and small, leading an exciting new era of biosciences in the UK.
Our industry, a major contributor to the economy of the UK, brings life-saving and life-enhancing medicines to patients. We represent companies who supply more than 80 per cent of all branded medicines used by the NHS and who are researching and developing the majority of the current medicines pipeline, ensuring that the UK remains at the forefront of helping patients prevent and overcome disease.
Globally our industry is researching and developing more than 7,000 new medicines.
The ABPI is recognised by government as the industry body negotiating on behalf of the branded pharmaceutical industry for statutory consultation requirements including the pricing scheme for medicines in the UK.