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Venture Capital Trends in Biotech

     

Last year, venture capital funding for the biotechnology sector reached record levels, which obviously caused the broader medical category to reach a new high as well. Even though many markets began to experience declines toward the end of last year and are continuing to witness these declines this year, it does not look like the same is true for biotechnology. Granted, there was a flurry of IPO activity in the early months of 2015 that likely will not repeat itself this year, but corporate venture capital and corporate equity investors appear poised to continue to bolster the surging biotech sphere. The following aspects of biotech seem particularly attractive to investors right now:

Genes

The advances in genetic research, from mapping to engineering and beyond, has transformed every facet of the medical industry. Medicines, diagnostic methods, and treatments are all taking genes and genetic influences into account. Of course, additional research is always needed, and firms in biotech are constantly seeking to pioneer new areas. Given that this is a growing field of tremendous significance, it is not surprising that it manages to generate substantial interest and dollars.

Drugs

There have always been tons of drugs that treat one problem, and yet create other medical issues because of side effects or other adverse reactions. However, as our understanding of cellular processes continues to expand, researchers are better equipped to tailor therapies in a way that reduces the possibility of that sort of collateral damage, so to speak. Plus, these days, risk-averse medical professionals and consumers are expecting more specialized and targeted treatment modalities, and as this demand grows, hopefully the prevalence of these uniquely formulated drugs will as well.


The problem, of course, is whether insurance companies will pay for anything considered novel or experimental. Fortunately, these potential price wars have not stopped biotech firms from investing resources into innovative research and development processes. And, given the usual profitability of medicine, investors still seem keen to support these endeavors. Hopefully, there will be improvements in the affordability of medicines, which may initially impact the producers’ profit margins, but will ultimately foster competition and promote efficiency across the industry.


Releated Article: 9 Lessons Learned While Raising Venture Capital


 

Medical Devices

With all of these advancements in medicine, people are living longer, although many adults have to manage various chronic conditions. Transplants and implanted devices are no longer as rare and dangerous as they used to be. And, with the growing number of war-injured veterans in need of prosthetic limbs and other medical support devices, it is no wonder that this is also a growing area of biotech innovation and development, and consequently investment.


Of course, one of the reasons that biotech and these specific areas are inherently valuable is because of the unique skills, knowledge, and expertise that is required for these fields, as well as the intellectual property (IP) associated with the research and development process. To protect this IP and thus the value of any related business, a strong data security approach is imperative, but we’ll address this further in our next post!

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