The dramatic increase in capital raised can be explained in one word — debt.

While the overall financing numbers appear impressive, the increase in fundraising was attributable to debt raised by a few large companies. “Innovation capital” for the vast majority of the industry remained flat.

In 2011, biotech companies raised a staggering US$33.4 billion, second only to 2000, when the genomics bubble was at its height.

However, the dramatic increase in capital raised can be explained in one word — debt. Specifically, a handful of “commercial leaders” (companies with revenues in excess of US$500 million) took advantage of low interest rates to raise large sums of debt, propelling debt totals to US$17 billion — the highest amount in the last decade, by a wide margin.

Conversely, capital raised by the vast majority of firms that are not mature commercial leaders — what we term “Innovation capital” — has flatlined over the last four years, averaging about US$2 billion less than the average amount raised between 2004 and 2007. A relatively small number of companies garnered a significant portion of the innovation capital invested in any given year.

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