Beyond borders: biotechnology industry report 2013

Financing

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In 2012, capital raised in North America and Europe fell for the first time since 2008. The decline was due to the same factor that had driven the sharp increases in the first place: debt.

Biotech companies in North America and Europe raised US$28.2 billion in 2012, a drop from the US$33.3 billion raised in 2011. This decrease was driven by a reduction in debt funding, which fell by almost a third. The IPO market remained tepid, with aggregate proceeds of only US$805 million, down from US$857 million in 2011.

Indeed, the real story behind the numbers is one of remarkable consistency. In every year since 2008, funds raised in public equity offerings and venture capital have remained fairly steady, while large swings in the amount of debt raised have driven year-to-year fluctuations in total capital raised.

While a few large companies have benefited from these funds, the amount of capital available for the vast majority of smaller, venture-backed entities has remained frozen at amounts below pre-crisis levels. This situation, which we dubbed “the new normal” in prior issues of Beyond borders, continued to hold in 2012.

Capital raised in North America and Europe by year (US$m)

Capital raised in North America and Europe by year (US$m)

In 2012, the innovation capital raised (money raised by companies with revenues below US$500 million) by companies in North America and Europe held steady at US$15.3 billion, practically unchanged from the US$15.2 billion raised in 2011.

Indeed, innovation capital has been remarkably consistent over the last four years, averaging US$15.2 billion between 2009 and 2012. However, this is considerably lower than the 2004-07 average of US$19.6 billion. This is significant because, unlike the commercial-stage leaders, companies raising innovation capital require funding to sustain their operations and fund R&D.

Innovation capital in North America and Europe by year

Innovation capital in North America and Europe by year

To view country-specific findings, download our complete report.

Innovation capital in North America and Europe by year

Innovation capital in North America and Europe by year

Source: EY, BioCentury, Capital IQ, Canadian Biotech News and VentureSource.
Innovation capital is the amount of equity capital raised by companies with revenues of less than US$500 million.

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Capital raised in North America and Europe by year (US$m)

  2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
IPOs 602 484 2,104 1,852 1,995 2,267 116 840 1,316 857 805
Follow-on and other 2,046 7,170 8,895 7,486 12,324 11,012 4,338 9,750 6,320 6,427 7,884
Debt 4,616 6,627 4,419 5,702 8,230 9,196 5,743 5,573 11,904 20,294 14,051
Venture 3,437 4,026 5,375 5,928 5,934 8,105 6,196 5,852 5,864 5,730 5,437
Total 10,702 18,307 20,794 20,968 28,483 30,580 16,393 22,015 25,404 33,307 28,177

Source: EY, BioCentury, Capital IQ, Canadian Biotech News and VentureSource.
Numbers may appear inconsistent because of rounding. Convertible debt instruments included in "debt."

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