Stephen M. Monroe, Partner
Gretchen S. Swanson, Associate Editor
800-248-1668
203-846-6800
Fax: 203-846-8300
pressreleases@levinassociates.com
Health Care Venture Capital
Market Heats Up With More Deals And More Dollars In 2005
NORWALK, CONNECTICUT – July 14, 2005 – Health care
venture capital results for the six months ended June 30, 2005 primarily
reveal rising trends, according to Healthcare Corporate Finance News,
published by Irving Levin Associates, Inc. The total amount of venture
funding committed to health care companies and the overall number of health
care venture capital financings increased during the first half 2005.
However, both the average and median sizes of health care venture capital
deals decreased by approximately 16% during the first six months of the year
ended June 30, 2005, compared with the first six months of the previous
year.
Already this year, health care companies have secured
approximately $3.9 billion in venture funding, compared with about $3.6
billion for the first six months of last year. So far, 235 venture
financings in the health care sectors have been announced during 2005,
compared with 186 that were announced during the first six months of 2004.
Health Care Venture
Capital Investment Totals By Sector
Sector
Six Months
Ended June 30, 2005
Second Quarter
Ended June 30, 2005
Deal Volume
Dollar Total
Deal Volume
Dollar Total
Biopharmaceuticals
49
$986.5
23
$519.0
Biotechnology
40
$583.7
20
$400.5
e-Health
18
$150.1
14
$108.3
Medical Devices
50
$693.3
25
$314.1
Health Care Services & Other
35
$604.5
14
$323.9
Pharmaceuticals
43
$823.8
20
$372.5
“Spin-out companies emerging from universities and
corporations account for a number of the smaller deals,” commented Gretchen
S. Swanson, Editor of Healthcare Corporate Finance News, “and others
may be accounted for by investors being skeptical of firms without proven
products or seasoned management teams, but still willing to support specific
initiatives such as clinical tests, FDA applications and product trials.”
Forty-eight health care companies announced venture capital rounds of $25
million or more during the first half of this year, compared with 55 for the
first half of last year. Deals in this range account for approximately 54%
of all venture capital committed to health care companies during the six
months ended June 30, 2005, but by comparison, accounted for approximately
65% of all health care venture capital raised during the same period of
2004.
“The launch of new, smaller private venture capital funds
and state-centric initiatives, with smaller target investment sizes, also
influences the results,” continued Ms. Swanson. Large deals are still being
made, with 10 VC deals for $50 million or more announced in the past six
months, accounting for about 20% of all health care venture capital funding,
compared with 12 deals accounting for about 25% of the funding raised during
the first half of last year.
Health care companies continue to exit through the public
equity market, some with strong after-market performances. Only three of
the 12 health care companies that have gone public in the past six months
are trading below the IPO prices, and of the 38 that have gone public in the
past 12 months, 24 are trading above the IPO prices.
Domain Associates and Alta Partners were the most active
venture capital investors contributing to health care during the six months
ended June 30, 2005. The health care venture capital firms that were most
active during the second quarter, and for the first half of 2005, appear in
the following chart, ranked by participation in number of investments.
Irving Levin Associates, Inc., a leading health care
financial publisher established in 1948, is based in Norwalk, CT and is
online at www.levinassociates.com. This privately held corporation publishes
newsletters and annual and quarterly reports, and maintains merger and
acquisition databases, on the health care and senior housing markets.
Financial events in the health care venture capital, private equity, public
equity and merger and acquisition markets are reported monthly in the
publication Healthcare Corporate Finance News. For more information on
publications by Irving Levin Associates, Inc., please call 1-800-248-1668,
or visit www.levinassociates.com.
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