Stephen M. Monroe, Partner
Gretchen S. Swanson, Associate Editor
800-248-1668
203-846-6800
Fax: 203-846-8300
pressreleases@levinassociates.com
Five Years of Growth in Health Care Venture Capital,
According To Healthcare Corporate Finance News
Norwalk, CT - January 14, 2008 - For the fifth year in a row, venture
capital funding increased in the health care industry, with more total
dollars invested and more deals announced in 2007 than the previous year.
Health care companies announced 481 deals totaling $9.7 billion in venture
capital last year, achieving an almost 13% increase in funding compared with
2006. Deals were made at a brisk pace, with the number of deals increasing
by approximately 4% in both 2006 and 2007. The quarterly and year-end deal
and dollar totals for these years are displayed in the chart below.
Health Care Venture Capital Deal and
Dollar Volume, 2006 to 2007
Quarter/Year
Number of Deals
Total Funding, in Billions
Q1:06
136
$2.2
Q2:06
97
$2.0
Q3:06
110
$2.2
Q4:06
120
$2.2
Year-End Total, 2006
463
$8.6
Q1:07
134
$2.8
Q2:07
117
$2.3
Q3:07
121
$2.5
Q4:07
109
$2.1
Year-End Total, 2007
481
$9.7
“Health care venture capital investments have
increased steadily over the last five years and lately, we are seeing more
of these deals tied to mergers, acquisitions and collaboration agreements,”
commented Stephen M. Monroe, Managing Editor. “In addition, we continue to
see new venture capital firms being formed and new funds launched to focus
on health care sectors.”
Some of the top venture capital firms in health care in 2006 doubled their
investment activity in 2007, including Domain Associates and Alta Partners.
Furthermore, in 2006, no venture capital firms announced more than 12 health
care deals, while in 2007, 12 firms had 13 or more investments. The top
health care venture capital firms for the quarter and the year ended
December 31, 2007, based on number of investments, are listed in the chart
below.
Most Active Health
Care Venture Capital Firms
Fourth Quarter, Ended December 31, 2007
Number of Investments
Year Ended December 31, 2007
Number of Investments
Johnson & Johnson Development
7
Alta Partners
21
HBM BioVentures
5
Domain Associates
20
New Enterprise Associates
5
Sofinnova
18
Domain Associates
4
Novartis funds
17
ProQuest Investments
4
Frazier Healthcare
16
Sofinnova Partners
4
Johnson & Johnson Development
16
Vivo Ventures
4
Polaris Venture Partners
15
HBM BioVentures
14
InterWest Partners
14
MPM Capital
14
New Enterprise Associates
14
Versant Ventures
13
“From what we hear, venture capital investors anticipate 2008 will be
another busy year for health care,” noted Gretchen S. Swanson, Editor of
Healthcare Corporate Finance News. “What remains to be seen is the
level of impact that political and economic forces
will have on the financial markets in the coming year, and whether these
forces will encourage or dampen deal flow.”
The results of the fourth quarter of 2007 are not quite as impressive as the
results for the entire year—but the fourth quarter has historically not been
the most active quarter of each year. During the three months ended
December 31, 2007, approximately $2.1 billion of venture capital financing
was provided to health care companies in a total of 109 rounds. In the
same period, the median deal size increased to $16 million, up from $11.5
million in Q4:06. The chart below offers a view of quarterly investment
activity for the year, broken down by sector.
Quarterly Health Care
Venture Capital Deal And Dollar Volume, By Sector, 2007
Sector
Q1:07
Q2:07
Q3:07
Q4:07
Deals
$Billions
Deals
$Billions
Deals
$Billions
Deals
$Billions
Biopharmaceuticals
23
$727.4
27
$686.4
20
$472.5
17
$457.1
Biotechnology
27
$392.9
25
$368.8
26
$358.2
33
$479.8
e-Health
9
$52.3
5
$35.9
12
$106.3
5
$19.0
Health Care Services and Other
13
$245.1
6
$119.5
8
$503.0
9
$192.0
Medical Devices
43
$726.1
35
$733.4
34
$622.7
27
$600.9
Pharmaceuticals
19
$660.4
19
$352.2
21
$390.5
18
$396.9
Zosano Pharma announced the largest venture capital financing of any health
care company during the last quarter of 2007, with a $90 million round.
Including that deal, six rounds of $50 million or more apiece were announced
during Q4:07, accounting for about 18% of all funding for the period. The
health care services sector produced two of those deals, even though the
sector accounted for only a small percentage of the number of deals
announced. Reliant Renal Care and Simplex Diabetic Supply each raised $50
million rounds. As one might expect, the rest of the largest investments
were made in pharmaceutical, medical device and biopharmaceutical companies.
Healthcare Corporate Finance News (www.hcfnews.com) reports weekly on
financial events in the fast-paced venture capital, private and public
equity, and merger and acquisition markets for health care companies, and
provides subscribers with access to a searchable online database of health
care venture capital deals. This monthly newsletter and weekly email update
is published by Irving Levin Associates, Inc., a leading financial publisher
and source of market intelligence since 1948. For more information, please
call 1-800-248-1668.
Since 1948, Irving
Levin Associates, Inc. has been the leading source of information
and investment research on mergers and acquisitions in the
Behavioral Health Care, Biotech, e-Health, Home Health Care,
Hospitals, Laboratories, MRI and Dialysis, Long Term Care, Managed
Care, Medical Devices, Pharmaceuticals, Physician Medical Groups,
Rehabilitation and other health care markets.
