Global Funding

Global Funding Levels Flat YOY

Venture Capital

Public Offerings

^{Source: PitchBook Data, Inc.; *Data has not been reviewed by PitchBook analysts}

Despite an enthusiastic start to 2024, global funding levels were flat during the first half of 2024 when compared to the first half of 2023. Global life sciences funding in 2024, including VC and IPOs, totaled nearly $26.7 billion, in line with the $26.8 billion from the first half of 2023.
Europe’s share of funding increased this year, accounting for 23% of capital raised compared to 15% or less in the two previous years. In contrast, APAC’s share of funding sits at 12%, down 22% from its three-year average.
In April, Xaira Therapeutics, a U.S.-based biotech company that uses AI and machine learning for drug discovery, secured a $1 billion first-round investment, marking the largest single VC investment this year. After a flurry of IPO announcements early in 2024, including those from Galderma, CG Oncology and Kyverna in the first quarter, IPO activity slowed in the second quarter. Total IPO volume was flat on a YOY basis and should equal or exceed 2023 levels at the end of 2024.

Key Takeaway: Global life sciences funding in 2024 looks a lot like 2023. Potential interest rate cuts in the second half of the year could spur additional investment in the sector.

U.S. VC Funding Is Supplemented by Growing NIH Funding

Total Annual US Funding Over Time

^{*2024 forecast based on flat budget projections for 2024 NIH funding and flat VC deal volume}
^{Source: U.S. National Institutes of Health, Cushman & Wakefield Research}

U.S. government funding focused on research and development continues to increase amid a challenging VC funding environment. Combined funding for 2024 should continue to outpace pre-pandemic years.
For fiscal year 2024, the NIH proposed a budget of $51 billion, the bulk of which will go toward R&D grants. Most NIH grants are allocated to the public sector, including hospitals, research institutes and research universities.
NIH allocations to for-profit companies have averaged 7% since 2010. NIH funding totaled $17.6 billion through midyear 2024, with 5% (or $858 million) allocated to for-profit recipients.

Key Takeaway: NIH allocations to for-profit companies have increased steadily over time, providing an additional source of funding for the life sciences sector.

Biotech Pricing Edges Higher

Share Prices Ticked Up Mid-Year 2024

U.S. Public Biotech Company Revenues, 2000-2023

^{Source: The Nasdaq Stock Market, Inc. (NASDAQ), Cushman & Wakefield Research}

^{Source: EY analysis 2024, Cushman & Wakefield Research
Note: Commercial leaders are companies with revenues at or above $500 million.}

Biotech stocks receded in April 2024 from a strong start at the beginning of the year. However, this drop was short-lived, and pricing has exceeded its three- and five-year averages, as well as its linear long-term trend.
This recent pricing increase could continue into the second half of 2024, as increased expectations of interest rate cuts could spur additional investment in the sector.
Public biotech revenue fell slightly to over $165 billion in 2023, a 1% drop YOY.
Commercial leaders dominate revenue and on average account for 83% of total annual revenue over the last 23 years.
In 2023, commercial leader revenue share totaled 86%, with a YOY drop of 4.1%. Emerging leaders had a 20% increase in revenue YOY.

Key Takeaway: Interest rate cuts should be positively received by the industry. While interest rates are expected to remain higher for longer, the onset of cuts is expected to improve sentiment and potentially result in increased investor activity.

Various Funding Sources Drive Clinical Trials in the U.S.

Funding by Source and Clinical Trials by Year of Initiation

^{Source: Clinicaltrials.gov, Pitchbook, NIH, Statista}

Although the sector started the year with momentum, 2024 has generally been the same as 2023. Sluggish VC funding means that clinical trials were muted, and as of June 2024, just over 4,400 trials had been initiated, a 7.2% drop from the same period in 2023.
Improvements in the processes for clinical trials are expected in the near term, as many companies deploy AI solutions to enhance trials. With these enhancements, the number of trials may drop further as efficiencies improve.

Key Takeaway: AI efficiencies in clinical trials have the potential to revolutionize the industry.