Global Funding

Global Funding Reverting to Pre-Pandemic Levels

Venture Capital

Public Offerings

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

Global life sciences funding, including VC and IPOs, totaled $51.5 billion in 2023, a 25% drop YOY.
VC activity levels fell 24% globally, totaling $45 billion. Most VC deal volume was focused on North American deals (67%), with APAC and Europe capturing 18% and 15%, respectively.
Eight of the top 10 global VC deals were transacted in the U.S. and totaled $2.6 billion in aggregate value, with an average deal size of $322 million. The largest deal of the year was the $2.7 billion sixth-round funding of Vancouver-based Aspect Biosystems.
Shanghai-based Ailomics Therapeutics entered the market with a first-round raise totaling $859 million.
Global IPO activity fell significantly short of the 2021 peak, totaling $7.5 billion in 2023, down 34% YOY. The U.S. accounted for 63% of total IPO volume, with $4.7 billion.
The U.S. IPO market has had a very active start in 2024. Several IPOs launched successfully, and others are set to launch soon.

Key Takeaway: Global VC volume has fallen from pandemic-fueled highs, but 2024 could be the year that the dry powder sitting on the sidelines begins to be deployed in earnest.

US Drop in VC Funding is Supplemented by Growing NIH Funding

Total Annual US Funding Over Time

^{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 2023 is expected to outpace pre-pandemic years.
NIH funding grew 35% over the last five years (2018-2023), a stronger rate of growth when compared to the 17% growth of the previous five-year period (2012-2016). For fiscal year 2024, the NIH proposed a budget of $51 billion, the bulk of which will go toward R&D grants.
Most of the 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.
The NIH awarded a total of $37.9 billion in 2023, 9% (or $3.3 billion) of which was allocated to for-profit recipients. Allocation to for-profit companies increased 12% YOY, outpacing the 3.3% YOY increase in total NIH funding in 2023.

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

Do you expect total VC volume to increase, decrease, stay the same in your region in 2024?
(Answer for your region)

North America

Decrease significantly (10%+)
Decrease slightly (1-9%)
Stay the same
Increase slightly (1-9%)
Increase significantly (10%+)

Europe

Decrease significantly (10%+)
Decrease slightly (1-9%)
Stay the same
Increase slightly (1-9%)
Increase significantly (10%+)

Asia

Decrease significantly (10%+)
Decrease slightly (1-9%)
Stay the same
Increase slightly (1-9%)
Increase significantly (10%+)

Despite Share Price Volatility, Biotech Revenues Continue to Increase

Pricing is Ticking Up in Early 2024

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

US Public Biotech Company Revenues, 2000-2022

^{Source: EY analysis 2023, Cushman & Wakefield Research}
^{Note: Commercial leaders are companies with revenues at or above $500 million.}

A recent uptick in biotech stocks have pushed pricing above its five-year average and closer to its linear long-term trend. The pricing rebound will provide a welcome change from the dips of 2022 and 2023. Volatility will continue to impact pricing in 2024, however, approaching longer-term trends means that overall, the sector may see some price appreciation in 2024.
Normalization of interest rates has added some buoyancy to the sector. Although rates are expected to remain higher for longer, further increases are not currently expected.
Public biotech revenue ballooned to over $167 billion in 2022, with an impressive annual growth rate of 12%.
Commercial leaders dominate revenue and on average account for 83% of total annual revenue over the last 22 years.
In 2022, commercial leader revenue share increased to 89% with a YOY growth of 3%. Although emerging leaders have gained revenue share, growth dropped 20% YOY as smaller companies struggled.

Key Takeaway: Positive sentiment in the sector has impacted biotech stocks at the start of 2024. Analyst expectations of a bounce-back in biotech means that the sector may have turned a corner.

Various Funding Sources Drive Clinical Trials in the US

Funding by Source and Clinical Trials by Year of Initiation

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

The drop in venture capital had a slight impact on the number of clinical trials in 2023. With a major source of funding restricted, the number of clinical trials initiated in 2023 fell 2% YOY. A total of 9,094 trials were started in 2023, below the five-year annual average of 9,500 trials.
2024 is off to a strong start. In January, a total of 1,012 clinical trials were initiated, 23% more than January 2023. This is a very strong pipeline of clinical trials, which signals that the market is ready to ramp up clinical trials again in 2024.

Key Takeaway: A flurry of announcements around clinical trials expected for 2024 point to a robust year of activity.