Biopharmaceutical investors and executives alike conceded during the recent BIO International Convention that the booming financial environment, which peaked in 2020 and 2021 with record levels of venture capital investment and initial public offerings, created too many new drug development start-ups and public companies. Many therapeutics firms shut down as investment in the sector slowed in 2022 and early 2023 – a trend that is likely to continue – but others have adjusted to market realities.
KEY TAKEAWAYS
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Consensus remains that funding is available for some companies, as long as they meet important milestones or have significant readouts approaching soon. IPO activity is expected to remain muted in 2023 and macroeconomic factors a headwind for biopharma.
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VC is in a musical chairs scenario as investors look for backing for funding rounds for their portfolio companies from firms also looking for participation in financings for their own portfolio companies.
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The previous funding frenzy created a lot of companies with similar development goals, but now biotechs are gaining a better understanding of how they might differentiate in order to survive.
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The bar has been raised and investors are saying no to things they would have funded in prior years
Scrip spoke with several investors and executives at BIO about their expectations for when this downturn in the financial market will turn around, but none had a clear view of when the industry could expect a significant change
