Bleak Results in the Second Quarter for Life Sciences Investment

September 17, 2012

New investment activity in the life sciences venture capital segment continued to decline through the second quarter of 2012, PEHub’s Jonathan Marino reported in an August article. This continues a widespread trend seen in many other private equity investment sectors.

With a plunge of 40 percent year-over-year investment levels based on a report from PricewaterhouseCoopers and the National Venture Capital Association, those in life sciences startups are growing concerned about access to funding. Not only did the total amount invested decline, but the number of deals also fell substantially.

Slide in Investment Impacted all Life Sciences Sectors

No sub-sector of the life science business was immune from the decline in investment activity in the quarter. Medical therapeutic fundings fell by 26 percent, while firms focused on medical diagnostic products and services saw their fundings fall by 44 percent.

Newer Startups Gaining Favor from Investors

One interesting trend that was apparent in the report is the disparity between the investment in early and late stage startups. For example, while early stage medical device fundings declined 10 percent in the quarter, the fall in later stage fundings was even more dramatic, with a 22 decline. This shift in focus towards earlier stage projects is also apparent in the biotech sector, where the decline in late stage funding outpaced early stage projects by 5 percent.

Handful of Firms Remain Active in the Life Sciences Segment

PEHub reports that several venture capital firms are still active in the sector, however, including Versant Ventures, Pappas Ventures and potentially Sanderling Ventures. These firms are continuing to seek additional funding.

What this Means for Job Seekers

As with much of the investment industry at this time, uncertainty is the word of the day for job seekers and even for those employed within the profession. Declining investment in the life sciences sector is just further evidence of the fall in investment activity across the economy, especially in the private equity space. Accordingly, opportunities are few and far between, and when they do present themselves, the jobs are often short-term and the competition for openings is fierce.

Firms in the life sciences space will be most interested in candidates that bring a strong background of experience and education in medicine or a related field. Often, this is paired with business or investment experience as well. Candidates with strong backgrounds in these areas are usually the most successful in landing the opportunities that become available within the field.

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