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Private Equity, Breathing Life into Life Sciences

by Helen Wilson

  • 29 Sep 2009
  • PE

Life science is no longer simply a scientific sector; it is now a global business, relying upon private investment to fund vital progress in areas such as pharmaceuticals and biotechnology. Private equity in particular has become an increasingly significant source of capital for the industry, with a growing number of funds focusing on the sector.

Life science is an attractive niche that appeals to private equity fund managers and investors alike, resulting in both a growing number of life science focused funds being raised and an increase in the capital committed to these funds. In 2007 a total of $17.1 million was raised by private equity funds that included life science in their focus and in 2008 this figure rose to a record-breaking $28.2 million.

So far in 2009 fundraising has been slow, with $3.4 million raised to-date. It is important to remember however that fundraising figures for all types of private equity funds have been in dramatic decline this year and this slump isn’t exclusive to life science focused funds.  

The majority of funds focusing on the life science sector are venture funds. Life science venture funds invest in both early and late stage opportunities, although the majority of funds do not specify a stage focus. Since 2007 there have also been four funds of funds focusing on the life science sector.   

The most active type of investor in the life sciences private equity sector are funds of funds, which account for 44% of the total private equity life science investor universe. Public and private pension funds are also significant investors, accounting for 32% and 9% respectively.

Preqin has produced a research report which examines the private equity life sciences sector in further detail. The report contains information on the geographies and stage preferences of existing life science funds, as well as information on active and potential investors.

To read Preqin's exclusive report on fundraising for life science focused funds, please click here.

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