Return rate of biopharmaceutical industry

Source: the return data of Xinkangjie on September 24, 2014 strongly proves the magic of biopharmaceutical industry investment, and the proportion of financing failure in biopharmaceutical industry is far lower than that in other industries The greater the risk, the higher the return has become the psychological consensus of investors, biopharmaceutical venture capital also can not escape the market law In China, biopharmaceutical venture capital is still in the state of "more bees than flowers" The investors who are interested in VC are far more than the carrying capacity of early biopharmaceutical projects The return distribution of venture capital in different industries has been surprisingly similar, which is the fact reflected by historical data of various industries We compared the highest yield and total scale yield of biopharmaceutical VC with other industries The research team of CV (correlation ventures), a famous venture capital company, has established a huge database, which is the basis of risk analysis CV recently released data on 21640 times of financing of U.S VC backed companies between 2004 and 2013 Most of these companies were either listed, acquired or directly bankrupt About 10% of the financing flows into the biopharmaceutical industry, but this proportion is not as high as the investment in the biotechnology industry in the past 10 years (> 15%) Compared with other industries, most of the venture capital is concentrated in software industry, information technology, e-commerce, etc It needs to be emphasized that the statistical data is financing behavior rather than the number of companies, because the return brought by financing is sometimes positive and sometimes negative Figure 1 the data of return rate of venture capital (proportion of financing times) released by the distribution of return rate of venture capital among listed, merged and bankrupt companies in the United States from 2004 to 2013 strongly proves the magic of investment in biopharmaceutical industry Among the risk financing with a return rate of more than 5 times, the number of times of financing in biopharmaceutical industry accounts for about 11.5%, far higher than other industries (9.8%) The proportion of biopharmaceutical companies is higher if the statistics go up to the company level rather than each financing (Figure 1) No matter which industry, the case of investment failure is never a scarce teaching material, but there are differences between industries The proportion of financing failure in biopharmaceutical industry is far lower than that in other industries (57%: 65.7%, < 1x) We will not mention the return on investment temporarily It is worth noting that the biotechnology industry has not been a popular VC industry in Europe and the United States, because unlike software industry, information technology, e-commerce and other industries, the biotechnology industry lacks "halo effect" In 2013-2014, there was a strong momentum of M & A and listing of biopharmaceutical and biotechnological companies Since last year, 120 biopharmaceutical companies have publicly issued shares At the beginning of this year, there has been a record of 8 listings per week, which is the best performance since February 2000 In the first half of this year alone, 91 M & A activities have taken place in the biopharmaceutical industry The demand for innovation drives the development of venture capital in the industry Because of the attractive rate of return, more venture capital companies pay attention to it The raising of funds enables Biopharmaceutical Enterprises to have a good living environment with sufficient funds, and constantly improve the past fatigue 2014 is expected to be the golden year for life technology enterprises to go public But in addition to the outstanding return on investment, there is also a vicious circle in the biotechnology industry: large-scale enterprises are getting larger and smaller, and small-scale enterprises are getting smaller and smaller According to statistics, the initial stock issuance value of 40 companies is more than $200 million With the listing of these companies, the stock price has increased by an average of 46% Another 26 companies have an initial valuation of less than US $200 million After listing, 73% of them have seen their share prices fall, with an average decline of 10% Nearly three quarters of them have seen their share prices fall after listing (Figure 2) Figure 2 IPOs of biotechnology companies: the bigger the bigger, the smaller the smaller Any market is bound to have both risks and returns On the one hand, investment scale affects the size of risks, on the other hand, it affects the flexibility of enterprise market or R & D strategy by controlling enterprise scale To balance this contradiction, I'm afraid we need to start from two aspects: financing management and company management However, there is no doubt that biopharmaceutical industry brings high returns to venture capital, while ensuring that compared with Low investment risk in his industry.