At the end of 2020, many of us reflected on the huge successes that the Biotech industry had experienced with obtaining IPO funding; we did not expect to see it continue long into 2022. However, it has, and an astonishing number of Biotech firms are enjoying large amounts of funding when they take their company public.
What’s Been Happening in the Biotech Industry This Past Year?
It’s not a shock to learn that Biotech firms have continued to be in demand this year, with nearly 70% of them planning to spend more on research and development in a bid to resolve the pandemic.
The other key area of growth in the Biotech industry has been the number of companies that have collaborated and plan to continue collaborating with other companies for quicker results. Part of this was made possible by the R&D tax credits that helped firms stretch their resources further, and the other part was because more Biotech companies have gone public and received IPO funding to help them progress.
The First Three Quarters of 2021
The number of biotech’s to go public in the first three quarters of 2021 stood at 68. Combined, they have raised over $21 billion from investors that want a piece of the action. Comparing these stats with 2020 seeing 71 public offers and $15 billion funding makes it clear that 2021 will have beaten the records set by 2020!
However, it is important to balance these stats with the trading successes that these companies are enjoying. Unfortunately, many have experienced dips with others trading at less than their offer price. Despite these drops, biotech’s in their early stages are still hitting bigger wins than ever before, leading us to believe that the industry will continue to boom into 2022.
Why Is There So Much Funding?
One of the key questions remains: Why and how is there so much funding available to biotech companies when they go public? The main reason is that investors continue to be interested in what is being offered as well as the opportunity to see high returns in an industry that is enjoying substantial growth and want to be part of new and innovative solutions to some of the most complex issues the world currently faces. From developing new vaccines to support the reduction of Coronavirus to finding new drugs that can help those affected by COVID get better, there are many exciting prospects to invest in.
Interestingly, along with more cash from investors, biotech companies are also being valued higher than ever before. Despite some investors becoming tired of the high valuations, there are still many willing and able to deliver the cash needed to back the companies that interest them the most. What remains to be seen is whether these record highs will continue or if biotech’s may find themselves out of favour as the new year begins. Keep your eyes open as the JP Morgan conference in January may give us a glimpse of what is to come!