'No one was spared': 2023 biopharma funds projected to fall $13B YOY, Pitchbook finds

By the end of the year, biopharmas are projected to have raised about $24 billion across about 840 transactions—the lowest tally in four years, according to a new PitchBook analysis.

This is compared to annual values of $38.1 billion in 2020, $53.9 billion in 2021 and $36.9 billion for 2022, representing a $12.9 billion drop.

“No one was spared,” senior analyst Kazi Helal, Ph.D., who contributed to the Dec. 7 report, told Fierce Biotech. “Everyone took a bit of a hit.”

While AI and obesity drugs have proven to be slight exceptions, Helal said the sentiment holds true when looking at the bigger picture.

Despite the significant drop in venture capital funds, deals are still being done, though a shift in investment strategy has occurred, according to PitchBook. There have been fewer but more significant deals happening, indicating a more judicious approach that prioritizes larger and potentially more stable investments, the report said.

Investors have also set higher benchmarks for clinical data readouts, a focus that has revived fundraising for early-stage ventures.  

“Strong deals will persist, regardless of economic conditions,” Helal said, a statement bolstered by fundraises like ElevateBio’s $401 million series D in May or Eli Lilly’s July acquisition of metabolic disease-focused Versanis Bio for up to $1.92 billion.

“It's still relatively slow growth, but it might be more of a market correction from the prior years—the pandemic years,” the senior analyst said.

Total exit activities—such as acquisitions or IPOs—expected by the end of 2023 are fairly similar to 2022, with projections of 55 IPOs and 29 acquisitions totaling $17.9 billion. This number differs greatly from the highs of 2021, when 200 deals were made for a total of $86.4 billion.

The greatest loss has been in the IPO market, where biopharma debuts have already dropped 71% from 2021 to 2022. The largely frozen-over markets of 2022 carried on throughout this year, despite hopes that IPOs like RayzeBio’s $358 million offering or Neumora’s $250 million entrance would crack the ice.   

2024 could bring the warmth needed to thaw the cool market, according to Helal.

“As soon as an IPO window opens, we should see a potentially giant wave of companies entering the market,” he said. “There's dry powders there, people are just not spending the money.”

Cracking that window, however, requires more favorable conditions overall, not just for the biotech sector, according to Helal.