Healthcare Investments Surge Forward in 2015

By Toby Lewis, Chief Analytics Officer, GCV Analytics

Healthcare corporate venturing units had a banner year in 2015, with Global Corporate Venturing Analytics tracking 262 investments globally last year, the most active year since we began tracking data in 2010. The US dominated this activity, with 173 investments, representing the more mature healthcare venture investment industry in the country.

The significant activity marked a 50 percent surge in the number of investments against 2014.

Healthcare CVC activity since 2011

Factors driving the uplift, included a 50 deal year from the most active corporate Johnson & Johnson, which invests through its Johnson & Johnson Development Corporation, as well as increased activity by groups such as shopharmaceutical distributor McKesson, gene sequencing company Illumina, pharmaceutical company Sanofi, and health insurance company Cambia Health Solutions.

Deals by healthcare CVCs in 2015

The sector has also seen significant investment by non-healthcare corporate venturing investors including Qualcomm, which invested in 13 companies, and Alphabet, which made 10 investments. The trend of generalist technology groups investing more heavily in the broader healthcare sector is expected to grow, as the application of software insights to healthcare continues to increase.

Most active investors in the healthcare sector

GCV Analytics tracked 12 deals bigger than $100 million last year, up from seven in 2014, as appetite to write big checks increased. The biggest investments in healthcare last year were: the $450m round raised by US-based drug discovery company Moderna Therapeutics from investors including pharmaceutical firms AstraZeneca and Alexion Pharmaceuticals; the $394m round raised by GuaHao, a China-based healthcare services tool, backed by internet company Tencent and conglomerate Fosun; and the $320m raised by UK-based cancer treatment company backed by investors including pharmaceutical firm Eli Lilly and Company.

Other big deals during the year included US-based biotechnology company Adaptive Biotechnologies raising $195m from biotechnology companies Celgene and Illumina, laboratory services provider LabCorp and medical devices maker BD Biosciences, as well as Merck’s agreement to provide $450m in equity payment and collaboration over five years to drug company NGM Biopharmaceuticals.

The largest deal so far in 2016 is Roche leading a $175m series C round for Flatiron Health, a US-based developer of cloud-based oncology software, as part of a strategic partnership. The company is also backed by GV, a corporate venturing unit of Alphabet, as well as LabCorp.

The largest exit of 2015 was biopharmaceutical company Bristol-Myers Squibb buying US-based cancer treatment developer Flexus Biosciences, which had been backed by Celgene, in a deal that could be worth up to $1.25bn. Bristol-Myers Squibb paid $800m upfront and up to $450m in development milestones.

Other notable exits included nervous system disorder company Naurex’s $560 sale to Allergan, and Celgene buying US-based cancer drug developer Quanticel Pharmaceuticals, in which it invested in 2001, in a deal worth up to $485m. The largest corporate venturing-backed initial public offering, was NantKwest, backed by Celgene and Sorrento, raising $238.3m on Nasdaq.