The life sciences investment outlook this year appears a bit conservative – if not muted – according to Cushman & Wakefield global research manager Sandy Romero.
Still considered a “relatively attractive” industry for investment, Romero said the capital would also be “chasing stability and looking more closely for strong financials” such as clinical trial successes as opportunistic plays continue to exist across all industry types.
She said that US dry powder in venture capital increased to $290.1 billion at the end of the third quarter of 2022. Looking at the past 10 years, it can be estimated that about 16% (or $46.4 billion) of the dry powder would be allocated toward life sciences. In 2021, life sciences investment totaled a record $50 billion.
Facing the potential of a global economic slowdown, life sciences VC capital will most likely become “more conservative in 2023,” Romero said.
Capital Flows Mostly to California
The San Francisco Bay Area, Boston, and San Diego markets, collectively, were expected to receive two-thirds of the available capital in 2022. In 2022, seven of the top 10 capital flows were primarily focused on California.
Drug discovery and biotechnology remain the hottest industries, accounting for 72% of 2022 funding.