The California Healthcare Institute and PricewaterhouseCoopers, LLP have released their 2015 California Biomedical Industry Report describing industry trends through 2014. The CHI report highlights the continued strength of the biomedical industry in California:
California holds a unique position in the worldwide life sciences community. Golden State companies are leaders, producing some of the world’s most innovative therapies and diagnostics. In turn, these corporations have made the state’s life sciences industry an economic juggernaut.
The report indicates that California leads all states in biopharmaceutical and medical device employment, with 767,300 direct or indirect industry-attributable jobs. According to the report, the success of California biomedical industry begins at the academic research level, where California academic institutions received $3.3 billion dollars in NIH grants in 2014, $1 billion more than the institutions in any other state. The report concludes that more basic scientific discoveries funded by such grants translates into more commercial products and biotech start-ups.
The CHI report also describes the continued prominence of venture capital investments in California biomedical companies. The report notes that investments in California companies account for approximately 45% of all venture capital investments in medical device companies, with an estimated $1.1 billion dollars invested in 2014, and that notably, venture capital investments in California medical device seed stage companies are projected to rebound to $33 million in 2014, up from $9 million in 2013, as illustrated in the chart excerpted from the report reproduced below:
The CHI report states that 70 M&A deals targeting California biomedical companies have been completed as of September 2014, matching the total for all of 2013. Through September 2014 there have also been 20 IPOs for California biomedical companies bringing in a total of $1.5 billion, compared to 17 IPOs in all of 2013.
Recent events have also been consistent with the CHI report’s conclusions regarding the strength of biomedical M&A activity in California. On November 17th, Allergan, based in Irvine, CA (NYSE: AGN) agreed to be acquired by Actavis Plc for $66 billion, after Valeant Pharmaceuticals abandoned its attempts to purchase Allergan.
As yet another example, Second Sight Medical Products, Inc., based in Sylmar, CA (Nasdaq: EYES) raised $32 million in an IPO on November 19th , and the stock has more than doubled with respect to its IPO price. According to its website, Second Sight develops implantable prosthetic devices that could potentially restore functional vision to patients that suffer from retinal degeneration.
