Many advances have been made in the biopharmaceutical industry, such as immunotherapy for cancer treatment, gene editing and cell-based therapies. A major factor driving the biopharma industry is healthy investments in biopharma companies, which have spiked within recent years, including the contributions that established biopharma companies are making through corporate venture capital (CVC) affiliates, which support biotech startups. According to Pharmaceutical Research and Manufacturers of America (PhRMA), CVCs are investments that are “made by an external entity established by a corporation specifically to invest in promising startup companies, usually related to the company’s own industry.” Along with financial investment, a CVC can also support a startup with management, technical development and strategy.

Venture investments in deals that involved CVCs of 15 PhRMA member companies have surged over 660%, from $414 million 2000 to $3.2 billion in 2017. The value of all CVCs investments have increased 90% over 17 years from $12.8 billion in 2000 to $24.3 billion last year. Approximately 20% of total biopharma investments are supported by PhRMA members’ CVCs, which also contributed to 30% of the increase in biopharma VC investments in 2016–17. The number of health care startups, such as companies specializing in health technology and digital health, have also risen thanks in part to the support of PhRMA-member CVCs.

PhRMA-member CVCs that fund new startups helps to address issues with biopharma innovation and R&D, as much of the money is used to fund R&D that concentrates on newly emerging technologies. Much of the support for the biomedical R&D ecosystem is provided by PhRMA companies through CVC funds, which not only provide financial support  but also non-financial resources to ensure that these biotech startups can flourish.

Source: PhRMA