Library Innovation Group (2008) - European Healthcare Technology Venture Market

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This report provides insights into the European healthcare venture market by analysing venture capital investment activities in 2007 and 2008.
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  L . I . Group The Healthcare Technology Venture Marketin Europe, UK and Yorkshire & Humber  i About Library Innovation Group (L.I. Group) The L.I. Group was formed as a spin-out company from the Library House Consulting Department. The company usesestablished evidence-based research methodologies to deliver strategic insights into innovation-led companies andmarkets. It also advises public and private sector organisations on strategic issues that involve technology, innovation, entrepreneurship and nance. Project Team: Martin HoliAlexander JanStephen MounseyDr Jonathan LawtonDr Siobhán Ní ChonaillMalgosia RozyckaFor more information about the contents of this report, please contact:L.I. GroupSt John’s Innovation CentreCowley RoadCambridgeCB4 O WSUnited Kingdom www.li-group.co.ukinfo@li-group.co.uk Access To Finance For Healthcare Technologies Programme Access to Finance for Healthcare Technologies is an investment readiness programme established by Yorkshire Forward toassist companies in the Health Technology sectors. The programme addresses three key factors relevant to the Yorkshire &Humber region:the opportunity to develop investment markets, especially for companies in complex and challenging markets such as ã healthcare;the opportunity to engage talented business support professionals able to provide advice and guidance on raising ãnance in general and especially in this sector; and a shortage of existing successfully venture backed companies to act as role models, explain the process and showcase ãthe benets. The programme is scheduled to run for an initial period of three years from January 2009 and is delivered by a consortium of three companies, led by Grant Thornton UK LLP and including Quotec and BITECIC. www.investinginhealth.co.uk  ii The Healthcare Technology Venture Market    C  ONT E NT  S  Contents 1. Executive summary ............................................................................................12. Introduction .......................................................................................................23. The healthcare technology sector ........................................................................3 3.1. Pharmaceutical industry ................................................................................................43.1.1. Global and European pharmaceutical industry ...............................................................53.1.2. The UK pharmaceutical industry .....................................................................................53.1.3. Pharmaceutical industry in Yorkshire & Humber .............................................................73.2. Medical technology industry ..........................................................................................7 3.2.1. Medical technology product naming classication .........................................................83.2.2. Cardiovascular ...............................................................................................................83.2.3. Diagnostics ...................................................................................................................83.2.4. Orthopaedics ................................................................................................................93.2.5. Global expenditure in medical technologies .................................................................103.2.6. Medical technologies in Europe ....................................................................................103.2.7. Medical technologies in the UK ....................................................................................113.3. Medical technologies Yorkshire & Humber ....................................................................12 4.Thenancingcycleofhealthcaretechnologycompanies .....................................13 4.1. Where do healthcare technology companies come from?.............................................134.2. Is the United Kingdom a good place to attract venture capital investments? ................134.3. Is this also true for healthcare technology companies? .................................................144.4. First round investments ................................................................................................164.5. Who are the early-stage investors? ...............................................................................174.6. How much capital was invested? ..................................................................................174.7. Follow on investment rounds .......................................................................................184.7.1. European investors in healthcare technology companies..............................................194.7.2. Top deals in Europe ......................................................................................................224.7.3. Top deals in the UK .......................................................................................................22 5. The attractiveness of Yorkshire & Humber ..........................................................23 5.1. The investment landscape in Yorkshire & Humber ........................................................235.1.1. The srcin of companies in the region ...........................................................................235.1.2. Venture capital backed university spin-outs in the healthcare technology sector ..........255.1.3. Independent healthcare technology start-ups .............................................................265.2. Investors in Yorkshire & Humber ...................................................................................275.3. Venture capital investment successes ..........................................................................29 6. Future trends in the healthcare technology venture market .................................307. Sponsors of Access to Finance for Healthcare Technologies Programme ................38  iii F  OR E W OR D Foreword Yorkshire & Humber is at the forefront of the UK’s latest advances in healthcare making it an important region for thehealthcare technology industry and one of the fastest-growing nationally. It has one of the UK’s highest concentrationsof medical device companies, superb specialist skills (especially in surgical instrumentation, orthopaedics and advancedwound-care), exceptional access to clinical trials, pioneering R&D and Europe’s largest teaching hospital.The healthcare technology venture market is the second largest sector, behind information and telecommunications,attracting around 24% of all deals in Europe and 29% in the UK. This represents over £2.1bn of investment in Europeanhealthcare companies and £434m in the UK in 2007 and 2008.However, despite the buoyancy of the sector and the strengths of the region, many healthcare technology companies still face diculty in raising private equity particularly in the early stage where they face the so called ‘equity gap’ .Typically this is the rst round of venture capital investment of around £500K to £2m where investors regard propositions as particularly risky.To help companies in Yorkshire & Humber best position themselves to secure funding we are very pleased to announce a new programme, ‘Access to Finance for Healthcare Technologies’, which will assist these companies to become ‘investment ready’. We are delighted to be part of a consortium with a track record of success in this area, led by Grant Thornton andincluding Quotec and BITECIC, which will work closely with companies in the region to provide skills, business model reviews,mentoring and investor introductions to get them in the best possible shape to secure investment. The programme will runfrom January 2009 to April 2012 and is open to all SMEs in the healthcare technology market based in Yorkshire & Humber.This report has been prepared for the launch of the programme, with the needs of entrepreneurial companies in mind, toprovide an overview of the level of investment activity in the healthcare technology sector over the last two years in Europe,the UK and Yorkshire & Humber. It details the types of deals that have been completed and who the most active investorshave been and also provides a commentary on the current status of the investment market and likely future trends. I hope that you will nd it informative. Glenn StonePartner, Grant Thornton UK LLP
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