More good analysis from Bruce Booth of the Life Sci VC blog. This time he shows us that the the number of pharmaceutical and biopharm companies with a market cap over $50 M has shrunk from 329 in 2005 to only 240 today. That's a 27% reduction in only 5 years. Ouch!
Booth goes through all the numbers accounting for attrition and addition of companies during that interval. Many companies of course merged, were acquired, shutdown -- in fact 40% of the original 329 (or 129) shared in that fate. Another 64 shrunk below the $50 M cap size -- resulting in only 136 surviving from the original cohort.
Booth says that drivers for shrinkage (no, not cold pool water ala George Costanza), are not enough companies maturing into public companies, not enough new ones getting started and too many disappearing in mergers. It appears that the best companies get acquired and the rest have trouble gettign any funding as VC pools (cold shoulder not water) have dried up in this sector.
How do we fix? We need access to public market sources of low cost capital to fuel long term growth in this sector. Otherwise, we will likely see movement toward more attractive funding environments in the East.
Posted by Bruce Lehr Sep 9th 2011.
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