Biopharma Funding Year in Review
January 26, 2023 | Ian Hamilton-Burge, Director of Customer Solutions |
Review of 2022 Biopharma funding: How should sales teams at service providers adapt for 2023?
Funding in the pharma/biotech world has certainly felt a little different these past few years. It’s hard to know where exactly things stand with the ups and downs caused by the COVID-19 pandemic, current inflation rates, changes in the labor market, and concerns about the recession. Let’s take a pause and review some of the straightforward funding data from the past couple years and how sales teams might adapt accordingly for 2023.
The fuel for this report comes directly from data aggregated in the Zymewire platform which is laser-focused on companies conducting novel drug development activities. In this article, we refer to them as “biopharma companies”.
Let’s jump into it.
How did 2022 biopharma funding compare with 2021?
We’ll save you from trying to do the mental math and just put the total amounts for each year in a chart with 2020 for good measure:
There’s no sugarcoating it, funding was substantially lower in 2022 than 2021 (↓38%) and the result may be a more competitive 2023 for industry service providers compared to recent years.
With less funding in the industry coming out of 2022, when it comes to your sales outreach you’ll want to keep an even closer eye on what new funding is being announced so you can get involved in opportunities as early as possible. To get ahead of the curve you may also want to keep tabs on biotech companies that attended recent investment-focused conferences like Biotech Showcase and JP Morgan Healthcare.
Our advice is to not read too much into quarters that have higher funding than others. Just a couple of large pharma funding events in a specific quarter can play a big factor in boosting the numbers. For example, the Bristol Myers Squibb offering at the start of 2022 and the recent Takeda-Nimbus deal contributed billions of dollars to the Q1 and Q4 quarters, respectively. Accounting for these outliers reveals a more even spread across the 2022 quarters. If you’re forecasting or doing your own market analysis, make sure you weigh these kinds of outliers appropriately and consider variables like the size of these companies, revenue, and volume of clinical activity.
What are the regional differences in 2022 funding?
Looking within the different global regions, you still have to be aware of outliers (Figure 4), but the total differences in funding totals across these regions won’t come as a surprise if you’re familiar with the industry. North America is the clear leader with the most biopharma companies receiving the most funding, but there are always some interesting nuances to discover when you look beyond the raw numbers:
Almost the same proportion of EMEA companies had funding as their North American counterparts, and on average they had a bit more money in their pockets overall. Still, percentage points in the low twenties means the large majority of companies didn’t receive funding last year regardless of where they were based. As a salesperson, your funded qualified prospect list shrinks even more if you don’t count money from grants and development milestone royalties as we’ve included here. These sources aren’t always the big, big bucks but they’re still used to pay for services and can be a signal of a company’s momentum and continued development. Lastly, don’t let yourself get too focused on calendar years. Lots of the 2022 funding will be used to fund activities in 2023.
With lower funding in the industry, are there many new biotech companies launching?
In 2022, we notified Zymewire users of a total of 526 newly launched biopharma companies (Figure 6). It’s hard to be pessimistic about the health of the industry when there’s an average of ~10 new companies popping up each week developing novel drugs. You can subscribe to newsletters and websites to track some of these launch announcements. Biospace’s “new companies” page does a decent job of tracking some of these launches but it’s not fully comprehensive and also covers launches of other kinds of companies in the market.
Contact us to learn more about being automatically notified of newly launched biopharma companies.
While it’s reassuring to see so many new companies launching regularly, your email can easily become buried in someone’s inbox at one of these new startups. Remember that just because they’re new, doesn’t mean that they’re the only, or even the best opportunities around town. Thousands of biotechs are out there operating in stealth in the early stages of development. These stealthier companies have been around for a bit longer and so may be less inundated and more responsive to your outreach.
Final thoughts for 2023 sales planning
With a leaner year of funding just behind us, service providers to biopharma may have to compete for opportunities. Sales teams should be considering ways to tighten their focus and narrow in on the truly qualified opportunities. Which companies and projects do you prioritize? How do you go about identifying and engaging with them at the right time?
Teams should be using their sales intelligence systems to identify and track funded companies so that when they announce another relevant signal (such as planning to move to the next stage of development, attending a mutual conference, or making a key hire), you are ready with your well-timed outreach. Behind the charts and tables in this post are many well-funded biotech/pharma companies that have the right projects, are at the right stage of development, and are ready to hear from you.
If you’re interested in more productive and automated ways to identify the right biopharma opportunities, contact us to learn more about Zymewire.
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