Life science companies broaden their access to finance

The growing life science sector in Sweden has expanded its funding opportunities over the last decade. This is the result of a survey of members of the industry organization SwedenBIO. The findings are published today in the Bridging the Gap report, which also identifies 2018 as a record-breaking year for the refinancing of listed life science companies.

– In an industrial sector where access to risk capital is a cornerstone for building success and growth, it is very gratifying to see the strong capital supply to the companies, comments Jonas Ekstrand, CEO of the industry organization SwedenBIO.

The survey has collected data on 361 financing events since the founding of forty-six companies over the period 2007-18 and shows that Swedish private equity investors (e.g. private equity and venture capital) continue to be the most common source of financing, but that the share of this group continuously decreased in importance over the period. The category “private equity investors” is defined in the report as all types of investors participating in off-exchange share issues.

The single most important contribution to the decline in the importance of private equity was an increased number of initial public offerings (IPOs) and subsequent new issues. Another important contribution to the report’s observation of declining shares for private equity was an increase in soft funding sources, both from governmental activities such as Vinnova and Almi, and from European funding programs such as Horizon 2020. These two categories together accounted for 23% of all financing events in 2018.

– “Capital from government and EU-funded authorities plays an important role in financing life science companies, both as a bridge to share issues and as a substitute for share capital when it is less available,” says Jonas Ekstrand.

In 2018, the number of IPOs on the dominant Swedish listings – Nasdaq Stockholm, First North and Spotlight – decreased, but the number of refundings of previously listed companies increased significantly. In total, new share capital of SEK 6.9 billion was issued in connection with refinancings, well above the level of SEK 4.0 billion reached in 2017. In the 2017 figure, Getinge’s issue of SEK 4.3 billion has been excluded to increase comparability.

Additional data from the survey shows that the share of foreign investors was low during the period, which can be seen as an opportunity for the industry to gain access to another important source of funding, in addition to those described above. An increase in the share of foreign investors in the number of financings was seen in 2018.

– “Helping to increase foreign investors’ knowledge of the Swedish life science industry is a high priority for all initiators of the report,” says Jonas Ekstrand and continues.

– The importance of a strong investment promotion that can attract competent capital to our Swedish life science sector is critical for us to be able to revitalize the industry, this is a conclusion we draw. Regional and national investment promotion has an important role to play here.

SwedenBIO conducts this work in close cooperation with the investment promotion organizations Business Region Göteborg, Invest in Skåne and Invest Stockholm, all of which have been involved in the preparation of this report.

The report Bridging the Gap can be downloaded from the SwedenBIO website https://swedenbio.se/om-life-science/rapporter/. Bridging the Gap is produced in cooperation with Westerberg Kommunikation AB.

For further information, please contact Jonas Ekstrand, CEO SwedenBIO, on: 070 302 08 96 or jonas.ekstrand@swedenbio.se.

The industry organization SwedenBIO’s
over 260 member companies
has a total of 20,000 employees who contribute in various ways to the development of new treatments to prevent and alleviate ill health. Members include companies that are active in drug development, biotechnology, medical devices and diagnostics or are experts in areas such as business development, financing, intellectual property and law.