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VCs Keep Coming Back to Biotech

Biotech is trending up in venture capital funding and managing a significant amount of M&A activity as well, according to research conducted for Connect’s Innovation Reports.

For the full year in 2011, biotech attracted $498 million in 50 VC deals compared with $446 million in 60 deals in 2010, said Steve Hoey, director of business creation and development at the technology trade group. Biotech’s share represents 56 percent of all VC funding received by San Diego companies in 2011, he said, adding that the software industry trailed behind as the next largest recipient with just over $100 million.

During the first quarter 2012, biotech attracted $170 million in VC funding in 13 deals, Hoey said.

“It’s on par with the previous year, maybe even to exceed it,” he said. “We had some loss over the last couple of years in biotech jobs, but biotech has been successful in San Diego. It’s one of the few sectors that’s been robust in terms of receiving funding from venture capital organizations.”

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Its vigor was heightened even during the recession as nearly 70 new companies were started in the pharmaceutical and biotech fields in San Diego County last year, creating almost 300 new jobs, said Hoey, who estimates well over 30,000 employees work at some 600 biotech companies not including contract research organizations.

Three local M&A standouts in 2011 were Excaliard Pharmaceuticals’ purchase by Pfizer Inc. for about $316 million; Anadys Pharmaceuticals’ acquisition by Roche for $216 million; and Amira Pharmaceuticals’ acquisition by Bristol-Myers Squibb for $475 million.

Connect’s Innovation Report for the first quarter 2012 is expected to be released in two weeks.

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