The Half-Time Score on 2013
Well, we are little more than half-way through 2013 and I couldn’t resist giving my business impressions on the year so far, and think about how that affects business growth and hiring. If you pardon the sports analogies, get your head in the game, and let’s figure out the game plan.
The scoreboard: Stocks & IPOs – Earlier this month, Burrill and company reported good news. Life science stocks were out performing other major indices this year. Life Science companies raised $56.2 billion in cash during the first half of 2013; 60% more than last year. A number of factors including a strong stock market, lower interest rates and more stable economy probably contributed to the growth. The IPO market continues to improve and in fact many are saying this is the best IPO window we have had in 13 years. What was the breakdown? There were twenty-three life science IPOs in Q1 and Q2. The majority of them, eighteen, were in therapeutics. There were also successful public launches of three diagnostics companies (Nanostring, Cancer Generics and Lipo Science), one tool company (Quintiles Transnational) and an agricultural company (Bioamber).
The mid-season trades: Deals & Acquisitions – M & A activity is a bit slower so far this year with 24 deals announced compared to 28 last year at the half. Probably the major one we are all watching is Thermo Fisher’s $13.6B acquisition of Life Technologies. Illumina continues to quietly build their platform. In January, they bought Moleculo, a Next-Gen Sequencing company with the ability to do long reads (10kb) and in February they completed their acquisition of Verinata, a prenatal diagnostics company. Qiagen also expanded its genomics portfolio by acquiring Ingenuity for $105M.
The odds-makers: Venture Capital – On the venture capital side, the news seems to be the same as last year. There was a slight increase in venture capital money raised in the first half of the year. Q1 started out slow at only 29% of the pace of Q4 2012 while the dollar volume was down ~30%. Only 20 companies received first-time funding, the lowest in a quarter since 1995. But 147 life science companies were able to raise follow-on funding so the quarter was perhaps not as slow as it may otherwise have seemed. The follow-on funding trend is primarily due to VC’s doubling down on existing bets which was good for existing companies, but resulted in limited resources for new companies. The good news is Q2 was strong with a 209% increase in first-sequence investment, from $77 million to $238 million. So what will the second half look like? We can certainly expect a lot of integration work for Thermo and Life Tech, and perhaps streamlining of those businesses. Look for a continued reliance on M&A activities to grow businesses for some, and as an exit strategy for others. Lastly, I believe we will see that as the number of venture capital firms continues to drop, NewCos will look to investments from strategic partners as well as non-traditional sources of money.
So what does this mean for hiring? I predict that there will be continued upheaval in large companies such as Qiagen, Life, and Perkin Elmer while smaller companies will continue to tighten their belts due to scarce funding. The take home is that no matter where you work it is important to do your current job well while always keeping an eye open for other opportunities. Take the time to catch up with colleagues, lend a hand to help others network and keep an eye on markets that continue to grow such as personalized medicine, regenerative medicine or synthetic biology, just to name a few. Remember what the great Yogi Berra said, “you can observe a lot just by watching.” Or, if you prefer, I would recommend, don’t be “out in left field”; “be at the top of your game”; and although you may not “get a hit every time”, “don’t get caught riding the bench”…that’s probably sufficient sports cliché’s for this month.