Venture Capital Funding for Life Science Declines After Two Quarters of Growth

The third quarter of this year saw the lowest number of venture capital (VC) deals in the life sciences sector in more than two years, according to a new report from PricewaterhouseCoopers and the National Venture Capital Association.

Though funding for life science companies, including biotech and medical device firms, increased more than 20% over the same period in 2010, the $1.8 billion pumped into the sector during Q3 2011 was 18% less than the Q2 total. The number of deals fell from 214 in Q2 to 170 in Q3, according to the report.

The drop comes after two consecutive quarters of growth in life science VC funding. Despite the decrease, funding for the year is still likely to increase over 2010, the report predicted. Overall, venture capital funding in all sectors increased by nearly a third in terms of dollars and by 3% in terms of deals in Q3.

In the medical device category, both the medical/health products and medical diagnostics subsegments saw steep dollar-amount declines of 51% and 38% respectively over Q3 2010. Funding for medical therapeutics, which accounted for the lion's share of dollars invested in the medical devices subcategories, grew by more than half year over year, according to the report.

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—Jamie Hartford