Investment in Minnesota life science companies is on track to hit a 5-year high by the end of 2014, according to a new report from LifeScience Alley. The industry group, whose membership includes companies from the medical device, health IT and pharmaceutical industries, says the 3rd quarter saw a total of $113.6 million in life science investments, bringing the year-to-date total to nearly $300 million.
The numbers reflect a general trend over the past few years. Officials with the group say they’ve seen more deals, more investors and higher budgets.
"We’re seeing increased activity across the board," LifeScience Alley director of research and intelligence Cheryl Matter told MassDevice.com. "Compared to where we were in 2013, we’re about 28% above that in 2014. So, generally, investment is up."
The reason for the surge is hard to pin down, Matter said, noting that an improving economy and the traditionally strong medical device industry in Minnesota may be factors.
There are also more big deals and big players, the numbers show. Five companies raised more than $10 million during the quarter, and the percentage of deals larger than $5 million increased from 28% in Q3 2013 to 33% in the most recent quarter. The median size for investment deals, according the report, reached $3.2 million, a 5-year high.
The report also notes that the 3rd quarter has traditionally been the most robust quarter for investment: Every year, the data shows more investment during that quarter than in others, an outcome that might be related to regulatory reporting practices, officials say.
Although medical device companies have traditionally dominated the investment scene, the report notes that the percentage going to pharmaceutical companies and health IT firms grew from just 5% in Q3 2013 to 33% during the same period this year.
Matter said the higher percentage of investment in pharmaceuticals was driven largely by a single, $25 million deal for Rebiotix, a Roseville, Minn.-based company that is developing treatments for gastroenterological diseases.
"Pharma is a little more volatile, at least here in Minnesota," she explained. "But we’re definitely starting to see larger numbers put up in health IT."
This fits with national trends, according to Matter, as health IT in general is a growing industry. She adds that although the emergence of health exchanges as part of the Affordable Care Act is driving some HIT investment, there are other factors as well.
"We’re starting to see corporate wellness, we’re seeing information management, we’re really seeing information technology investment moving across the spectrum," Matter said.