After a slow Q1'20, projections based on Q2 activity point to a possible recovery in global healthcare funding and deals.
Q1’20 saw a global slowdown in healthcare funding activity, likely attributable to the Covid-19 pandemic.
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Global digital health funding reached $10.4B in Q1’22, a 36% decrease compared to Q4’21. Get our full report to find out all the trends.
Last quarter, healthcare funding deals fell 6% compared to Q4’19. China’s healthcare deal count dropped to its lowest level since Q2’17.
All signs seemed to point to sluggish healthcare funding activity in 2020 — but data from Q2 suggests it could already be rebounding.
Below, we look at the Q2’20 global healthcare funding trends that point to a more promising year ahead.
Q2’20 is on track to be a strong quarter for global healthcare funding
Healthcare companies around the world raised over $8.8B across 672 deals between April 1, 2020 and May 24, 2020.
At this pace of funding activity, Q2’20 could close with over $15B in funding and almost 1180 deals, which would make it one of the strongest healthcare funding quarters in the last 3 years.
The projections, based on the current run rate, show a 6% jump in funding compared to Q1’20 and an 11% increase year-over-year. Deal volume could also see a 2% boost quarter-over-quarter.
Funding to Asia-based healthcare companies could rebound while North America sees a dip
Despite the global upward funding trend, the projected funding rebound for Q2’20 currently varies by continent.
In aggregate, funding to healthcare companies based in North America could see a significant quarterly decline.
On the flip side, Asian and European countries could land a strong quarter — suggesting that re-opening and recovery efforts have positively affected healthcare funding growth. This could be a positive sign for countries in North America and other parts of the world that are further behind in re-opening their economies.
For Asia, Q2’20 is projected to pull in the most healthcare quarterly funding for the region to date with $4.8B set to be raised, beating the record set in Q3’18. This boom is largely driven by $100M+ mega-rounds on the continent, especially in China, which has started to see economic recovery from the pandemic.
Five of the 14 mega-rounds raised from April 1 through May 24 went to China-based companies. This includes a whopping $1B round for MGI Tech, a BGI Genomics-affiliated manufacturer of DNA sequencing instruments.
Meanwhile, US-based companies pulled in 8 mega-rounds over the same period, worth a combined $1.1B. Erasca closed the largest round from this cohort, raising a $200M Series B co-led by ARCH Venture Partners and Cormorant Asset Management. The company says it will use the funding to further its pipeline of oncology therapies.
Free Download: the State of digital health
Global digital health funding reached $10.4B in Q1’22, a 36% decrease compared to Q4’21. Get our full report to find out all the trends.
Global digital health funding is on the decline
For digital health companies, the mid-quarter data points to a different story: global digital health funding levels could see a 16% quarterly decline and a 31% nosedive year-over-year.
Similar to the trend in global healthcare funding activity described above, the quarterly drop is driven by declining funding to digital health companies based in North America — which could dip by 25% from Q1’20.
Notably, US-based digital health companies are on pace to pull in just under $2.4B in Q2’20, an almost $800M drop from Q1. The associated deal count is also projected to decrease to 208 over the same period, down from 231 in the previous quarter.
The biggest deal to a US-based digital health company in Q2’20 so far was telehealth company Amwell‘s $134M round. Amwell has reportedly filed to go public later this year, adding to the momentum from the Covid-driven surge in demand for telehealth services.
See more healthcare trends in our State Of Healthcare Q1’20 Report.
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