EUROPEAN LIFE SCIENCES INVESTORS UPBEAT ABOUT 2024 OUTLOOK

Tough markets set to improve in 2024, finds Optimum's survey of leading VCs

Deals, including collaborations and M&A, likely to pick up sooner than IPOs

While investors remain discerning, plenty of 'dry powder' is available for the right investment

Against this backdrop, clear communication has never been more important

LONDON, Jan. 8, 2024 /PRNewswire/ -- Optimum Strategic Communications ('Optimum'), the international strategic healthcare communications firm, today announces the results of its 2024 survey of European life sciences venture capital (VC) investors. The survey, conducted in November and December 2023, and including responses from highly influential European investors, representing funds with c.$300bn in assets under management, found that most believe market conditions for life science companies will improve through 2024.

After two years of relentlessly rising interest rates, which have had "a fundamental impact" on valuations and market activity, investors say the outlook appears to be more positive – opening the door to more deals, including financings, collaborations and M&A. However, investors believe the appetite for IPOs is unlikely to improve before 2025.

The tough market environment has forced investors to become more cautious: many saying that they have to focus much of their time, energy and cash on existing portfolio companies. Yet the survey also found many VCs still have plenty of 'dry powder' ready to be deployed if the right opportunity presents itself. When looking out for fresh opportunities, investors have become more discerning - demanding great data, proven management teams and clarity of vision.

Against this difficult but improving backdrop, investors told Optimum that it has never been more important for companies to be able to communicate a strong and compelling investment story if they are to secure the deals they need. 

Report highlights

• More than half of survey respondents described the 2024 outlook for European life science companies as positive
• While deal activity has been slow since 2021, activity is picking up and likely to increase as Big Pharma looks to refill its pipeline ahead of numerous patent expiries in the late 2020s
• Areas of particular investor interest include obesity drugs, neurology, immunology and select oncology, including ADCs and radiopharma
• The improving sentiment comes after high inflation and interest rates forced VCs to re-appraise their investments in life science companies due to the increased cost of capital
• The lack of IPOs has also meant investors have had to back portfolio companies for longer, limiting opportunities for investment in new companies
• VCs have considerable 'dry powder' ready to be deployed, if they can be convinced of a company's merits
• Investors remain highly impressed with the quality of science exhibited by European life science companies, citing this as their main strength
• Valuations can be a sticking point, with investors concerned management of some private companies are not being realistic given the changed interest rate environment
• European companies need to improve how they communicate their science and their stories, with one VC urging them: "Just sell the hell out of it!"

Commenting on the survey, Mary Clark, CEO, Optimum Strategic Communications, said:

"Life sciences companies have been on a white-knuckle ride over the last few years, with soaring valuations during the pandemic followed by a painful crash. Optimum's latest survey of European healthcare investors suggests that while the situation remains tough, sentiment finally appears to be turning a corner - with a majority of respondents having a positive outlook for 2024. Crucially, many investors say they have lots of capital to deploy, but the difficult conditions of the last couple of years have led them to be much more discerning.

"While few believe the IPO market will really re-open until 2025, deal activity is already starting to pick up – a trend that is likely to increase through 2024.

"European companies now need to work harder to convince investors or partners of their strategy and vision: being able to tell the 'right' story has never been more important."

If you would like to receive the complete report, please email contact@optimumcomms.com or download it from our website here.

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About Optimum Strategic Communications

Optimum Strategic Communications is an international healthcare communications consultancy which specialises in strategic investor relations, corporate and financial communications. Our senior team of healthcare specialists, based in London, Amsterdam, Stockholm, Zurich, and New York, are experienced and trusted advisors to some of the world's most exciting public and private companies, both large and small, across pharmaceuticals, biotech, medtech, health tech, healthcare services and industrial biotechnology.

Over the last 25 years, our team has worked with over 300 healthcare companies, advising them on financial communications and investor relations, including major corporate activity such as fundraising, IPOs, M&A, as well as corporate reputation and crisis scenarios.

We have an exceptional network of contacts across the international investment community in Europe and the US; contacts we have built and maintained over the last three decades. The Optimum team includes ex-fund managers and analysts, as well as financial and corporate communications specialists.

For more information please visit www.optimumcomms.com