Growth Of Life Science Focused Specialty Finance Companies- An Insight:
The COVID-19 pandemic crippled the stock markets and toppled industries and economies of scale due to its unprecedented nature and magnitude. The slowdown was felt worldwide, and several big economies have suffered and continue to do so.
However, life science and biotech companies gradually started being bullish, and the trend has been resilient over the last year and continues to do so. This trend is especially evident in how specialty finance companies like SWK Holdings, which focus primarily on the life science and biotech spheres, have displayed enormous dividends in their year-on-year revenue and have garnered significant attention in NASDAQ.
According to industry experts, this phenomenon is being touted as the ‘biotech renaissance.’ Let’s find out the intricacies behind this windfall which is predicted to continue in the near future.
Reasons for the bullish trend of biotech, pharma, and life science organizations and startup enterprises:
There was a time during the mid-2014 when investment in the biotech and life sciences sector was considered a safe yet over-ambitious prospect. Most of the companies and startups were showing a sluggish trend. However, with the constant innovation and development of patents, the trend was becoming optimistic. Both marketers and industry pundits started the conjecture that the boom will be significant in the latter half of the decade.
Numbers that spill the fact of the ever-growing resilient trend:
The global biotech venture funding rose from 17 billion USD in 2018 to 18.8 billion in 2019 alone. Though this growth was just a forecast about what was to come, no one had anticipated the boom that would happen in the next couple of years.
The global biotech and life sciences market size had a valuation of 752.88 billion USD in 2020 alone. Although the COVID-19 pandemic created havoc worldwide, it was just the fitting precursor to initiating the ‘biotech renaissance.’ The market continues to advance at a whopping 15.83% CAGR and is expected to demonstrate this windfall throughout this year and till 2028, which is quite a long-term prospect.
Reasons behind the life science and biotech boom:
The primary reasons behind this trend can be listed as follows.
- Developing nations worldwide are encountering favorable government initiatives.
- Modernization of drug regulatory pathways.
- Standardization of clinical studies and diagnostics.
- Acceleration of product approval procedures.
- Improvement of reimbursement policies.
- The aggressive growth and technological advancement to alleviate the COVID-19 pandemic through innovation of vaccines, modern testing methods, and others.
How are specialty finance companies taking advantage of the biotech boom?
During the biotech boom of 2018 and 2019, the IPO proceeds of 11.4 billion and 11.5 billion USD were considered a massive rise. Mergers and acquisitions surpassed 1.3 trillion USD in 2019 alone. But the newest biotech enterprises that got included in the US-listed IPO cohort sported a 30% more valuation than their recent, high-flying predecessors. These life science, biotech, and pharma firms that held IPOs in 2020 flaunted a staggering 782 million USD of post-money valuation.
And this is where the specialty finance companies that are primarily invested in the life science and biotech sectors started making a windfall. According to the chairman and CEO of SWK, which caters to small and mid-sized life science and biotech companies, they continued to identify promising companies with differentiated commercial product portfolios that require capital assistance to continue their sterling innovation and research in healthcare.
SWK Holdings is among the topmost specialty finance organizations providing impetus to SMEs in the life science and biotech sectors and accelerating their growth, thereby pushing them to the marketplace and supporting their innovation. This specialty finance company itself displayed enormous figures by generating massive value creation highlighted by the 16.7% realized yield in the finance receivable segment in the first quarter of 2021. With its total investment assets becoming 219 million USD in the first quarter of 2021, that was a mindblowing 21.1% increase from the first quarter of 2020- SWK continues to light a beacon to the small and mid-level life science and biotech companies and cementing its position in the NASDAQ.
The rapid growth of life science and biotech companies worldwide will continue into the foreseeable future. With the momentum being partially provided by the unprecedented COVID-19 pandemic, these companies are looking forward to the leaders in specialty finance like SWKH to bolster their growth by financing their innovation endeavors.