Ophthalmology Attracts $7.1 Billion in Investments

March 1, 2017: By Market Scope

Big transactions drive ophthalmology investments, and the purchase of Abbott Medical Optics—the No. 2 manufacturer in ophthalmic surgery—was the key driver in a near record 2016. Investments in 2016 were substantially higher than those in 2015 in terms of total funds ($7.1 billion in 2016 and only $935 million in 2015).

A total of 53 investment transactions occurred in 2016 that included investments to fund development of new products and technologies, commercialization of new products, or outright purchases of products or technologies. These transactions ranged from $1 million to $4.3 billion.

Each of these transactions is unique, with a wide variety of reasons for raising funds and investing. Market Scope has organized investments into three categories based on the status of the business/entrepreneur raising the funds, plus four categories based on the type of investor.

Those raising funds fall into three categories: early development stage, early commercial stage, and sale of company/business. With early development and commercial stage investments, funds received are plowed back into the business; with the sale of a company, funds flow back to the owners/investors. This grouping reflects the life stage of new ventures, as early development and commercial stage businesses are ultimately targeting a sale of the business in most cases.

Investors in ophthalmology include venture capital firms, private equity firms, strategic investors, and public stock market investors. Venture capital firms are early stage investors with a mission to help develop new products by providing seed capital and business advice to entrepreneurs. We identified 22 of these investments during 2016. Private equity firms generally like to get involved after the product development stage, and these investors usually provide both capital and strategic direction to position the business for a sale or public offering. Market Scope identified four of these transactions in 2016. Public stock markets are increasingly popular routes for raising funds to be used by the business for development and for sale of the business. We counted nine of these transactions in 2016.

Looking forward to 2017, Market Scope expects another strong year for investments in ophthalmology that might be driven by another mega-transaction. Although no deals have been announced, Novartis has said it is evaluating options for its Alcon surgical business and Valeant has also said it is entertaining proposals for sale of its Bausch + Lomb business. Other smaller transactions are likely to add to this total. In addition, there are at least 80 ophthalmic companies/projects that are in fundraising development stages, and many of these are expected to seek funds in 2017.

Market Scope is pleased to announce the availability of the “2016 Ophthalmic Deals Book: Venture Funding, Commercial Equity, and Business/Technology Sales.” Click the following link: 2016 Ophthalmic Deals Book: Venture Funding, Commercial Equity, and Business/Technology Sales or call (314) 835-0600 for more information.

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