Private equity gets serious about drug development

Private equity gets serious about drug development

Source: Evaluate Vantage

Venture capital has the brains, private equity has the books – can they make lots of money?

Private equity is going shopping, and biotech venture funds are on the list. Three deals in the past few months suggest this to be true: EQT’s acquisition of LSP, Carlyle’s Abingworth buyout and, most recently, Sofinnova’s sale of a minority stake to Apollo.

For the buyers, these moves were not about adding scale; Carlyle could raise the $2bn that Abingworth had under management with a shrug of the shoulders. They were about adding expertise in a complex area, and being able to offer investment opportunities in a sector that Covid proved to be critical.

“Some aspects of business you can apply broadly in many industries, but healthcare is very different,” says Thilo Schroeder, managing partner at Nextech Invest, a European oncology-focused venture fund. “Building expertise internally takes time – or you buy a fund and bring it in overnight.”

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