Tesi-健康与生命科学研究 芬兰 2023

TuomasRekonen

KlausMajanen

HenriHakamo

JuhaLehtola

Health&Life

SciencesStudyFinland2023

JoniKarsikas

MiiaKaye

3

12.10.2023

*Thedatasetincludestechnologyorplatformcompaniesthatcouldbeconsideredaspotentialdealflowforinvestors.Theselectioncriteriaissubjectiveandqualitative,andthedatasetisformedfrommultiplecompanylistsidentifiedbyus.Thedatasetcanincludecompaniesthatdonotfitthecriteriaifassessedmorerigorously.Andontheotherhand,thelistcertainlydoesnotincludealltherelevantcompanies.

DigitalHealth&Software

235companies

Biotech&Diagnostics

94companies

Services

63companies

Tesi’sDefinitionofHealth&LifeSciences

MedicalDevices&

Supplies

159companies

oTesi’sHealth&LifeSciencesstudyincludesdataonover550companies.

oTheselectionofcompanieshasbeenmanually

screenedandcategorizedasHealth&Life

Sciencesbyourinvestmentteammembers.In

addition,ouraimhasbeentofocusonthe

venturecapitalmarket.Therefore,wehave

focusedonstart-ups*andVC-fundedfirms,

excludinglarge,establishedcompaniesaswellastheFinnishsubsidiariesofglobalfirms.Health

careproviders(e.g.,doctors’clinics,dentalpractices)havealsobeenexcluded.

oAsaresult,oursamplediffersfromthoseusedinotherreportsandanalysesoftheHealth&Life

SciencesmarketinFinland.

oInlinewithFinland’swiderstart-upecosystem,

digitalhealth&softwarecompaniesarethe

largestsubsectorwithinoursample,representingover40%.Medicaldevicesrepresentcloseto

30%,whilebiotech&diagnosticsandservicesaresignificantlysmallersubsectors.

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4

Tesi’sHealth&LifeSciencesSectorDescription

DigitalHealth&Software

oInprinciple,allHealth&LifeSciences-relatedsoftware

companies.

oSectorincludese.g.digitaltherapeutics(DTx),data

managementsolutions,AI-basedsolutionsfordrug

discoveryordiagnostics,

anddigitalhealthconsumerapplications.

(Medical)Devices&Supplies

oProductsandequipment

usedformedicalpurposes,e.g.implants,monitoring

equipment,etc.

oHeterogeneousgroupof

mainlyhardware-based

companieswithvaryinglevelofclinicalevidencerequired.

oTesi’sdefinitionalsoincludeswellnessproductsnot

requiringregulatory

approval.Diagnostics

excludedandcovered

separately.

Biotech&Diagnostics

oTherapeuticsandvaccinesaswellasdiagnostictests/methods.

oDoesnotincludesoftwareusedfortherapeuticor

diagnosticpurposes(e.g.DTxorAI-assisted

diagnostics).

Services

oConsultingandotherservicesfortheHealth&LifeSciencesindustry.

oIncludeswidevarietyofserviceproviders,frome.g.,regulatoryconsultingtonutritional

coaching.

5

Investmentshavegrownsignificantly

€1.1bntotalinvestedcapital2011-22

6xincreaseinannualvolumes,taking

annualinvestmentstoover€100m

Emergenceoflargerounds

Althoughmajorityofroundsstillsmall,for

thefirsttimealsoseeingroundsofseveral

tensofmillionsonaregularbasis

Diverseinvestorbase

Angels,VC’sandCVC’sactiveinthesector

Complementedbygovernment-owned

investorsandnon-dilutivegovernmentfunding

SmallshareofVCfundinggoingintoHealth&LifeSciences

Health&LifeSciencesshareoffunding

significantlybelowglobalaverage

Investmentneedsarelarge,

butcompaniesremainunderfunded

Needforsector-focusedVCinvestors

Sector-experienceneeded;

limitedamountinthelocalecosystem,

howeverthesituationisimproving

Decreasingnumberofnewcompaniesbeingfunded

Downwardstrendincompanyformation,followingseveralrecordyears

Multiplelargeexitsinrecentyears

Historicalexittrackrecordhasbeenweak,butrecentyearshaveseenseverallargeexitstoleading,globalcompanies

Biggestexitssofarinbiotech&diagnostics

Largeexitsofrecentyearsconcentratedinbiotech&diagnostics

KeyObservations

FinnishHealth&LifeSciencessectorgrowing

InvestmentsandnumberofcompaniesintheHealth&LifeSciencessectorhavegrownsignificantlyoverthepast12years.Althoughstillrare,wehavealsoseenforthefirsttimetheemergenceoflargeroundsoftensofmillionsofeuros.Theinvestorbaseisdiverse,includingangelinvestors,venturecapitalfunds,corporates,andgovernment-backedinvestors.

Despiterecentimprovements,sectorstillunderfunded

FinlandisagloballeaderintermsofVCinvestmentspercapita,butdespiteincreasedinvestment,shareoffundinggoingtoHealth&LifeSciencesremainsunderwhelming.Asasectorrequiringspecialistknow-howandsignificantcapital,Health&LifeScienceshasbeennegativelyimpactedbylackofspecialisedlocalVCinvestors.Government-ownedinvestmentcompaniesplayanimportantroleinsupportingtheecosystemthroughinvestmentsinbothfundsanddirectlyincompanies.Theaimisthat,togetherwithincreasedlocalfundactivity,theseinvestmentswillcatalyseadditionalinternationalinvestments,bringingnetworks,know-howandcapital.Hopefully,thiswillalsoreversethedownwardstrendinnewcompanyformation.

Multiplesuccessfulexitsinrecentyears

Exitactivityhashistoricallybeenweak,withsignificantlosses

sufferedbyinvestors.However,inrecentyearstherehavebeenmultiplesuccessfulexits.Interestingly,thelargestexitshave

beenachievedinbiotech&diagnostics,whereinour

assessmenthefundinggapisthelargest.Hopefully,strongperformancewillattractmoreinvestorstothespace.

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6

43

42

27

26

2626

23

Health&LifeSciencesBasicInformationHealth&LifeSciencesFundingHealth&LifeSciencesInvestorsHealth&LifeSciencesCategories

Onaverage,31Health&LifeSciencescompaniesfoundedyearly,withadropobservedinrecentyearsfrompeaknumbers

371

companiesfoundedsince2011

31

companiesfounded

yearlyonaverage

NumberoffoundedHealth&LifeSciencescompanies

56

Companiesfoundedin2021-2022maynot

havebeenidentifiedyet

39

37

Ø31

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

13

13

2021

2022

12.10.2023

7

17%

25%

27%

33%

29%

26%

43%

29%

30%

Health&LifeSciencesBasicInformationHealth&LifeSciencesFundingHealth&LifeSciencesInvestorsHealth&LifeSciencesCategories

Regionaldifferencesinecosystemcomposition,reflectinglocalstrengthsandtalentpool

oMostcommonlyfoundersofFinnishHealth&LifeSciencescompanieshaveengineeringormedicalbackgrounds.Regionswithlargerengineeringuniversitiestendtohaveahighershareofsoftwareandmedicaldevicecompanieswhereasbiotechisstronglyrepresentedinmedicalschoolregions.

oComparedtoFinlandasawhole,TurkuandKuopioregionshavethehighestshareofcompaniesinbiotech&diagnostics,TampereinsoftwareandOuluindevices.Onahighlevel,theHelsinkiMetropolitanareaprovidesafairrepresentationoftheFinnishecosystemcomposition.

oSuccessfulcompaniesimpactregionalcompanycreation,butFinlandlacksmajorinternationalHealthandLifeSciencescorporations.Instead,smallerclustersformfromtechnologicalknow-how(e.g.,Nokiaheritage)andresearch.

Numberofcompaniesperregionandsub-sector

Services

Biotech&Diagnostics

Devices&Supplies

DigitalHealth&Software

51

30

64

63

523

57

286

6%

17%

8%

18%

11%

11%

13%

5%

17%

9%

28%

13%

58%

46%

44%

43%

33%

27%

32%

SouthwestFinland

Uusimaa

PirkanmaaNorthNorthRestof

OstrobothniaSavoFinland

Helsinki(Metropolitanarea)Turku

TampereOulu

Kuopio

12/10/2023

8

Health&LifeSciencesBasicInformationHealth&LifeSciencesFundingHealth&LifeSciencesInvestorsHealth&LifeSciencesCategories

InvestmentsintoHealth&LifeScienceshaveincreasedsignificantlysince2011

€1.1bn

totalinvestedcapitalthrough2011-2022

717

Investmentsthrough2011-2022

oThenumberofdealsandamountofinvestedcapitalhaveincreasedsignificantlyintheperiod2011-2022.

oTotalinvestedcapitalwas€1.1bnovertheperiod,andannualinvestmentvolumesin2022wereover6xthe2011level.

oInvestmentvolumespeakedin2021with€234mraised.Although2022’s€151mwassignificantlylowerthanthat,itwasstillthesecondhighestyearonrecord.

Developmentofinvestmentsinhealth&lifesciencesince2011

€m,numberofdeals

Numberofinvestments99

57

234

55

50

44

80

23

124

121

60

102

94

11

42

50

23

21

Totalinvestedcapital(€m)

788080

72

68

151

201120122013201420152016201720182019202020212022

>6x

growthfrom2011in

investmentvolumes

12.10.2023

9

1

Mmeruhealth

1

1

Health&LifeSciencesBasicInformationHealth&LifeSciencesFundingHealth&LifeSciencesInvestorsHealth&LifeSciencesCategories

Increasedfundingofpastyearsdrivenbyhandfuloflargeinvestmentrounds

oMediandealsizesintheFinnishHealth&LifeSciencessectoraresmall(<€2movertheperiod),althoughtherehasbeensomeincreaseinroundsover€5minrecentyears.

oBiotechandmedicaldevicesinparticularareextremelycapitalintensive,anditseemsthatthemajorityofcompaniesarenotmaturingtolaterstagesandraisinglargerrounds.

oHowever,overthepastthreeyearswehavealsoseenforthefirsttimetheemergenceoflargeinvestmentrounds(>€20mraised),

includingOura’s2021$100mroundand2022roundvaluedat€2.5bn(amountundisclosed).Thisisapositivedevelopment,evenifthenumberoftheseroundsisstilllimited.

oTheselargedealshavesignificantlypushedupthefundingraisedinthepastcoupleofyears.In2021and2022,approximatelyhalfoftheinvestmentvolumescamefromacoupleoflargeinvestmentrounds.

>€20minvestmentrounds

DevelopmentofinvestmentsinHealth&LifeSciencessince2011

€m,numberofdeals

Numberofinvestments,investmentrounds>€20m

Investmentrounds<€20m

Investedcapital,investmentrounds>€20m

2

201120122013201420152016201720182019202020212022

10

12.10.2023

*TransactiondataforthemarketasawholehasnotbeenreviewedinthesamelevelofdetailastheHealth&LifeSciencesdata.Therefore,theremaybesomeinaccuraciesinthedata.However,thegeneraltrendsshouldbeassetout.

29%

25%

19%

19%

18%

21%

20%

16%

12%

11%

10%

Health&LifeSciencesBasicInformationHealth&LifeSciencesFundingHealth&LifeSciencesInvestorsHealth&LifeSciencesCategories

ShareofHealth&LifeSciencesfundingremainsunderwhelming

Shareofhealth&lifescienceoftotalinvestedcapital

(Growth,andventurecapitalinvestments)

8%

201120122013201420152016201720182019202020212022

Shareofhealth&lifescienceofnumberoftransactions

(Growth,andventurecapitalinvestmentrounds)

13%

2012

13%

2015

13%

2019

13%

2021

11%

2013

11%

2016

11%

2017

11%

2022

10%

2014

10%

2020

7%

2011

14%

2018

Comments

oHealth&LifeSciencesfundingshareoftotalinvestmentshasbeendecreasinginrecentyearsandrepresentsasmallportionofthetotal

oIn2022,Health&LifeSciencesrepresented8%oftotalvolumes,thesmallestsharetodate

oLookingatthepastthreeyears,thesectormadeup11%oftotalvolumes,stilldownsignificantlyvs.earlieryears

oAssetoutintheearlierslides,investmentvolumesinHealth&LifeScienceshaveincreased.However,theyhavenotkeptstepthewiderFinnishmarket,whichhasboomedinrecentyears

oWeestimatethatgloballyHealth&LifeSciencesrepresentsc.20%ofinvestmentvolumes,i.e.,Health&LifeSciencesissignificantlyunderrepresentedinFinland

oTherelativelackofbiotechinvestmentsisonedrivingfactor.Acrosstheperiodunderstudyjustover25%ofHealth&LifeSciencesinvestmentswereinthiscapital-intensivesub-sector,whereasbasedonourearlierstudies,globallythisfigureisc.50%

oFinnishHealth&LifeSciencesinvestmentsarealsoskewedtotheearlierstages,withaseeminglackofcompaniesgraduatingtothelaterstages.Thereareclearlymultiplereasonsforthis,butonereasoninourviewisthelackofspecialistfunding(whichinadditiontofunding,

bringsvaluableexpertiseandnetworks).

12.10.202311

International

investors

NolongeractiveinVCinvesting

CVC

Government

Other

Health&LifeSciencesBasicInformationHealth&LifeSciencesFundingHealth&LifeSciencesInvestorsHealth&LifeSciencesCategories

NotableinvestorsinFinnishHealth&LifeSciencesmarket

oFinnishVCinvestorshavebecomeincreasinglyactiveintheHealth&LifeSciencessector.However,theinvestedamountsarestillsmall.Althoughthereareexceptions,investmentsarefocusedonearlystagesandareaswherethelevelofregulation/requiredclinicaldataislimited(e.g.digitalhealthandwellnessvs.drugdevelopment).Lackofasector-focussedfundhasmadefundraisingespeciallyinmoreclinicalareaschallenging.Seenextpagefordetailonlocalinvestors.

oAhandfulofnotableinternationalventurecapitalfundsandCVCshaveinvestedintheFinnishHealth&LifeSciencessector.However,thenumberislimited,andnoneofthemisanactiveinvestorinthemarket.Ahandfulhavemadeinvestmentsintwocompanies;formosttheinvestmentshavebeeninasinglecompany.

oAsaresult,state-ownedinvestorTesi,angelinvestorsandcrowd-fundingplayasignificantroleintheecosystem.

oHowever,wearehopefulthatanewsector-focussedlocalVCfundandtheincreasinglyactivelocalgeneralisttechfundswillcatalyseinvestmentsfrom

internationalHealth&LifeSciencesinvestors.Severalfundsareactivelylookingatthemarket,withagoodunderstandingoftheFinnishcompanylandscape.

Theseinternationalfundswouldbringvaluableadditionalcapitalwellasknow-howandnetworkstotheecosystem.

Private

Funds

Finnishinvestors

icehreaker

Tesi

NA

ANGELS

dlnniinves

Healthcap

12

10/12/2023

IncludesFinnishcompanieslistedinNasdaqHelsinkiMainMarketorFirstNorth

Source:Pitchbook

7728%

14%

28

4

10%ofFinnishIPOshavebeenraisedbyinnovativeHealth&LifeSciencescompaniesduringthepast12years

NumberofIPOs

(Health&LifeSciences,excl.largerhealthcareservicescompanies)

25%

8%

20%

2

14%

1

1

8%

4

33%

2

1

2011

2012

2013201420152016201720182019

Health&LifeSciencesIPOs%ofallIPOsinFinland

202020212022

2011-2022:

11IPOs

(10%ofallIPOs)

ValueofIPOs,€m

(Health&LifeSciences,excl.largerhealthcareservicescompanies)

67%214

2011-2022:

370m€

22%

(6%oftotalIPOvalue)

18

5%

30

2011

202020212022

20122013201420152016201720182019

Health&LifeSciencesIPOs%ofallIPOsinFinland

Comments

oIPOshavebeenmorepopularinthemoreclinical

subsectors,suchasBiotech&Diagnostics,where

companieshavenoorlimitedrevenue.Example

companies:HerantisPharma,FaronPharmaceuticals,Nanoform,NightingaleHealth.

oThehighestIPOpeakwasseenin2020-2021withcloseto€300mraisedbyfivecompanies.

o2021wasexceptionalIPOyearingeneralwithapproximately30IPOsacrossallsectors.

oIPOactivityhassloweddownconsiderablyinadifficultmacroenvironment.

oSwedenbyfarthemostactiveNordicmarket–FinnishIPOslagbehind.

oIPOdHealth&LifeSciencecompaniesinFinlandarerelativelyearly-stagecomparedtoEuropeanandUSmarkets,andtheyoftenrequirefollow-onroundsaftertheinitiallisting.

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