2023 September Life Sciences Update

U.S. Drop in VC Funding is Supplemented by Growing NIH Funding

› U.S. government funding focused on research and development continues to increase amid a challenging VC funding environment. Combined funding for 2023 is expected to outpace pre-pandemic years. › Higher funding commitments by the federal government to the NIH have resulted in increased funding, which grew 31% over the last five years (2018-2023), a stronger rate of growth when compared to the 17% growth of the previous five-year period (2012-2016). › The bulk of NIH funding is allocated to the public sector, including hospitals, research institutes and research universities. Of the $21.7 billion awarded in the first half of 2023, the top 10 recipients received $4.4 billion, or 20%. Nine of the top 10 recipients were universities, except for Massachusetts General Hospital, which was the only non university recipient. › NIH allocations to for-profit companies have averaged 7% since 2010. In 2022, funding to for-profits totaled $3 billion, up 61% from the $1.8 billion 2018 allocation. Key Takeaway: Although NIH funding is not a major source of funding to for-profit companies, the $1.4 billion allocated so far in 2023 provides an additional source of funding to supplement the $12.9 billion in VC funding.

Total Annual U.S. Funding Over Time

NIH VC

$90

$80

$70

$60

$50

$40

Billions

$30

$20

$10

$0

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 1H 2023

Source: U.S. National Institutes of Health, Cushman & Wakefield Research, 2022 as of June 30, 2022

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LIFE SCIENCES SEPTEMBER 2023