The foundation of companies is a dynamic process in the life science landscape. Academic spin-offs, where research is transformed into market opportunities, as well as spin-offs from other public institutions or established companies within the industry are common pathways. For business development professionals, understanding the circumstances in which companies are founded provide valuable context: It reveals the underlying values, and shows what influences the company’s expertise and business capabilities. In this article, we break down insights from Biotechgate data to explore the current state of life science spin-offs.
Sources of Spin-offs by Sector
A look into Biotechgate data sheds light on the diverse dynamics of spin-off formation across life science sectors and different parts of the globe. The chart below, which illustrates the proportion of spin-off sources by sector, shows that universities emerge as the most popular foundation source of spin-offs in most sectors. Companies categorized as “Biotech – Other” have the highest proportion of spin-offs originating from universities (63%). This finding highlights the significant role of academic institutions in fostering life science ventures.
Unsurprisingly, pharmaceutical companies show different trends, with universities being less dominant in their spin-off origins: Nearly half of all pharma company spin-offs stem from other established companies, 42% from universities and 9% from other public institutions or Non-Profit-Organisations (NPOs).
Spin-off Foundations by Year
An analysis of the number of spin-offs founded each year and still operating since 2013, shows that university spin-offs peaked in 2018, with a total of 148 newly founded ventures. In contrast, company spin-offs experienced a decline, reaching only 37 in the same year. However, over the past five years, all three types of foundation sources recorded a decreasing number of spin-offs. University spin-offs faced the sharpest decline, with a staggering 76% drop from 2018 to 2022. There may be several regulatory and funding-related factors contributing to this decline. It is also important to note that newly founded start-ups sometimes remain under the radar until their first financing round.
Dominating Spin-off Countries
Looking at the ten leading countries in the life science spin-off landscape, the United States dominates with the highest number of spin-offs across all categories. With 428 academic and 275 company spin-offs, the US significantly outpaces other countries. For public institution spin-offs, while the US still leads, Germany follows closely with 120 spin-offs.
When analyzing the geographical distribution by region, European universities have fostered more spin-offs than the US. The number of spin-offs from public institutions in Europe is more than double that of the US. Additionally, the Asia-Pacific (APAC) and Rest of the World (RoW) regions demonstrate a higher prevalence of spin-offs originating from universities than from other organizations.
Spin-offs Publicly-Listed on Stock Exchange
Lastly, let us turn our attention to companies that have undergone IPOs and the differences observed across regions. As the chart shows, there are more spin-offs from universities that have gone public in Europe and the Rest of the World. For Europe, this trend is largely driven by start-ups that went public in Sweden, the UK and France. Conversely, most publicly-listed spin-offs from the United States and the APAC region originate from other established companies. Fewer spin-offs that are listed on a stock exchange emerge from public institutions and non-profit organizations in every region.
To discover more insights like these, you can make use of Biotechgate’s advanced filters. Read our guide to find out how you can explore the origins of life science spin-offs in just a few clicks.