OrbiMed, a major global financier of biopharmaceutical companies, has successfully amassed $4.3 billion, earmarked for investment in emerging healthcare and life sciences startups in the coming years. This substantial sum represents the combined capital raised across three distinct funds: Private Investments, Asia Partners, and Royalty & Credit Opportunities. Carter Neild, a managing partner at OrbiMed, noted that while the Asia Partners fundraise is in line with the amount secured in March 2021 when the previous fund closed, the other two funds have seen remarkable growth, with increases of approximately 30% to 35%. The net amount of $4.3 billion marks a 23% expansion compared to the $3.5 billion raised across three predecessor funds in March 2021.
Neild emphasized the importance of ensuring that the fund size aligns with the evolving landscape of opportunities. Factors such as increasing innovation and the growing demand for non-equity funding have expanded the investment prospects. Over 90% of the capital in this fund was contributed by investors who had previously participated in OrbiMed funds, primarily hailing from pensions and sovereign wealth funds, although specific details were not disclosed. OrbiMed actively sought collaboration with leading medical and research institutions in the US to foster strategic dialogue.
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With a fund of this magnitude, OrbiMed has a wide array of investment possibilities at its disposal. Carl Gordon, Ph.D., who leads the global private equity team, emphasized the firm’s intent to invest in areas that are currently thriving and also in those that represent future potential. Of particular interest is small-molecule drug discovery, notably exemplified by the development of KRAS inhibitors by companies like Mirati and Amgen. This focus on small-molecule drug discovery is significant, given the recent concerns surrounding small-molecule development following the passage of the Inflation Reduction Act, which allows price negotiations for small molecules four years earlier than biologics.
Gordon pointed out the appeal of small-molecule drug discovery, highlighting the broader druggability of many proteins. Additionally, antibody-drug conjugates (ADCs) have caught OrbiMed’s attention, particularly those targeting novel and undisclosed targets.
In light of the challenges associated with securing non-dilutive financing, OrbiMed’s royalty and credit business has gained prominence. General Partner Matt Rizzo explained that OrbiMed collaborates with companies on the cusp of drug approval, offering financial support ranging from $100 million to $400 million to bolster commercial teams or facilitate product launches. Repayment options include traditional loans or a share of revenue, the latter of which holds appeal in the current high-interest rate environment.
Rizzo also noted that the downturn in IPOs and public market activity has resulted in a significant upswing in the healthcare structured royalty and credit sector. OrbiMed is well-positioned to leverage this trend to support promising healthcare initiatives.
