Nordic Life Science asked Pekka Simula, Partner, Innovestor Life Science, about his predictions for 2024, including market trends, financing opportunities for SMEs and business strategy advice.

What do you predict will be the dominant market trend within life sciences this year?

“In the Nordics, syndication. Even while globally there’s talk about syndication being passé because of ever bigger new funds, there aren’t too many active life science funds in the Nordics, and they aren’t too big. In the wake of GLP-1 successes, metabolic diseases will continue to attract interest, or some may say, hype.”

When it comes to opportunities to find funding or financing, what’s your outlook?

“Continued high interest rates will shift investments to later (at least clinical stage) opportunities, or if earlier, cases need to be so exceptional that they attract enough investors to form a strong syndicate to reduce the financing risks. Early stage digital therapeutics companies will have a hard time. We have started using the term “DTx winter”.”

Early stage digital therapeutics companies will have a hard time. We have started using the term “DTx winter”. Oncology continues to be crowded. You have to be unique to stand out.”

“Oncology continues to be crowded. You have to be unique to stand out.”

What are some of your basic criteria to invest capital in a company? What factors will you consider especially important this year?

“It’s always a combination. Compelling science, team, business case/market size, IPR, differentiation from competition, feasibility of plans, and exit path are some of the main criteria we assess. Right now, a clear exit path is maybe even more important than in the past.”

Right now, a clear exit path is maybe even more important than in the past.”

What strategies can Nordic life science SMEs use to keep the lights on until funding for the sector improves?

“Non-dilutive funding, obviously. They also need to think about their burn rate and focus on the essentials, and consider possibilities for early partnering. Accept the fact that the sky-high valuations of 2021 are gone. If you raised your last round then, good for you, but consider a reality check on your valuation.”

Accept the fact that the sky-high valuations of 2021 are gone. If you raised your last round then, good for you, but consider a reality check on your valuation.”

“Some companies have gone for crowd-funding but that may cause challenges in the long run, as many big investors are allergic to a long cap table.”

What new life science technologies do you believe will gain ground during 2024?

“We don’t believe in any dramatic change. This is a slow-paced industry and new technologies will take time to gain ground.”

What impact will the ongoing wars and conflicts and current recessions have on life science investments in the Nordic region this year?

“Raising new funds has already become much tougher. Even some experienced managers with a strong track record are having a hard time closing their next fund. That will directly impact early stage funding in the Nordics.”

What do you predict when it comes to M&A activity in the Nordic life science industry this year?

“Globally we expect deal activity to remain the same as last year. In the Nordics, it might even slightly increase, because challenges in fund-raising will push some companies toward partnering earlier than they had planned. Consequently, average deal size might be smaller, or the deals more back-loaded.”

Anything you would like to add when it comes to predicting the Nordic life science financial landscape in 2024?

“We believe that some IPO hopefuls will emerge also in the Nordics, and hopefully they are strong cases that will perform well. At the same time, we will see some Nordic penny stock companies, listed at the peak, switch off their lights. There will be some healthy lessons learned.”

Photo: Harri Toikkanen