VIENNA – A live – and lively – rendition of the overture to The Marriage of Figaro was the perfect start to the 2019 edition of BIO Europe Spring Monday. Mozart's great opera – premiered in Vienna in 1786 – celebrated love of the shared and unrequited variety, and while most biotech executives will be less emotional in their calculations, some will doubtless have to deal with rejection from the objects of their affection over the course of this week's partnering meeting. For those that do manage to strike a deal, the challenge will be to ensure that the course of the partnership runs smoothly. Even if partnering deals do not quite have the same longevity of a marriage, like that institution, they should not be entered into lightly.

In his customary slot ahead of the opening plenary, David Thomas, BIO's vice president of industry research and analysis, presented a mixed investment picture to delegates. Although the public markets crashed during 2018 – by Christmas Eve, the Nasdaq biotech index was 27 percent off its peak in June – the large M&A deals announced at the JP Morgan conference – Bristol-Myers Squibb Co.'s proposed $74 billion acquisition of Celgene Corp. and Eli Lilly & Co.'s $8 billion takeover of Loxo Oncology Inc. – kick-started a recovery. The index is up about 20 percent from the late 2018 trough.

The underlying performance of the biopharma sector, which delivered a record 59 FDA drug approvals in 2018, has helped to maintain the flow of funding. Last year was another record for R&D-stage IPOs in the U.S., which logged 47 IPOs with an average raise of $106 million, compared with 24 IPOs in 2017. Asia also performed strongly, with 12 R&D-stage IPOs with an average raise of $35 million, up from just three transactions in 2017. European R&D-stage IPOs were well down in 2018, Thomas reported, with just five transactions during 2018, down from 16 in 2017.

Venture capital investment "was unstoppable" across all three regions, Thomas said, with the biggest gain in the U.S., where funding rose to $12.4 billion from $7.8 billion in 2017. In Europe, the rise was more modest, from $2 billion to $2.6 billion. In Asia, funding rose from $1.3 billion to $2.4 billion. The scale of the transactions is reaching unprecedented heights. "We're seeing series A rounds that are north of $200 million," Thomas said. The mobilization of Chinese capital, both at home and abroad, is one source of new money. The entry into biotech by Swedish furniture giant Ikea AB is another. It participated in Samumed LLC's $438 million megaround, which was bettered only by Moderna Inc.'s $500 million pre-IPO Series G round.

Moderna's European rival Biontech AG topped the chart of ex-U.S. private equity deals, with a $270 million series A round. Strikingly, 10 of the top 15 ex-US venture capital investments involved Chinese firms, including Cstone Pharmaceuticals, Brii Biosciences Ltd., I-Mab Biopharma and Innocare, which occupied the other top five slots.

The wash of cash is not permeating all parts of the industry. Indeed, it is highly concentrated – the top quartile of firms accounted for about 70 percent of the cash in 2018, Thomas said. Nor is it directed at the key public health challenges that face the world. "Some disease areas are underrepresented in this golden age of funding," Thomas said. Most of it is concentrated on oncology and rare disease.

Infectious disease, tropical disease, pediatric conditions and highly prevalent chronic conditions, including cardiovascular disease, diabetes, obesity, depression, pain and addiction continue to be relatively neglected.

Many investors opt not to participate in the "hard climbs" associated with bringing new therapeutics to market in these areas. Those that do can find the summit to be a hostile environment because of insufficient reimbursement. BIO is, Thomas said, working with regulators, payers, patient groups and other stakeholders on strategies that would encourage investors to return to these neglected areas.

"A lot of these areas are poorly served, because they're poorly understood," David Rossow, founding partner of the Strategic Investment Fund of the Seattle-based Bill & Melinda Gates Foundation, commented during the plenary that followed Thomas's presentation.

Rossow casts himself as "a cynical investor on one side and an optimistic philanthropist on the other." The foundation's focus is on reducing the global disease burden by focusing on where it is highest, as measured in disability adjusted life years (DALYS). That takes it into infectious diseases such as HIV, dengue fever and malaria, as well as maternal and neonatal health and nutrition. Partnerships are key to making progress, particularly in the global south, where it is difficult to commercialize products. The foundation is taking equity positions in some of the firms it backs, which underlines that it is "along for the ride" and not just a supporting player.

Rossow declared himself to be "optimistic for a cynical reason."

Generation Xers and milliennials will inherit $30 trillion from baby boomers over the next 30 years. That will reshape the philanthropic landscape – and will lead to a rise in impact investing.

"Biopharma is a perfect place to do that," he said.

Another pull factor could be China's integration into the global health care innovation system. This will offer large-scale opportunities for drug developers working on what are currently considered rare diseases. Gastric cancer and hepatocellular carcinoma are regarded as rare diseases in western markets, but they are large indications in China, Jonathan Wang, senior vice president and head of business development at Shanghai-based Zai Lab Ltd., told delegates. China has half of the world's liver cancer population.

Because of the scale at which it operates, big pharma will always play a key role in determining capital allocations to drug development.

"We're going to make an impact for patients one way or another," Michael Crowley, head of business development for Roche AG pharma research and early development, told BioWorld. "It's not a question of this space or that space." The company's R&D spend in 2018 was $11 billion. Its focus is on engaging with the science and applying its "best judgment" to take forward the most promising opportunities.

Oncology remains a core focus – it is responsible for almost 60 percent of pharmaceutical sales and, along with immunology and neuroscience, is one of three R&D priorities.