Healthcare sector led VC field last year

Healthcare venture capital -- which includes biotechnology -- led the pack in 2003, receiving more Australian venture capital funds than IT software, communications, business services or general technology, according to a new report.

VCs invested more than AUD$200 million in the healthcare sector, according to the report by the Australian Venture Capital Journal.

Tipping the scales in favour of the sector was the $120 million sale of Mayne's hospitals (ASX:MAY) to venture capitalist CVC Asia, now rebadged as Affinity Health.

The report said that 2003 has been a prosperous year for the private equity sector, and overall funds under management had grown from $26.7 billion in 2003 to $28.9 billion.

"Healthcare is leading the pack and has done for the last few quarters," said AVCJ editor Victor Bivell. He said the survey defined the healthcare sector to include biotechnology, health services, and medical devices.

Of Australia's 131 venture capital firms, 11 specialise in the healthcare sector. A group of more diversified technology investors also dabble in the market.

"There is a very strong innovative research and development trend and company formation stage. [We are seeing] a lot of biotech and pharma development," Bivell said. "A lot of companies have secured investment from more than one venture capitalist. This is a good sign. We expect that this revitalisation will have a significant impact on the industry."

Australian healthcare venture capital specialists include GBS Venture Partners, and Queensland Biocapital Funds.