Hallie E. Kuhn
Senior Vice President, Science and Technology & Capital Markets at Alexandria Real Estate Equities
Thank you, Joel, and good afternoon, everyone.
This is Hallie Kuhn, SVP of Life Science and Capital Markets. Today, I'm going to review the fundamentals of the $5 trillion secularly growing life science industry, what these fundamentals mean for the health of our diverse life science base, and how our tenant science dictates the need for Alexandria's Labspace infrastructure. In 2008, on the heels of a great financial basis, the size of the public biopharma industry was around $2.5 trillion, and approximately $11 billion in venture capital was invested in private life science companies. There was no cure for hepatitis C, obesity was considered too complex to ever treat with an effective therapy and gene and cell therapies were a hope, not a reality.
Today, the industry is valued at over $5 trillion. Venture capital is on pace to reach 4x the level deployed in 2008. 600 additional novel therapies have been approved by the FDA and countless lives have been improved, extended and saved. Coming out of this bear cycle, albeit with stops and starts along the way. The life science industry is in a profoundly different place compared to previous cycles, with a fundamentally strong framework to accelerate long-term growth of the industry and demand for Alexandria Labspace. With the long-term perspective as a backdrop, let's step through first quarter trends in the life science industry.
First, with respect to life science venture investment, nearly $11 billion of deployed capital was announced in the first quarter and $100 million-plus mega rounds accounted for 34 deals, the highest number in the last 8 quarters and any quarter prior to 2021. These trends bode well for demand from new and existing private biotechnology tenants, which account for 10% of our ARR. Moving on to our pre-commercial and commercial public biotech tenants, which represent 9% and 16% of our ARR, respectively. Follow-on and pipe financings achieved one of the highest quarters on record, totaling $15.5 billion, of which $1 in every $4 was raised by an Alexandria tenant. This past week, long-time Alexandria tenant, Intracellular Therapies, announced clinical data for their first-in-class therapy, lumateperone, for treatment of depression and went on to raise $500 million.
The story here is that demand is milestone-based, and for companies that achieve their target milestones, typically clinical data, they have access to meaningful capital to accelerate their science and expand. Third, our multinational pharmaceutical companies, which represent 20% ARR. M&A is a key headline for this segment. 2023 was a record for acquisitions, and first quarter continued at a strong pace, eclipsing $40 billion in announced deals. This activity reflects large pharma's strong balance sheets and pressure to expand their pipelines with innovative therapies to counter the over $200 billion in revenue at risk from patent expirations through 2030. M&A is a robust sign of the health of the industry.
And as capital is recycled back to investors and entrepreneurs, it will be redeployed into the next generation of life science companies. Last, are our life science products, service and device tenants, which represent 21% ARR. A trend we are watching closely is pressure from Congress to limit utilization of Chinese CDMOs under the proposed BIOSECURE Act. Whether or not the legislation passes, this is positive for our US-based CDMO tenants, which analysts expect to see a substantial increase in demand and will help ensure we maintain our national competitive edge in such a critical industry. Switching gears, let's put on our lab coats and examine how our tenants research dictates their lab requirements.
Illustrating with a real-world example, consider a private biotech company developing precision oncology medicines that is expanding into 20,000 square feet. Working directly with Alexandria's in-house lab operations team, they placed 328 pieces of equipment in the lab, ranging from bench top centrifuges to freezers, cryo tanks, DNA sequencers and advanced microscopes. 10 pieces of equipment, including negative 80-degree freezers require emergency power as it is critical this equipment operates 24/7 to ensure hundreds of thousands of dollars of experimental samples are safeguarded. Now where this equipment is placed is not based simply on the square footage required but the process flow of their experiments. A single cell biologist utilizes equipment spanning multiple benches, chemical, fume hoods, tissue culture suites and microscopy rooms.
Beyond that, she moves back and forth through the lab and adjacent nontechnical space, conference rooms and communal kitchen throughout the day. Lab space cannot be equated to traditional office desks dictated solely by the number of workers, but is more akin to a data center where the space needs are driven by the physical equipment. While highly trained scientific talent is required to oversee the science, it's a scientific workflow and instrumentation use that dictates the lab footprint. On a related topic, given the immense volume and complexity of data required to inform AI algorithms, many AI-centric tenants have heavy equipment needs that require significant laboratory footprints.
A great example is South San Francisco-based tenant, insitro, with whom we announced a significant early extension this quarter. AI is an amazing tool, but the laboratory is still the workbench. So circling back to where we began. In the past 15 years, the life science industry has doubled in size, along the way, improving countless lives. Projecting 15 years into the future, the growth trajectory of this industry is massive. As companies work to cure diseases, such as Alzheimer's, autoimmune disease, and the nearly 7,000 rare diseases that affect 1 in 10 Americans. As a trusted partner to the world's leading life science companies, our job is to safeguard our tenant's mission-critical research and support and catalyze discoveries that will shape the future of medicine.
With that, I will pass it to Peter.