Investment in Life Sciences

Historic Metrics

Historic funding sources that have been tracked and analyzed by OLS include:

• U.S. Small Business Administration SBIR/STTR
• National Science Foundation
• Congressionally Directed Medical Research Program
• Ohio Third Frontier

Life Sciences Venture Funding

Bringing life sciences technology to market is an exceptionally costly process, requiring years of research, clinical trials, and regulatory considerations. Companies often seek investment from angel investors, venture capital funds, and private foundations to support their work beyond what institutional grants can provide.

OLS analysis indicates that 57 Ohio life sciences-related companies announced $1.3 billion in private investment in 2021. This is the highest amount recorded since OLS began tracking deals in 2004. Recent years have been strong in the state, with the previous record set in 2020 ($797M), followed by 2018 ($790M).

Over 550 private investment firms have contributed to the growth of Ohio’s life sciences industry by investing in over 670 companies in the last 20 years. Of these funding sources, at least 150 have been located in Ohio, many of which are still actively investing or managing investments in life sciences commercialization and success.

Funding distribution across life sciences sectors in 2021:

• Digital Health led with $684 million and a five-year average of $351 million.
• Pharmaceuticals & Therapeutics was second, raising $433 million with a five-year average of $186 million.
• Medical Devices finished the year with $188 million and a five-year average of $134 million.

Central and southwest Ohio were first and second for venture investment among Ohio’s six regions, recording $966 million and $209 million, respectively. Northeast Ohio was third in 2021 with $107 million.

Life Sciences Exits

Often an investor’s return on their investment is realized in the form of an exit. Typical exits include an acquisition by another company, the launch of an initial public offering (IPO) as a publicly traded company, recapitalization to buy out existing investors, licensing of a product or platform technology, or selling individual equity positions to new investors.

OLS began tracking private investments and exits in the Ohio life sciences community in 2004, with over $49.5 billion recorded to date. Exit activity in the state remained strong in 2021, totaling $1.1 billion. With the terms of numerous deals remaining undisclosed, the actual value of life sciences exits in Ohio is much higher than can be reported.

Most companies receiving investment from outside of Ohio have remained in the state, including those receiving funding from coastal U.S. investors or foreign sources. The notion that investors will force companies to relocate is rebuffed by deal after deal resulting in the growth of Ohio-based operations and an influx of ideas, support, and new jobs in the state.

National Institutes of Health Funding

Funding from the National Institutes of Health (NIH) is essential to research and development in the life sciences, providing support for life-changing discoveries at Ohio’s academic research institutions and private companies. With roots tracing back to a single Marine Hospital Service laboratory established in 1887, the NIH is currently made up of 27 Institutes and Centers, each with a unique research focus. Areas of study include cancer, vision, heart health, genome research, alcohol & drug abuse, infectious diseases, medical imaging, diabetes, environmental health, and more.

In 2021, $965 million was awarded to 69 Ohio institutions and companies by the NIH (compared to the national average of $718 million). Ohio’s highest record of $995 million had been set in 2020, but fast forward, and Ohio has secured a record-breaking $1 billion in awards from the NIH during fiscal year 2023.

Ohio’s top five NIH award recipients, The Ohio State University, Case Western Reserve University, Cincinnati Children’s, Cleveland Clinic, and University of Cincinnati, remain among the top 100 nationally. Combined, these five institutions received $787 million, 82% of the statewide total.

Ohio continues to be ranked 10th in the nation in terms of total state funding from the NIH. Among nearby states, Ohio’s 2021 NIH funding surpassed Michigan ($915M) and Indiana ($374M), but trails ninth-ranked Illinois ($1.2B) and sixth-ranked Pennsylvania ($2.1B).

Small Business Innovation Research and Technology Transfer Funding

The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs are administered by the U.S. Small Business Administration’s Technology Program Office, with participation from many federal departments, such as the NIH, NSF, and the Department of Defense. These competitive programs fund small, high-tech, innovative businesses’ research and development efforts. SBIR/STTR funding is widely considered to be an indicator of a new technology approaching commercialization and can serve as validation to strengthen a company’s position for future investment from the private sector.

OLS analysis indicates that since 2000 the SBIR/STTR program has contributed $533 million to life sciences innovation in Ohio, representing 26% of the state’s $2.1 billion in total program awards. 2021 data indicates Ohio companies collectively received $126 million in grants, of which $24 million (19%) was life sciences related. 

Note:  Many life sciences-related SBIR/STTR awards flow through the NIH and are reflected in NIH funding totals. To avoid duplication, overlapping awards are deducted from SBIR/STTR figures in aggregate totals. Because SBIR/STTR data does not offer a built-in life sciences filter, OLS conducts its own analysis of individual awards to determine inclusion in life sciences-related totals.

National Science Foundation Funding

The National Science Foundation’s Directorate for Biological Sciences (NSF BIO) supports research activities that advance the understanding of biological knowledge. The agency operates a variety of programs designed to promote research collaboration and discovery related to biological molecules, cells, tissues, organs, organisms, populations, communities, and ecosystems.

The NSF awarded $78 million in grants to Ohio-based organizations in 2021, following $86 million awarded in 2020, and the record-setting $136 million in 2016. Recent, high-value funding years have been driven in large part by awards to Battelle for the management of the National Ecological Observatory Network (NEON).

Ohio ranks third nationally in cumulative impact since the year 2000 with Ohio institutions receiving $789 million from the NSF to support scientific research. California ($1.8 B) and New York ($1.2 B) hold the top two funding levels. The national average for all US states and territories that receive NSF BIO funding was $15 million in 2021.

Congressionally Directed Medical Research Programs Funding

The office of Congressionally Directed Medical Research Programs (CDMRP) originated in 1992 to cultivate new approaches to biomedical research, military health, and other critical areas determined by the needs of the American public, the military, and Congress. Areas of research supported by these funds in Ohio include cancer, drug resistance, hereditary disorders, genomics, medical imaging technology, biomarkers, nanotechnology, hormonal therapy, computer-aided diagnostics, pharmacology, and more.

Nationally, through over 18,200 awards since the program began operations, via extramural grants, contracts, and cooperative agreements, the CDMRP has managed over $14 billion in Congressional appropriations for peer-reviewed research aimed to prevent, control, and cure disease.

Since 1992, Ohio has received nearly $413 million in CDMRP funding. In 2020, Ohio was home to 34 projects funded by $33 million. 2019 set the state’s record at $49 million to 49 programs.

Ohio Third Frontier Funding

Since its inception by the State of Ohio, the Ohio Third Frontier (OTF) program has been a game-changing resource for the Ohio life sciences industry. The program targets investment opportunities that have the highest potential for product commercialization and job creation. A relatively large portion of these investments has been deployed within the life sciences community.

Since 2002, over 370 life sciences-related projects have been funded with nearly $1.9 billion in collective state and corporate matching investments. More recently, from 2019-21, 50 life sciences-related projects were funded by the Ohio Third Frontier with awards of over $28 million.

Current programs and funding opportunities available through the Ohio Third Frontier include the Early Stage Focus Fund, the Ohio Venture Fund, the Pre-Seed/Seed Plus Fund Capitalization Program, and the Technology Validation and Start-up Fund.