Venture capital funding in life sciences – including biotechnology and medical device manufacturing – decreased 22 percent from the fourth quarter of 2011 in the first quarter of 2012, according to a PricewaterhouseCoopers report.

Venture capitalists invested $1.5 billion during the that quarter. Deal volume was also down, dropping 11 percent during the same period.

When compared to a year ago, dollars invested into life science companies decreased 8 percent and the number of deals declined 12 percent from the $1.6 billion invested in the first quarter of 2011.

“Venture capitalists remained cautious during the first quarter after a lackluster fourth quarter in the public markets, as evidenced by the shift from investing in earlier stage companies to a focus on later stage companies in the first quarter,” said Tracy T. Lefteroff, global managing partner of the venture capital practice at PwC.

During the first quarter, biotechnology accounted for 53 percent of funding, while medical devices claimed 47 percent of dollars invested. In comparison, during the fourth quarter of 2011, biotechnology captured 73 percent of investment in the sector and medical devices accounted for 27 percent of the total.

Biotechnology investing decreased by 43 percent with $780 million going into 99 deals. Despite the drop, biotechnology ranked second in terms of overall dollars invested, second only to the software industry. On a year-over-year basis, biotechnology investments decreased 18 percent with deals down 9 percent, with $949 million going into 109 deals during the first quarter of 2011.

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Medical device investments rose 33 percent in dollars quarter-over-quarter while the number of deals dropped 6 percent during the same time period. With $687 million going into 72 deals in Q1, the medical device industry ranked behind software, biotechnology, and industrial/energy in dollars invested.

“A more active M&A market may be the reason that the Biotech industry experienced a decline in investing in Q1, as VCs saw more of their portfolio companies experience exits during the first quarter,” said Lefteroff. “While on the surface, the jump in dollars invested in the Medical Device industry during Q1 may seem surprising given the 22 percent drop in life sciences funding overall, a deeper dive shows that companies in the Later stage of development accounted for more than half of the investments in this industry.”