Acquisitions of biotechnology startups jumped in 2020, as buyers moved upstream to grab promising drugmakers while they were still private and relatively cheap.

Drug manufacturers bought 19 biotech startups last year, up from 15 in 2019, according to Silicon Valley Bank. Last year’s total was the highest since the 20 buyouts recorded in 2016. The median upfront sum paid in 2020 was $300 million, compared with $250 million the year before.

Buyers are competing with an exploding initial public offerings market. Eighty-four biotechs went public in 2020, topping the previous peak of 66 in 2014, according to SVB.

Median biotech IPO pre-money valuations, the value before a company goes public, reached a record, $500 million in 2020. Some acquirers aim to buy biotechs before they become more highly valued, publicly traded companies, SVB Managing Director Jonathan Norris said.

“We’re seeing unprecedented valuations of companies going public and great performance out there,” Mr. Norris said.

This post first appeared on wsj.com

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