A private equity firm focused on investing in pharmaceutical products in the late stages of clinical development is aiming to raise $1.5bn (€1bn) to capitalise on growing demand for new products, as spending on research and development for new medicines rises and fewer drugs win regulatory approval.

Celtic Pharma, whose operations are based in London and New York, is raising two funds, one which will focus on acquiring mid-stage product development projects in the US and a British-based fund to take controlling stakes in biotech firms.