Venture capitalists would rather back US biotechnology spin-off companies than those from the UK because university technology-transfer offices in the UK fail to market them well enough.
This is the conclusion of a group of MPs looking into why the UK is losing its status to other European countries.
The House of Commons trade and industry select committee's report on the UK biotechnology industry says there is a danger that the UK could lose its prominence because of a lack of experience in its technology-transfer offices.
"The perception is that US companies are superior to, and have better quality management than, those from Britain or the rest of Europe," the report says.
The UK was close behind the US in developing a biotechnology sector, with most new companies founded on the back of academic research. But since the mid-1990s, other European countries have stepped up their activity, with some estimates now putting Germany ahead of the UK.
The committee said that increasing expertise in technology-transfer companies could provide better prospects, but there would still be the barrier of perception and it would be up to individual companies to prove their viability.
David Catton, managing director of Sheffield University Enterprises Limited, said lack of funding was to blame: "Most technology transfer is hideously undercapitalised. We don't have access to money at an early stage to recruit and retain professional managers," he said.
He added that, although universities could afford to take out patents, they often could not afford the further years of development to prove the viability of the idea.
The report also warns that regional rivalry could undermine the UK's strength in biotechnology since too many regions had targeted the sector for cultivation.