Europe's financing gap is key barrier for biotech industry, claims report

April 20, 2005

Brussels, 19 Apr 2005

A new report that compares the health of the biotechnology industry in Europe with that of the US has concluded that a lack of access to financing is the main barrier for biotech companies on this side of the Atlantic.

The report, published by biotechnology consultants Critical I, is the first of its kind to use a single definition of biotechnology to allow a true comparison between countries. While there are some positive trends, overall the results reveal that Europe still has a lot of work to do in order to catch up with the US.

For example, the report states that: '[W]hile Europe and the US have the same number of [biotech] companies, the US biotechnology industry employs twice as many people, spends almost three times as much on research and development [and] raises three to four times as much venture capital.'

The report defines what it calls the 'elite European company' - relatively large, still growing and continuing to invest in research and development (R&D). 'Elite European Companies can compete against US firms for finance, personnel and deals,' says John Hodgson, Director of Critical I. 'The problem is there simply aren't enough of them.'

The study concludes that the financing gap is probably the biggest barrier for the European biotech industry, particularly the lack of suitable financing later on in the business cycle, leading many companies to collapse after three to five years in operation.

A key element in addressing this financing gap, according to Johan Vanhemelrijk, Secretary General of the biotech industry association EuropaBio, is the response at EU level. 'It is crucial that the European Union, e.g. the [European Investment Bank] and [European Investment Fund], reconsider how they stimulate the market to invest in innovation,' he said.

There are some positive signs for Europe's biotechnology sector. Although it employs fewer people and generates less revenue, Europe has more biotech companies that the US, and is currently creating many new ones each year than its major rival.

Yet the widening gap in research investment - so crucial for creating new products and markets -is of great concern to the Commission. Speaking at the world life sciences forum BioVision in Lyon on 14 April, Commissioner for Enterprise and Industry Günter Verheugen highlighted that while in 1990 Europe spent 50 per cent more on pharmaceutical research than the US, by 2001 the situation had been reversed with 40 per cent more spent in US.

'We must not underestimate this widening gap. Losing R&D in life sciences is going to have major social and economic consequences for Europe,' said the Commissioner. 'I don't want to over dramatise the situation, but it is clearly high time to reverse this trend and unlock Europe's potential. I am convinced that the biotech sector can play a significant role in the economic development of Europe, and I do not want to see it falling further behind in global competitiveness.

'As far as I am concerned, I intend to use all means at the Commission's disposal to [...] ensure that European companies are at the forefront of the development and application of biotechnology,' the Commissioner concluded.

For further information, please consult the following web address:
http:///www.europabio.org/events/BioVisio n/CriticalI%20studyBiotech-Europ.pdf

CORDIS RTD-NEWS / © European Communities
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