Brussels, 08 Sep 2004
The UK's biotechnology industry has welcomed the announcement of a new study by the UK government that will investigate the impact of pre-emption rights on companies' ability to raise capital.
The biotech industry has made it clear to the government that current legislation, which requires firms to first go to existing shareholders when new shares are issued, makes it complicated and expensive for companies to finance research and development. These regulations were introduced in 1976 as part of the EU Second Company Law Directive.
This position was also presented to the government in the report Bioscience 2015, a report commissioned by the government to identify and clarify the issues that are critical to the future competitiveness of the UK biosciences sector. The report identified barriers that could significantly affect the competitiveness of the sector, and made recommendations on what action should be taken to overcome these barriers. One such recommendation was that pre-emption guidelines should be amended so that life science companies are able to issue up to at least 20 per cent of their share capital to any investor.
Biotech companies claim that regulations such as these are forcing them to consider moving some of their operations to the US, where it is easier to raise capital.
The UK government will use the results of this new study to contribute to discussions on the EU Directive, which is currently under review.