Fresh figures on European biotech industry show that Europe's science base in the sector is inventive and that its inventors are entrepreneurial, but states that "Europe's biotechnology project is in danger due to insufficient funding".
Biotechnology in Europe: 2006 Comparative study, released on 30 May 2006, states that under-funding of European biotech companies results in:
- instead of building value, companies put their effort into staying in business,
- slow growth of companies,
- young companies taken over by their competitors,
- even mature companies being acquired by their better funded US counterparts,
- companies looking to establish a presence in the US to access the more generous financial market.
"Capital available to European biotechnology companies is about one quarter of the amount available for companies in the US," said John Hodgson, director of Critical I, the specialist consultancy for biotechnology, which authored the study. "Venture capital is a luxury. Less than 10% of European companies win venture funds each year."
He also highlighted "a mismatch of European and corporate ambitions as to biotechnology". Faced with poor funding in the old continent, EU companies are increasingly turning to United States to live up to their ambitions.
EU wants companies that employ people, generate revenues and invest in R&D. However, the European biotech sector is dominated by young, small companies, 55% of companies being maximum 5 years old. According to the report, in order to develop to big, mature companies, they need more funding.
In order for European biotech industry to attract external funding, the EU needs to establish a reliable legal framework for approval of biotech products and clear and open market access for them", explained Chairman of the European Association for Bioindustries (EuropaBio), Hans Kast. "The current lack of political will, for example on the authorisation of genetically modified (GM) products, sends a totally wrong message to potential investors," he continued.
As to the EU-US comparison of the sector, the report's figures show that for the same number of biotech companies, around 2000 both in the EU and the US, the US sector:
- employs twice as many people,
- spends three times as much on R&D,
- has twice the number of employees involved in R&D,
- raises over twice as much venture capital,
- has access to 10 times as much debt finance,
- earns twice as much revenue.