Est. 3min 02-06-2006 (updated: 05-11-2012 ) Euractiv is part of the Trust Project >>> Languages: Français | DeutschPrint Email Facebook X LinkedIn WhatsApp Telegram An industry study on biotechnology shows that the European small biotech companies lack funding to grow into mature companies. They risk becoming ‘greenhouses’ for better funded US high-tech firms that buy them up. 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. Read more with Euractiv Commission urges regions to get ready for FP7 The regions should not wait for the official adoption of FP7 to consult their regional innovation partners, to fine tune innovation strategies and to submit the programs to the Commission. Subscribe now to our newsletter EU Elections Decoded Email Address * Politics Newsletters Positions"Europe can be a breeding ground for European companies, or it can be a greenhouse for high-technology firms that are acquired by better funded US firms. The development of technology will follow the money that allows it to develop. Europe needs to ensure that the money is here," said John Hodgson from Critical I, the specialist consultancy that conducted the study commissioned by EuropaBio. Chairman of EuropaBio, and President and CEO of BASF Plant Science, Dr Hans Kast urges introduction of "significant financial and tax incentives to investors and venture capitalists to invest in biotechnology such as the Young Innovative Company (YIC) concept, which was introduced in France in 2004, and gives generous tax and social cost incentives for small companies developing new, science-based products". EuropaBio is campaigning to make the YIC concept the norm across EU-25 to attract more investors to biotech sector. The employers' federation UNICE has emphasised that an attractive climate is needed for investors, entrepreneurs and researchers, as the current 'brain drain' is preventing Europe from reaping the fruits of biotechnology. The Standing Committee of European Doctors (CPME) has called on the Commission to find a new balance between publicly and privately funded research into health applications, without giving industry the almost exclusive responsibility. "Questions of intellectual property are of crucial importance in this field and a clear distinction should be made between 'discoveries' and 'inventions' with respect to their patentability," the organisation argues. Greenpeace and other environmental pressure groups have been fighting a fierce campaign against biotechnology and especially its uses in agriculture and food and they oppose patents on all genes. BackgroundThe Commission's 3rd progress report on the European strategy for life sciences and biotechnology qualifies 2004 as a year of consolidation rather than growth for European biotechnology and that the situation regarding the sector and its competitiveness needs to be improved (see EURACTIV 24 October 2005). The report highlighted the need for a reflection on the role of life science and biotechnology in the Lisbon Agenda and, accordingly, a study on the social, economic and environmental consequences and challenges of modern biotechnology was launched. Timeline A recent Commission and the UK presidency 'Risk capital summit' examined the factors which influence the flow of funding for business initiatives. As follow-up of the conference, the Commission will, in 2006, publish a communication on Financing growth - the European way. The Commission's Joint Research Centre study on the social, economic and environmental consequences and challenges of modern biotechnology is planned to be completed by mid 2007. The Commission is set to update its 2002 biotechnology strategy before the 2007 Spring European Council. Further ReadingEU official documents Commission:Fuelling growth by facilitating finance(2006) PreLex:Commission Communication: Life Sciences and Biotechnology - A Strategy for Europe(2002) [FR] [FR] [DE] Commission:Biotechnology International Organisations OECD:OECD Biotechnology Statistics 2006(22 May 2006) Business & Industry EuropaBio press release:European Biotech industry figures show signs of chronic under-funding(30 May 2006) EuropaBio fact sheet:Young Innovative Company Status (YIC) UNICE:European business supports EU-str ategy for biotechnology(7 November 2002) Standing Committee of European Doctors:Comments on the consultation document "Towards a strategic vision of Life sciences and biotechnology"(26 November 2001) Press articles Reuters:European biotech firms say lack follow-up funding MarketWatch:European biotech companies need capital, EU support Surveys and data Critical I:Biotechnology in Europe: 2006 Comparative study(30 May 2006) Critical I:European biotechnology: must do bigger(30 May 2006)
