Ambitious European biotech firms still look to the US when they need large sums of venture capital, according to EU officials, who fear home-grown talent is crossing the Atlantic.
Not only is it easier for high-growth start-ups to access funding in the US – enticing young research-based companies to abandon Europe – but Europe's own venture capital industry continues to lose the expertise of talented fund managers.
Speaking at a conference on innovation in healthcare, Giulia Del Brenna of the European Commission's enterprise arm said biotech SMEs are a major source of dynamism but these companies have a hard time in Europe.
She said that economic prospects are already picking up in the US, but Europe is still dogged by structural problems that predate the current crisis.
"We have a funding gap. It is said that it's easy to raise the first €3 million and it's hard work to get to €25 million – but after that you'd better go to the US. And that is exactly what we don't want," said Del Brenna.
As well as addressing structural problems in the venture capital industry, Del Brenna said some of Europe's best venture capitalists currently work in the US.
"We need to develop the skills and expertise required to calculate the risk and invest. To take these kinds of risk you have to know the sector – that means understanding the science, the regulatory pathway and even reimbursement strategies in 27 member states," she said.
Del Brenna said the Commission is looking to make investments in early-stage biopharmaceutical companies more attractive for micro-fund business angels, as well as removing barriers to cross-border operations of venture capital funds.
Around €6 billion is earmarked for health research in the EU's framework programme (FP7), 15% of which is supposed to go to SMEs. Separately, €2 billion has been invested in the Innovative Medicines Initiative (IMI) – a public-private partnership designed to bring companies and experts together to collaborate on pre-competitive research projects.