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European biotech flourishes


The European biotechnology industry has made a remarkable recovery following the market crash six years ago, with growth reaching double figures in 2006 and venture capital at an all-time high.

From the 12% sales decline recorded in 2003, revenues increased last year by 13% to €13.3bn, and market capitalisation grew 43% to €62.1bn. At the same time, financing rose 45% to €4.7bn and venture capital financing broke all previous records at €1.5bn.

Leading the European revival is the UK biotech sector. As William Powlett Smith, head of Ernst & Young’s UK biotech team, commented: “Across Europe, the UK continues to lead in product development, leveraging a much larger base of publicly-traded therapeutics companies compared to other countries in the region. Forty of these companies have 147 clinical stage products in their pipeline, and eight out of the top ten mergers and acquisition deals involved UK companies.”

Since the European biotech sector emerged from a prolonged period of restructuring in 2005, there has been cautious optimism that the industry would bounce back.

According to Ernst & Young’s recent publication Beyond borders: global biotechnology report 2007, European public biotech companies repeated the pipeline success story of 2005, with 163 new drugs added to the development pipeline of publicly-traded companies, bringing the total to 692. Significantly, Europe’s private companies had more products in the pipeline than public companies, at 802 products compared with 692.

Growing confidence in the sector was demonstrated by record levels of financing. Mr Powlett Smith said: “In many ways 2006 has been a very impressive year for biotech financing in Europe. The industry raised a massive €4.7bn, increasing at almost twice the growth rate seen in recent years, with venture capital eclipsing amounts raised during the height of the genomics bubble.”

The amount of private equity raised by European biotech companies passed €1.5bn for the first time. This interest in the industry by the financial community was reflected by the pharmaceutical companies.

“Investors are keen to keep biotech companies going as they are good bedfellows for pharmaceutical companies. And when pharma shows an interest in a biotech company the share price can increase enormously,” Mr Powlett Smith commented.

On the future of biotech, he was more circumspect. “Biotech is the new arena and is supplanting chemistry-based solutions,” he said. “The biotech industry is making parts of the pharmaceutical industry obsolete. It is a question of whether pharma will remodel itself with the help of biotech or whether biotech will ultimately replace some pharma companies.”

Pharma Times 16/04/2007


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