European biotech companies falling behind

03 June 2024 13:23

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Zurich/Paris - Coface has identified that the European and therefore also the Swiss biotech ecosystem has fallen further behind the USA. At the same time, China is emerging as a fierce competitor. In Europe, research needs to be more effectively translated into industrial applications and more venture capital must be mobilized, according to Coface.

Coface economists have determined that the gap between the European and Swiss biotech ecosystem and its traditional competitor, the USA, as well as the emerging Chinese biotechnology industry, is widening. An analysis carried out by the trade credit insurance and risk management firm concluded that Europe is not falling behind in the creation of expertise, but rather in translating this into industrial projects in particular.

Within Europe, the biotech clusters are concentrated in Switzerland and the UK. Almost one third (91 out of 310) of all publications from European researchers included in major scientific journals are attributable to authors from Switzerland and the UK, i.e. from countries outside of the EU. According to Coface, this raises questions about the robustness of basic research in Europe. In addition, more than 80 percent of European investment in biotechnology projects goes to companies in the UK and Switzerland.

Generally speaking, small biotechnology companies tend to be responsible for innovations in this field at European level. According to Coface’s analysis, their biggest challenge is securing financing for clinical phases I and II, as profitability is still difficult to gauge at this stage. However, just 30 percent of financing in Europe is attributable to phase I, compared with a value of 56 percent in the USA. In fact, the USA accounts for the lion’s share of all global biotech investments. Coface states that owing to the symbiosis of universities, research centers, financing institutions, private venture capitalists, clinical trial agents and pharmaceutical producers stateside, Europe’s deficit in this regard is only getting bigger.

At the same time, according to Coface, China has established itself as strong competitor. Moreover, the trade tensions between China and the USA have impacted the biotech segment.

To ensure that Europe is not left trailing in the wake of this fierce competition, the European biotechnology ecosystem must strive to attract additional financial resources, above all from venture capital firms and industrial partners across the continent, Coface concludes. This would facilitate the development of the requisite production capacities, including in collaboration with major pharmaceutical laboratories, as Coface explains. After all, these labs boast acknowledged expertise in drug development processes and have significant financial resources at their disposal that could, Coface posits, make it easier to promote growth at European biotech companies. ce/mm

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