Trends in the German biotechnology sector in 2021

Amid the pandemic, the German biotechnology sector attracts record investment and has high expectations of policymakers

The German biotechnology sector’s expectations of policymakers are high. This was shown by the results of the annual trend survey by the biotech association BIO Deutschland. The assessment of the current and future political climate is much more positive compared to previous years. Although there are cases where the coronavirus pandemic has impacted the current and future business situation, most companies do not attribute their situation to the crisis. German biotechnology companies set a new record for capital raised in 2020, with more than €3 billion euros coming in via the stock market and venture capital funding. Two vaccine developers – BioNTech and CureVac – accounted for around half of this total.

The annual trend survey, which BIO Deutschland has been conducting since 2006, revealed a largely stable assessment of the current and future business situation and hardly any change in plans for employment and R&D investment. In contrast, the assessment of the current and future political climate differed markedly from previous years. Some 53 percent of respondents described the climate as good in 2020 (2019: 28 percent), while 58 percent expect it to improve in 2021 (2019: 20 percent). Overall, about 60 percent of companies said their business situation was not affected by the pandemic, while 40 percent reported they felt an impact, either positive or negative, from the pandemic. For 2021, 30 percent of respondents expect the pandemic to affect their business situation.

With more than €3 billion euros in capital raised in 2020, investment in the sector reached a new record high (the previous record was some €1.3 billion in 2018). Venture capital funding totalled €942 million, while €2.11 billion was raised via the stock market. This included two IPOs on the U.S. exchange Nasdaq by the Tübingen-based companies CureVac and Immatics. Half of the record sum was contributed by the SARS-CoV-2 vaccine developers BioNTech and CureVac.

Oliver Schacht, Chairman of the Board of BIO Deutschland, commented: “Over the past year, the biotechnology industry has shown the important role it plays in our health – whether through diagnostic tests, the first approved coronavirus vaccine or promising therapy candidates. It’s great that 2020 was also the first time we’ve seen such a high volume of investment in our companies. I think it has become clear in recent months that investing in biotechnology is an investment in our future. We now need to continue to work on improving framework conditions so that more research-based companies can realize large financing rounds. Only then can important innovations such as vaccines, cancer therapies or sustainable products be made available to society.”

BIO Deutschland’s Managing Director Viola Bronsema added: “The SARS-CoV-2 pandemic has almost overnight increased the awareness and appreciation of our industry among policymakers and the public. Of course, we would have preferred to achieve this without a crisis of such magnitude. Our companies’ assessment of the political climate has improved significantly as a result. Now those with political responsibility must take action. If we want the products developed by German biotech companies to be produced in Germany and provide benefits to patients, we need to improve the framework conditions, especially for equity investments.”

Findings of the 2020/2021 trend survey

About the survey:

For the 15th consecutive time, BIO Deutschland polled some 1,100 biotech companies including sector-specific service providers. Some 145 of them returned the questionnaire this year. The survey’s aim is to predict development in the current year, using the survey as a barometer of the sentiment within the sector. The index values are calculated by a method similar to that used by the ifo Institute. The values mainly represent the difference between positive and negative answers. The norm values are based on the results from 2006 (= 100%).

Current Business Situation

Some 59 percent of respondents rated their business situation in 2020 as good, while 9 percent said conditions were bad.

About 60 percent reported their business situation was not affected by the pandemic, while 40 percent reported they felt an impact. In percentage terms, the pandemic had the least impact on companies that described their current business situation as good. The greatest impact was seen among those who found it satisfactory.

Future Business Situation

Some 91 percent of respondents believe the business situation will improve in 2021, while 8 percent expect it to worsen.

About 70 percent of companies do not expect the pandemic will affect their future business situation, while 30 percent think it will leave a mark. The pandemic had the greatest impact on companies expecting a less favourable business situation, at 45 percent, while the pandemic’s impact on those companies expecting their situation to improve or remain consistent was the same, at around 30 percent.

Current Climate

Some 53 percent of respondents thought the political climate in 2020 was good, 39 percent found it adequate and 8 percent said it was bad.

Future Climate

Some 58 percent of respondents believe the political climate will improve in 2021, while 4 percent expect a change for the worse.

Employment outlook index

Some 56 percent of respondents intend to hire more staff, while some 10 percent plan to decrease their workforce.

R&D investment index

Some 49 percent of respondents said they plan to increase their R&D investment, while 9 percent intend to lower investment spending.