Trends in the German biotechnology sector in 2024

Biotech industry: financing remains stable – turnaround on the horizon

Despite the tense situation on global financing markets, the German biotechnology industry managed to raise around €1.08 billion in capital in 2023, a slight improvement over the previous year (€920 million euros). Some €533 million of this flowed into private companies in the form of venture capital, while €547 million was injected into listed companies through capital increases, according to the survey results published today by the biotech association BIO Deutschland. The association’s annual trend survey also shows that company directors again have a more positive outlook for the future, although they still assessed their business situation in 2023 as being markedly worse than in 2022. However, there continues to be a negative trend in terms of hiring intentions and R&D spending for the coming year.

Around 29 percent consider their current business situation to be bad, while in 2022 only 13 percent said so. In contrast, some 35 percent expect their business situation to be better in 2024 than in 2023, compared to just 26 percent last year. The number of companies that intend to cut staff has also increased, with 14.5 percent planning to do so, around three times as many as a year ago. The number of those intending to boost staff has remained stable at around 45 percent. Some 33 percent plan to spend more on R&D in 2024 (2023: 39 percent), while 18 percent plan to reduce such spending (2023: 11 percent). The number of those who think the current political climate is bad for biotech companies has more than doubled, from 15 percent to 35 percent. Company directors do not expect any significant changes as far as the future political climate is concerned.

Oliver Schacht, Chairman of the Board of BIO Deutschland, stated: “Our companies faced exceptional challenges in 2023. Capital markets were difficult, energy costs continue to be high and qualified staff are hard to recruit. This situation is reflected in the findings of our trend survey. It is remarkable that many company directors do not expect the situation to get any worse, but believe there are signs of a turnaround. Yet they are still cautious when it comes to investments, and more job cuts are also planned, but these will remain limited.”

Viola Bronsema, Managing Director of BIO Deutschland, added: “The trend survey shows that the assessment of the political climate for our industry has again deteriorated significantly over the previous year. This is understandable, as our government has still not made biotechnology a priority, even though bodies such as the Future Council of the Federal Chancellor have recognised the importance of the technology. Something urgently needs to be done about this. Biotech companies are major drivers in the value chain of therapeutic development, of the sustainable bioeconomy and of the circular economy.”

Findings of the 2022/2023 trend survey

About the survey:

For the 18th consecutive time, BIO Deutschland polled biotech companies and sector-specific service providers. Some 124 of them (14.1 percent) 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

31% rate their business situation as good, 29% as poor.

Future Business Situation

35% believe that their business situation will be more favorable in 2024, while around 14% expect it to be less favorable.

Current Climate

In 2023, 9% thought the political climate was good and 35% thought it was bad

Future Climate

17% of respondents expect the political climate to deteriorate in 2024. 29% still believe it will improve.

Future employment situation

45% of those surveyed said they want to increase staff, while 14% plan to reduce staff.

R&D investment

33% of respondents plan to increase their investment in research and development, while 18% plan to reduce it.