Trends in the German biotechnology sector in 2018

BIO Deutschland e.V. and transkript

Biotech investment hits a new high

The German biotechnology sector experienced a record year in 2017, with investment climbing to about €674 million. A majority of companies said they plan to increase hiring and ramp up R&D spending in the new year. These were the results of a company survey by the biotechnology sector association, BIO Deutschland, in cooperation with the biotech magazine |transkript.

The survey shows that the mood in the biotech sector is mostly upbeat. The responding companies again expressed greater intentions at the end of 2017 to make new investments in personnel and R&D. Half of respondents view the current business situation favourably, and expect the situation to improve even further in 2018. The survey revealed a positive climate overall, although the index was slightly lower than last year's level.

The results are backed up by research by BIO Deutschland and |transkript, which is published by BIOCOM AG. According to this research, investment in German biotech firms hit a record high in 2017: At €674 million, the figure is even slightly higher than the previous all-time high of €656 million reached in 2010, and a third higher than last year’s total (2016: €505 million). Listed companies achieved a double-digit growth rate of 36 percent, raising a total of €352 million (2016: €258 million). The successful IPO of InflaRx from Jena on the US exchange Nasdaq bolstered biotech’s coffers by a further approximately €86 million. Venture capitalists invested €236 million in German firms in 2017, 9 percent more than the previous year (2016: €216 million).

This development in Germany reflects a positive trend in the European capital market, which is on a significant upswing after a weak 2016. According to a study by BIOCOM AG, European biotech firms raised a total of €5.09 billion on the equity markets in 2017, 54 percent more than in 2016 (€3.3 billion), and almost matching the record high of €6.29 billion reached in 2015. Some 19 firms took the leap into public ownership last year (2016: 17), the overwhelming majority (15) on one European stock exchange. Four companies chose to go public on Nasdaq in the United States. They can certainly raise much more money there: Almost half of the capital that European biotech firms attracted in 2017 came through the US exchange Nasdaq (€2.16 billion).

Peter Heinrich, chairman of the board of BIO Deutschland, summed up the situation as follows: “The German biotech sector has seen continuous development over the past several years. To ensure that this growth trend is sustainable, it is urgent that the new German government further improves the policy environment for innovation, particularly for small and medium-sized companies. We expect the biotechnology agenda proposed by the CDU to be implemented.”

Sandra Wirsching, capital markets expert at BIOCOM AG, added: “Germany’s biotech firms are benefiting not just from the increasing maturity of the sector, but also from the broad investor base – both in Germany and internationally. These factors are a big reason why we are seeing more and more rounds of funding in Germany as well as new investors.”

Findings of the 2017/2018 trend survey

About the survey:

For the twelfth consecutive time, BIO Deutschland und |transkript polled some 1,100 biotech companies including sector-specific service providers. Some 115 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 90 percent of respondents rate their current business situation as satisfactory or good.

Future Business Situation

94 percent of respondents expect the business situation to remain the same or improve in the future.

Employment outlook index

58 percent of responding companies intend to hire more staff, while some 36 percent plan to keep their workforce at current levels.

R&D investment index

50 percent of responding companies said they want to increase their R&D investment, while some 43 percent plan to keep it at comparable levels as it is today.