Trends in the German biotechnology sector in 2019
German biotech sector attracts record investment
(Berlin, 10 January 2019) German biotech firms raised more capital in 2018 than ever before. Previously unpublished figures show, according to research by the biotechnology industry association BIO Deutschland, that more than one billion euros of venture capital and other equity investment flowed into the industry, whereby particularly large inflows of capital to two companies contributed to the good overall result. A recent survey by the biotech association found that the mood in the sector is relatively upbeat. The responding companies view the current and future business situation more favourably than they did last year and intend to increase their investments in R&D and personnel.
Germany’s private biotech firms attracted €369 million in venture capital investment in 2018 (2017: €236 million). The Mainz-based immunotherapy specialist BioNTech, which announced a financing round totalling the equivalent of €225 million in January, the biggest to date in Germany, accounted for by far the largest share of new investment. Public biotech firms were able to raise some €693 million via the stock market in 2018 (2017: €352 million). The biggest contribution to this figure came from Germany’s oldest biotech company, Qiagen, which last year issued convertible bonds totalling €445 million. The antibody specialist MorphoSys made a successful debut on the US exchange Nasdaq, raising €207 million. German firms nearly doubled their equity inflows to €1.27 billion, compared to the €674 million in equity raised in the previous record year of 2017.
The majority of companies (60 percent) view their current business situation favourably, while around 50 percent anticipate an improvement this year. Some 67 percent of respondents are looking to hire more staff in the coming months, and 56 percent plan to ramp up R&D spending. Only 28 percent see the political climate for biotech firms in Germany as good, but the same percentage of respondents believe there will be improvements over last year. All indexes are up compared to last year’s survey, with an especially positive trend being seen in business situation and political climate.
Peter Heinrich, Chairman of the Board of BIO Deutschland, says: “We are pleased that the mood in the sector has improved after the turbulent political developments at the turn of 2017/18. This shows once again that companies need a stable environment in order to be able to plan effectively. The financing figures are substantial, but as gratifying as they are, it must be clear that two outlier financings contributed to the good result. We urgently need a better capital market ecosystem in Germany, one that ensures that all companies have easier access to capital.”
BIO Deutschland’s Managing Director, Viola Bronsema, adds: “This year we have an exceptional result that illustrates the sector’s enormous potential. We must set the framework conditions in Germany in such a way that enables more companies to benefit from equity investments and more innovations to reach the market, while also making it possible for companies here to cover the entire biotech value chain.”
Findings of the 2018/2019 trend survey
About the survey:
For the twelfth consecutive time, BIO Deutschland polled some 1,100 biotech companies including sector-specific service providers. Some 135 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 93 percent of respondents rate their current business situation as adequate or good.
Future Business Situation
95 percent of respondents expect the business situation to remain the same or improve in the future.
Employment outlook index
67 percent of responding companies intend to hire more staff, while some 26 percent plan to keep their workforce at current levels.
R&D investment index
56 percent of responding companies said they want to increase their R&D investment, while some 36 percent plan to keep it at comparable levels as it is today.
28 percent of responding companies think the current political climate is good, 59 percent think it is satifying.
29 pecent of responding companies expect the political climate to improve, 61 percent think it will remain unchanged. About 10 percent expect a change for worse.