Trends in the German biotechnology sector in 2020

Investment in German biotech sector remains strong, but expectations have weakened

(Berlin – 13 January 2020) German biotech companies raised some €860 million in 2019 through venture capital funding and capital increases via the stock market, including two initial public offerings (IPOs). More than half of this capital was, however, invested in a single company, BioNTech from Mainz. The annual trend survey by the biotech association BIO Deutschland found that the sentiment in the sector is largely stable, but that there was negative trend when it comes to how companies view the future business situation.

Germany’s private biotech firms attracted around €525 million in venture capital investment in 2019 (2018: €369 million). Another €333 million was raised on the stock market last year (2018: €900 million), with two IPOs, both on Nasdaq, accounting for more than €186 million of this total. The Mainz-based immunotherapy specialist BioNTech and the rare disease diagnostics company Centogene made their public debut on the US exchange. The sector couldn’t outperform the record year of 2018 when inflows totalled €1.27 billion, but the €858 million total for 2019 was nearly a third more than the €674 million raised in 2017.

The annual trend survey asks companies to answer six questions. Overall, some 90 percent of respondents rate their current business situation as satisfactory or good and expect their business situation to remain the same or improve in the future. Some 60 percent plan to hire more staff in Germany, while only 7 percent plan to make staff cuts. Half of respondents plan to increase R&D spending. Only 20 percent (2018: 29 percent) of respondents believe the political climate in Germany will improve in 2020, and only 28 percent see the current political climate as good. 

The index for four of the six categories is largely stable when compared over several years. A clear trend can be observed in how companies view the future business situation. This index has continuously declined over the years. After hitting a record low following the last Bundestag elections, the current business situation index has improved markedly.

Oliver Schacht, Chairman of the Board of BIO Deutschland, commented: “It is a positive sign that German biotech companies have again succeeded in raising a substantial amount of capital, even if they didn’t match the record high of 2018. The good financing situation also confirms the quality of the German development pipeline. Another positive sign is that there have been several political developments in Germany that favour the biotech sector. Tax incentives for research are on the way – finally! The new bioeconomy strategy will be rolled out soon, and the Industrial Bioeconomy Dialogue Platform is operational. What is more, with Science Year 2020 focusing on the bioeconomy, the federal government is bringing more attention to the bio- and knowledge-based industry, thus increasing awareness of our sector.”

BIO Deutschland’s Managing Director Viola Bronsema added: “Despite the good investment figures and encouraging political signals, the future business outlook has worsened over the past few years. We view this as a result of recent international developments. The long struggle over Brexit and the trade conflicts have led to much uncertainty and have also impacted our sector. This is because it is strongly integrated internationally – another reason for Germany to ramp up support for biotechnology as a key technology. We have to do our part to make sure biotechnology can be sustainably used to meet challenges like climate change and global health.”

Findings of the 2019/2020 trend survey

About the survey:

For the 14th consecutive time, BIO Deutschland polled some 1,100 biotech companies including sector-specific service providers. Some 106 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 89 percent of respondents rate their current business situation as adequate or good.

Future Business Situation

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

Employment outlook index

60 percent of responding companies intend to hire more staff, while some 33 percent plan to keep their workforce at current levels.

R&D investment index

51 percent of responding companies said they want to increase their R&D investment, while some 41 percent plan to keep it at comparable levels as it is today.

Current Climate

28 percent of responding companies think the current political climate is good, 60 percent think it is satifying.

Future Climate

20 pecent of responding companies expect the political climate to improve, 68 percent think it will remain unchanged. About 12 percent expect a change for worse.