BIO Deutschland at the Trade Press Conference at Biotechnica 2010
“The venture capital used to fund innovations is increasingly withdrawing from Germany,” according to Olaf Wilhelm, a member of the board of BIO Deutschland, speaking at the trade press conference at Europe’s largest biotechnology trade fair, Biotechnica, in Düsseldorf on 17 June. He added that the biotechnology sector in particular relies on venture capital (VC) for the funding of its research and development work (R&D) on innovative products. Otherwise, the groundbreaking innovations for improving the supply of medication, for the food and animal feed industry, and for cleaner and environmentally friendly industrial processes, on which most small and medium-sized biotech enterprises (SMEs) conduct research and development, will be at risk.
Wilhelm explained that “innovative small and medium-sized enterprises hardly receive any bank loans for the development of product candidates”. The provision of venture capital is therefore essential to them. However, the current supply of VC to innovative SMEs is insufficient. Wilhelm also pointed out that the availability of venture capital had reduced noticeably once again in 2009 by around 30 per cent to 140 million euro.
Prior to this, the latest survey results came as a relief – contrary to the current crisis-hit economy, Germany’s biotechnology sector is impressive thanks to its positive figures. At the beginning of the second quarter of 2010, biotechnologie.de (commissioned by the Federal Ministry of Education and Research) and the consultancy and tax services company, Ernst & Young, presented gratifying figures on the development of the sector. Not only did the number of biotech companies increase from 501 to 531 in 2009 in comparison with 2008, the number of employees also increased by 5 percent in the same period from 30,000 in 2008 to 31,600 last year. The continued high R&D investments by the biotech sector of over a billion euro yielded results: the pipeline of medication candidates continued to increase in 2009. The fact that three new medications reached the market in 2009 is outstanding.
Entrepreneurs had to deal creatively with the decrease in the flow of venture capital. They adapted their business plans accordingly. Current popular strategies include concentrating on a small number of promising candidates in the product pipeline and making use of cash-flow generation services.
New forms of collaboration and strategic partnerships, particularly between the biotech sector, which is mainly characterised by small and medium-sized enterprises, and representatives of the pharma and chemical companies that traditionally belong to large industrial concerns, are among the methods of overcoming the shortage of funds. Other alternatives include new fund models, structured financing and out-licensing.
Wilhelm also called for the abolition of politically motivated restrictions on new types of technology in order to support innovative small and medium-sized enterprises. These include, for example, current legislation in plant and food biotechnology and the federal government’s current plans to reduce healthcare costs drastically.
In conclusion, Wilhelm said, “With the help of these measures, we have not only now ensured a top place for biotechnology in Germany as an internationally competitive sector, but have also made an important contribution to the sustainable economic power of Germany and Europe.”