Presentation of the survey of companies by Ernst & Young and biotechnologie.de

For the first time, Ernst & Young (E&Y) included BIO Deutschland participation when presenting its report to the press.

At the E&Y press conference held in Frankfurt at the beginning of May, BIO Deutschland drew attention to the fact that the biotech sector is still growing despite the difficult economic environment and the unfavourable parameters.

On 6 May, the German Federal Ministry of Education and Research (BMBF / biotechnologie.de) and the consultancy, Ernst & Young, presented the results of their latest surveys of companies in the biotechnology industry. The positive facts included increased turnover, a growing number of companies and even a higher number of jobs.

According to Ernst & Young´s data, the some 400 German biotech companies, which employ 10 500 people, generated almost €1.1 billion and made a net loss of €558 million. These firms’ expenditure on research came to almost €1 billion. E&Y regards companies whose main business aim is the commercialisation of modern molecular-biological methods as biotech companies.

The somewhat wider survey by the Ministry of Education and Research included around 500 ("dedicated" biotechnology) companies in the sector, which made an overall turnover of around €2.2 billion (an increase of 9 per cent in comparison with last year) and maintained R&D expenditure (€1.06 billion). Altogether, these companies employ around 14,500 people - like the result of the survey by E&Y, this is also a slight increase in comparison with the previous year.

However, the most important source of finance for the mainly small and medium-sized biotech companies, equity capital, is at risk of drying up. With a decrease of between 30% (Federal Ministry of Education and Research) and 50% (E&Y) as compared with figures for 2008, the majority of the companies are now looking for alternative ways of financing their programmes to develop innovative products.

On this subject, Peter Heinrich, Chairman of the Board of BIO Deutschland, emphasised that the German biotech sector is in relatively good shape in comparison with other countries, but that at least €1 billion worth of equity capital will be needed in the next three years in order to continue current projects in the companies, to finance the foundation of innovative new companies, and to avoid a loss of Germany’s position in international rankings. "We welcome the initiative by the Federal Ministry of Finance to revoke some of the sections of the Corporate Tax Reform," Heinrich added. He urged that words be followed by action and demanded that the parts of the reform that are detrimental to the entire sector of innovative small and medium-sized companies be cancelled retroactively.

At the press conference, the Managing Director of BIO Deutschland, Viola Bronsema, said that the Corporate Tax Reform placed a heavy burden on new and innovative companies that invest their capital in Research and Development. Consequently, the association demands that the way losses are dealt with in companies that conduct research be amended retroactively from 1 January 2009 and that the tax credits for expenditure on Research and Development be planned for the budgets at the beginning of the next legislative period. Viola Bronsema welcomed the apparent plan by the Federal Minister for Education and Research, Annette Schavan, to free new, innovative companies from the obligation to pay social security contributions. Bronsema said, "Only measures that improve the equity capital basis and flow directly to it can have a sufficiently rapid impact."