French Biotechnology Industry Remains Contrasted and is Shaken by International Financial Turbulence
While the French biotechnology industry has been hit by the temerity of stock market investors, the launch of Euronext’s Next Biotech Index provides greater visibility for the sector, thereby rendering it more attractive. Growth and innovation are both evident in the product and service portfolio of the French biotech sector.
France Biotech, the French life science industry association, is to present the results of its seventh annual survey of French biotechnologies industry at the European EuroBio 2008 Congress in Paris. While this year’s survey reveals slowing of stock market investment, the sector has been buoyed by venture capital investments throughout the first half of 2008, particularly pump-priming rounds, with investment of EUR 87m vs. EUR 95m for the first half of 2007 (down by 8%).
Within the healthcare sector, our survey shows a French biotech sector approaching maturity, with a pipeline of 73 products entering the research phase and 98 products currently in the three clinical development phases. Over the same period, the pharmaceutical industry boasts 57 products currently in development. Furthermore, marketing authorisation is pending for 10 biotech products with 4 products already marketed.
The different public policy incentives introduced by the goverment since 2004 to promote innovation in France have enjoyed considerable success among SMEs, particularly that of Young Innovative Company (YIC) status, with 66% of respondent companies in our survey opting for this standing.
However, the Research Tax Credit reform for 2008 has had far less positive impact in terms of redistribution of funds among SMEs, despite the fact that the budget allocated for this tool has risen from EUR 1.4bn to EUR 3.2bn.
The latest circular from the French Finance Ministry indicates that only 19% of companies employing fewer than 250 employees would in fact derive benefit from this measure. This reform will thus be helpful primarily to the larger groups.
In view of this prospect, France Biotech immediately warned the government of the direct impact of the new reform on its budget, which will cost between EUR 10 and 15bn over the next 5 years but will have no positive effect for SMEs.
The stock market window, reopening of which proved a major spur throughout the period 2006-2007, resulting in marked progression in 2007 and the listing of 15 French biotech companies, has now closed again with only one company, Ipsogen, being listed. The stock market, which finally appeared to be fulfilling its role of a financial rallying point for biotechnology companies, allowing pre-market investors to recover and reinvest their capital, was ultimately unable to ride out the current financial crisis.
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