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Financing Biopharma Product Dev En

Financing Biopharma Product Dev En

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Published by: kayeskowsik on Nov 10, 2011
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09/07/2013

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The biopharmaceutical industry is not a large industrial sector in terms of number of enterprises
or employees. Nevertheless, the sector is one of the fastest growing sectors and one of the
world’s most wealth-creating industries. Studies covering dedicated biotechnology enterprises12
have identified 2,163 biotechnology enterprises in Europe (excluding large pharmaceutical
enterprises and enterprises in the supplying sectors). According to these studies, the sector
employed over 96,500 people, including 42,500 in R&D, spent about €7.6bn on R&D and
generated a revenue in excess of €21.5bn in 2006 (EuropaBio 2006, European Commission
2006).

The biopharmaceutical sector is (still) a relatively small industrial subsector compared to other
sectors that are also characterised by a high international orientation (high export share) and

12

A definition: biotechnology enterprises includes enterprises whose primary commercial activity depends on the
application of biological organisms, systems or processes, or on the provision of specialist services to facilitate the
understanding thereof.

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R&D- intensity such as “radio, television and communication equipment” or “medical,
precision and optical instruments” with respectively 771,600 and 1,046,800 employees.13

The R&D intensity of the biotechnology sector can be illustrated by the EU industrial R&D
Investment Scoreboard (JRC/IPTS and DG Research 2008) in which an analysis of industrial
research among the world’s top 1402 companies found that 15 sectors constitute 93.3% of the
total R&D. The top three sectors were pharmaceuticals & biotechnology (19.2%), technology
hardware & equipment (18.3) and automobiles & parts (17.0%) The pharmaceutical &
biotechnology sector even exhibited double-digit R&D growth over the last three years. Within
pharmaceuticals & biotechnology, EU companies (including Switzerland) account for 28% of
the investments in R&D, while US companies account for 49%.

The biopharmaceutical sector is considered a driver of innovation in a range of industries, not
least the pharmaceutical industry, and new biopharmaceuticals are likely have a positive impact
on the healthcare sectors and healthcare in general. However, it is not possible to estimate the
economic importance of the sector for other industries due to lack of data (JRC/IPTS, Bio4EU
2008).

The 2,163 dedicated biotechnology enterprises identified in Europe (see above) can be divided
into four sectors: biodiagnostics, agrobio and environment, service, and human healthcare, cf.
Exhibit 4.4.

Exhibit 4.4: European biotechnology industry by subsectors

Source: EuropaBio 2006

13

Eurostat

Human
healthcare
37%

Services
34%

Agbio and
environment
11%

Biodiagnostics

18%

22

The business activities of the human healthcare sector14

largely represent the definition of the
target group for this study. This sector is the largest group comprising 37% of the total number
of enterprises in the biotechnology sector corresponding to approx. 800 enterprises.

The number of biotechnology enterprises in European countries differs significantly. The
majority of biotechnology enterprises are located in Germany, the UK, France, cf. Exhibit 4.5.
In the new EU Member States data on the biotechnology industry is still sparse and fragmented.
Many of the biotechnology enterprises in the new Member States are recently established and
the biotechnology industry in the new Member States is mainly involved in manufacturing
activities.

Exhibit 4.5: Number of biotechnology enterprises in 2004

Source: EuropaBio 2006

Looking at the size of the enterprises in relation to number of employees, the leading countries
are the UK, Denmark, Germany and France. Especially Denmark and the UK are characterised
by relatively large enterprises, whereas countries such as Sweden and the Netherlands are
characterised by small enterprises.

Many countries and regions strive to attract this rich source of taxable wealth and potential in
job creation, innovation and growth, but global competition is fierce. For Europe, the main
global competitor is currently the US biopharmaceutical sector. There are more biotechnology
enterprises in Europe than in the US. However, European biotechnology enterprises produce
fewer products and employ fewer people than their US counterparts. The availability of capital
in Europe is also limited compared to the US (EuropaBio 2006). With countries such as India
and Singapore moving up the global value chain, the competitive pressure on the research-
intensive sectors in Europe, such as the biopharmaceutical sector, will probably increase further.

14

Biomaterials, drug delivery, drug discovery, gene therapy or healthcare cell therapy, genomics, vaccines, red biotech

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