Tales of Two Sectors 1: French biotech thrives on public support

Biotechnology companies, dedicated to healthcare have become a national priority with the creation of the Strategic Investment Fund, Innobio, and France’s Grand Emprunt (Big Loan) scheme under which €6.5 billion has been earmarked to support the industry and SMEs. The objective is to strengthen partnerships between public research and industry, by building high quality structures for collaboration with an international dimension.

According to data from the state innovation body OSEO, two thirds of the companies it gave money to in 2009 are less than 10 years old and employ fewer than 20 employees. Four areas stand out in terms of the number of supported projects: Ile-de-France with 49 projects, Nord-Pas-de-Calais, 38 projects, Languedoc-Roussillon, 33 projects and Rhone-Alpes, 29 projects. In total, 383 pharma/biotech projects received OSEO support of Euro 91 million in 2009.

France has a head start in the Pharma-Biotech sector and is today a key player,” said François Drouin, Chairman and CEO of OSEO. “This sector has had a major restructuring the past few years, [brought on] by the [economic] crisis. OSEO must [...] help biotechs to get to market by accompanying them as far as possible in their development,” he added.

The data confirm the decrease in of private investment in the life science sector. However public funding increased in 2009, helping the industry continue to grow, noted Andre Choulika, Chairman of France Biotech, “We are delighted that the life sciences are recognised as a strategic sector in France, and we are hoping that the fundraising efforts will increase in 2010, to make French life sciences a leading player in the world.”

In terms of human therapies, the French biotech industry grew in 2009. There were 11 products on the market and 84 were in clinical development, including 10 in Phase III and 4 in pre-market registration. This was a 20 per cent increase in the number of clinical phase products compared to a year earlier, highlighting the advancing maturity of France’s biotech companies.

However, the economic crisis of the last two years has hit investment levels in the life science industry overall. The total amount of new venture capital investment fell from €151 million in 2008 to €65 million in 2009, a drop of 56 per cent. Of the €65 million invested, €22 million went to seed phase and first rounds of financing, with an average investment of €1.3 million. Even though the total amount of seed funding fell, the number of transactions remained stable at 18 in 2008, compared to 17 in 2009. In contrast, the value of second and third rounds of financing fell strongly, down from €115 million in 2008 to €43 million in 2009. The number of transactions remained stable in 2009 at 16, but the average size of funding rounds fell by 76 per cent.

In 2009, the stock market initial public offering window stayed firmly closed. Nevertheless, there were six secondary offerings, which enabled four companies, Cellectis, ExonHit Therapeutics, NicOx and Innate Pharma to raise a total of €122 million.

France’s various measures for fostering innovation, notably the Young Innovative Company start-up fiscal status and the CIR research tax credit, helped R&D investment to grow, despite a slowdown in turnover.

The pharma/biotech sector accounts for 10 per cent of the investment opportunities reviewed by the sovereign fund Fonds Stratégique d’Investissement and is the second-ranked industrial sector in terms of actual investments. Under another major component of the French government’s stimulus package, the National Bond Scheme, €6.5 billion will go to industrial companies and SMEs and €8 billion for academic research, including €2.5 billion for the life sciences.