EuropaBio calls for action on biotech finance

EuropaBio’s SME group has published “Access to Finance: A Call for Action”, a paper highlighting the funding problems besetting the biotech industry, along with  recommendations on how to tackle the issue.

 The report highlights the financial restraints biotech SMEs are facing and says EU funding instruments should be “optimised” to help them.

“European Biotech companies are facing a critical financial shortfall, which could have profound consequences for the future of Europe’s knowledge-based economy,” said Thomas Saylor, Chair of EuropaBio’s SME Platform and CEO of Arecor.

“If these companies fail, we risk missing out not only on innovative and effective treatments, short-changing Europe’s patients, but [also] undermining the potential for job creation in a sector which could play a major role in leading Europe out of the current economic slump.”

For these reasons, Saylor says it is extremely important for policy makers and the business community to work together to minimise the impact of the downturn and  improve access to finance for technology-based SMEs.

In the EU, SMEs comprise approximately 99% of all firms and employ about 75 million people. Within the biotech industry, SMEs face particular obstacles, in particular because of the long and costly development processes. While larger biotech firms have products on the market, young, innovative biotech SMEs need significant levels of funding to develop a product to the point of commercialisation. This funding is often hard to come by, especially in the current times of economic and financial crisis.

Recent figures show that around 20 per cent of Europe’s biotech companies could be gone by the end of 2009 if no immediate action is taken.

“Access to Finance: A Call for Action” has five main recommendations:

1. Make the EU funding instruments more accessible to biotech SMEs

2. Increase venture capital funding via co-investment

3. Make maximum use of the European State Aid rules

4. Develop measures and opportunities to capture the value of research within Europe

5. Make the EU Framework Programme for Research more attractive for biotech SMEs

“Europe’s policy makers need to provide more transparent and easy-to-use funding instruments,” said Willy De Greef, Secretary General of EuropaBio.  “The leading venture capital funds should be incentivised to invest in Europe’s innovative research and development, and EU funding for research [in Framework Programme 7] should be more accessible to SMEs. Only when all the sides come together, as they do in EuropaBio’s SME Platform – can solutions be found to ensure that Europe remains globally competitive”.