France Biotech records 79 per cent fall in investment and calls for government help

The trade association France Biotech reported a major drop in equity investments in French biotech companies, with funding falling 79 per cent to €143 million in 2008 compared to €694 million in 2007. Investment in listed companies collapsed by 98 per cent, to a miserly €12 million in 2008. Venture capital investments in private companies fell by 27 per cent. The trend for early 2009 appears to show continued falls.

Philippe Pouletty, France Biotech’s Chairman, called for government support: “In order to underpin the optimism of our entrepreneurs, we must adopt an aggressive stimulus plan for young, innovative companies. Assuming that they can access finance, today’s innovative small and medium sized businesses will become tomorrow’s multinationals and thus constitute an essential driver of strong, sustainable economic growth.”

France Biotech noted that, “Paradoxically, and in contrast to French President Nicolas Sarkozy’s declarations on 22 January, the French government has weakened its support for young, innovative companies for 2009.”

The budget for OSEO, the state innovation agency, and a key partner for innovative companies, has been cut by half  to €320 million. Meanwhile reform of the research tax credit has led to an average annual reduction of relief of 56 per cent for biotech companies incorporated within the last 5 years, following changes in tax rates and the exclusion of OSEO refundable advances as eligible expenditure for the rebate.

France Biotech called for action, including a doubling of OSEO’s budget for 2009, to return it to 2008 levels, and a tripling for 2010. The trade body also wants reform of the tax credit, to distribute the research tax credit more equitably between small companies and multinationals.

It also called for 50 per cent of the government’s Strategic Investment Fund to be channeled to innovative French companies to enable them to acquire undervalued foreign companies and technologies; the removal of caps on tax-efficient investments (income tax and wealth tax) in young, innovative companies; an extension of the duration of the Young Innovative Company status from 8 to 15 years; and for reform of the savings system to better channel life assurance and pension funds towards financing for young, innovative companies.