BioWorld International Correspondent

BRUSSELS, Belgium - Europe's biotechnology is in danger of foundering from insufficient financial backing, according to a new analysis of the biotechnology industry released May 30.

The report, commissioned by EuropaBio from consultants Critical I, said that through the public equity markets, U.S. companies raised 10 times as much money as their European competitors, who have struggled to raise sufficient investor interest and who still are too localized and inward-looking. European biotechnology is not, in general, mature enough to attract the kind of substantial debt finance that is sustaining the growth by acquisition of the U.S. biotech industry, the report said.

Nearly 15 years after the original F. Hoffmann-La Roche Ltd.-Genentech Inc. deal, conceived to ease Genentech's cash crisis, European innovating companies face stringent financial strictures, the report said. Even though total equity financings in Europe were up 44 percent in 2004 from 2003 and money raised through venture capital up a massive 41 percent from 2003, European companies still had access to only a fifth of the private equity finance that U.S. companies had.

The study identified 2,163 European biotechnology companies employing more than 96,500 people, including 42,500 in R&D - a slight increase on 2003 figures. Research spending was unchanged at €7.6 billion, and revenues slightly up at €21.5 billion. Venture capital raised was up to €1.1 billion (from €787 million in 2003), with €2.1 billion raised through equity in 2004 (up from €1.5 billion). In addition, debt financing rose €1.8 billion (compared to €1 billion in 2003).

By comparison, the U.S. comprised 1991 companies in 2004, employed 190,500, spent €21 billion on R&D, generated more than €41.5 billion of revenue, raised €2.5 billion in venture capital, sold an additional €5.3 billion worth of equity - largely through the public markets, and raised a further €6.6 billion of debt.

The report stressed that the development of health care products proceeds at the pace of health care regulators, and it is the regulatory regime in the agricultural and environmental markets that also dictates the pace of change toward a more sustainable and biology-rich future.

"There is a good deal of national government enthusiasm for biotechnology, apparent in a myriad of technology transfer initiatives, seed funding schemes and taxation schemes encouraging bioscience and other high-technology research and development. Europe's science base is inventive, and the establishment of over 100 new biotechnology firms across Europe in 2004 is testimony to the fact that its inventors are entrepreneurial, too. However, the practicalities of funding innovation, whether in science or in business, are currently confounding the good intentions and enthusiasm," the report concluded.

The consequence is that most European biotech companies are distracted from the business of building value by simply trying to stay in business. As a result, European biotechnology firms grow far more slowly than their better-funded counterparts.

European firms, on average, do not compete well in international markets for the substantial tranches of finance needed to propel them toward economic competitiveness and sustainability, the report said.

Agency Moots Pharmacogenomics In Oncology

Conscious of the growing importance of genetic and genomic knowledge in assessing new cancer medicines, the European medicines agency in London is planning to develop new guidance on pharmacogenomics in the field.

"It would be useful to assess the impact of pharmacogenomics in such evaluations in terms of appraisal of clinical trials design, risk benefit assessment and format for conveying the information in the summary of product characteristics and labeling," the agency said in a statement May 24.

It plans to pull together the experience its experts have gathered to provide a compendium of agreed principles, and to help ensure consistent evaluation. The aim is to distil the conclusions reached in reviewing oncology products from 2000 to 2005, particularly in respect of pharmacogenetic markers in clinical pharmacology studies design and in pivotal efficacy studies, and the impact of pharmacogenetics in product information, including the definition of target population and the description of relevant testing.

The agency is seeking comment on the content of such guidance, and aims to adopt a finished guideline by the end of 2007.