MUNICH, Germany Investor sentiment has moved from product companies to platform companies and back again to a focus on products.

Not much new money is going into the biotechnology sector now, but those who are investing are looking most closely at “hybrid” companies, those with a strong technology or biology platform that generates product candidates. There has to be products, said the investors who spoke here Tuesday at the second European C21 BioInvestor conference at the ArabellaSheraton Grand Hotel.

“I would not invest in a bioinformatics company. I wonder if it is a sustainable business model,” Denis Lucquin, general partner at Paris-based Sofinnova Partners, said while addressing a session titled, “Which companies are bioinvestors putting their capital into and why?”

Sofinnova, which focuses on seed and start-up financings, invests almost exclusively in product-oriented companies, and the hybrid model is the most attractive, Lucquin said.

“The platform must have product-engine potential,” said Kai Deusch, director of Munich-based Apax Partners. “We think there is huge potential and demand for new products.”

Charles Floe, head of international health care for Lehman Brothers in London, looks more at later-stage companies, those at the mezzanine financing round or later. But he, too, delivered the message that companies need products and pipelines to attract attention. He pointed to established companies such as Human Genome Sciences Inc., Celera Genomics Group, DeCode genetics Inc. and Genset SA as among those that have shifted their focus to pipelines rather than platforms.

The biotechnology industry in Europe is several years behind the U.S. and the European sector trails financially, as well. American firms are struggling to raise money, but the situation is even worse in Europe since fewer firms are generating earnings, the pipelines are less robust and many companies were built around platform technologies.

“The European public markets have been firmly closed for over six months now,” Floe said. “There is no clear sign of a European window yet. We will have strong markets again but never like in 2000.” Floe pointed out that only $50 million has been raised publicly in Europe this year.

Investors want larger, liquid companies, and smaller firms could look to mergers and acquisitions as a solution, particularly following the merger flurry among large U.S. biotech companies at the end of last year, Floe said. Among the barriers are unseasoned management teams, at least compared to their U.S. counterparts.

Deusch said Europe could use an influx of “serial entrepreneurs,” or executives experienced in building and developing new companies one of the features he looks for when investing in start-ups. Others are product engines, sustainable models and clear exit strategies.

Ronald Openshaw, executive director of WestLB Panmure in London and another panelist, said there are a number of smaller companies across Europe that are nearing a funding crisis, and mergers and acquisitions are an obvious solution. But those deals aren’t getting done. The reasons, he said, are management conflicts, scientific arrogance and valuation discord, all areas in which the companies fail to compromise. Openshaw’s solution? “Be pragmatic.”

He said being pragmatic also was a potential solution to getting financing deals completed. Companies just need to be creative or flexible. He pointed to PIPE deals (private investments in public entities), which U.S. companies have used successfully, as one solution. Companies using this vehicle may have to compromise but, like with mergers, compromise is required to close deals.

Openshaw had another suggestion for companies interested in raising money keep the public informed of progress. Many European companies are not as diligent, nor are they required to be, about releasing news that updates investors on company developments. But “news flow will drive liquidity,” drive share price and enable firms to raise money, he said.

Openshaw also commented about the hybrid model, calling it the “only truly sustainable long-term value.”

The conference was opened by Crispin Kirkman, CEO of the BioIndustry Association, which represents UK biotech companies, and Hugo Schepens, secretary general of EuropaBio, which represents about 1,000 European companies. Kirkman spoke of the need to address the fragmentation of biotech companies and investors by country or region, and Schepens spoke of progress being made at the European Union level to help the industry.

The industry in Europe is growing faster than it is in the U.S., at least by the number of companies, and leaders spoke of the need for a “pan-European vision.”

The conference, with about 300 attendees in a nearly equal mix of venture capitalists and company representatives, ends today.