LONDON _ The European market for biotechnology-relatedgoods and services is about ECU 38 billion (U.S. $45 billion). Butwhen Europe's biotechnology companies spend money on newprojects, the investment is more likely to be in the U.S. thanEurope.These are key findings from a survey of the European industryconducted by Ernst & Young, of Cambridge, England, incollaboration with the Senior Advisory Group Biotechnology(SAGB), a Brussels, Belgium-based industry lobby group. Thesurvey, published last week, also shows that Europe's industrialspending on biotechnology research and development is more thanECU 1 billion (U.S. $1.2 billion) a year.William Pyke, of Ernst & Young, said "38 billion ECU is a verylarge number indeed, and very much larger than most of us hadenvisaged." He pointed out that the study was not a survey of thebiotechnology industry so much as an analysis of the use ofbiotechnology and related products.The survey said most companies view sales as being essentially flatthrough the decade, but some 20 percent of companies expect salesto more than double during that period.The survey shows that sales in products related to human andanimal health care are expected to rise to about ECU 35 billion(U.S. $40 billion) by 2000, while sales for food and"equipment/diagnostics" each will grow to around ECU 20 billion(U.S. $24 billion). The growth of chemicals dependent onbiotechnology will rise to ECU 15 billion (U.S. $18 billion) overthe same period. In "agri-supply," sales will reach about ECU 3billion (U.S. $3.5 billion).Ernst & Young surveyed companies active in industrialapplications of biotechnology. The aim of the survey was "toestablish a more precise estimate of the economic impact ofbiotechnology and to ascertain where and how biotechnology isbeing applied." Of 350 questionnaires sent out, replies werereceived from more than 100 companies. Telephone interviews alsowere conducted.The company said that the survey "provides the first real in-depthscale of the biotechnology-based economic opportunities forEurope."Brian Ager, director of the SAGB, says that the survey provides "avaluable source of data and comment for policy-makers in Europe,and its messages need to be heard and acted on."The results of the survey show that about 200,000 jobs in Europealready depend on the application of biotechnology. Thebreakdown of current sales shows that human and animal health isthe largest sector, with current sales of ECU 15 billion (U.S. $18billion). Food is the next largest sector at ECU 10 billion (U.S. $12billion). The other sectors in the survey are diagnostics andequipment at ECU 8 billion (U.S. $9.6 billion); chemicals, ECU 4billion (U.S. $4.8 billion); and "agri-supply" at ECU 1 billion (U.S.$1.2 billion).The report said these sales suggest "the application ofbiotechnology to provide goods and services in Europe is rathermore widespread than has been evident in previous surveys."Jrgen Drews, chairman of the SAGB and president ofInternational Research and Development at Hoffmann-La RocheLtd., said the European biotechnology industry, "though moremodest than its American cousin, plays a significant role."The survey showed that when companies decide where to locatenew investments, the most important factors by far are theavailability of skilled staff and regulatory constraints. "Theregulatory climate in Europe has been less favorable than in theU.S.," Drews said.The survey found that European companies are showing growinginterest in the U.S. when they are considering biotechnology-related investments. Of the companies surveyed, about 60 percenthad located their investments in Western Europe while 20 percentlocated in the U.S. Future plans show a very different pattern.Around 40 percent of the companies surveyed said that theyintended to invest in Europe, while 45 percent anticipated investingin the U.S.Even smaller companies, with fewer than 1,000 employees, showeda similar pattern of investment intentions. In the past more than 75percent had invested in Western Europe while 25 percent hadinvested in the U.S. In the future, 55 percent expect to invest inEurope while 45 percent expect to invest in the United States.When it comes to the factors that affect investment decisions,Drews said that in the U.S., finance, health-care reform andproduct approval are the only issues that matter. By contrast, theEuropean companies cited a number of factors. Some 80 percentsaid the negative regulatory climate was the key factor, followed byconcerns about profitability of investments, negative publicperception, the "high level of opponent group activity," worriesabout the market size and difficulties in obtaining researchfunding.When Ernst & Young asked detailed questions about legal andregulatory constraints, companies cited product-approval delaysand lack of adequate patent protection as key factors.The survey also sought companies' views on anticipated researchand development expenditure. About 50 percent of the companiessaid they expect spending to increase by between 10 and 25 percentover the rest of the decade. Some 20 percent expected spending toremain the same, with slightly fewer forecasting an increase ofbetween 25 and 50 percent.The report, "Biotechnology's Economic Impact In Europe: ASurvey of its Future Role in Competitiveness," is available fromSteen Hansen at Ernst & Young, +44 (0)171 931 4548.

-- Michael Kenward Special To BioWorld Today

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