French biotech industry faces financing challenge

France Biotech says innovation grant reforms are blocking growth of many fast-developing companies

The French biotechnology sector is in need of new growth solutions as companies struggle to finance themselves, says a new report on the industry.

The Life Science Panorama report from France Biotech, the French association of life science companies, in partnership with Ernst & Young, describes the industry’s main trends for 2010/2011 in France and worldwide. Almost 200 firms took part in the survey.

The report says that France is ranked second in the world in terms of the number of life science companies (about 1,400). Of these, 85 formed partnerships with the pharmaceutical industry in 2011. It also reveals that financing of French companies in the sector (through venture capital, IPOs or refinancing on the financial markets) dropped sharply between 2010 and 2011, falling by 40% to €277m. This trend could also be observed in the biotech sector in Europe, where financing fell by 36%.

Respondents continue overwhelmingly to favour a number of public authorities, such as Oséo – the French state innovation agency – and CIR (tax rebates for research), while also underlining the ‘extremely negative’ impact of the reform of the Young Innovative Company status.

André Choulika, chairman of France Biotech, said that ‘in spite of the difficult period we are going through, our sector is proving its vitality’. However, he asks whether venture capital, which remains the main source of financing for the expansion of the French biotech industry will be able to meet the needs of the sector, taking into account the unprecedented drop in financing observed in 2011.

He added that France Biotech has warned the French government about the impact of the innovation grant reforms, which have blocked the path of many of fast-developing companies, and may continue to do so.

He argued that each small and medium-sized enterprise (SME) in the biotech sector is a large company in the making and France Biotech will continue battling to get the Government to review its standpoint on the recent reforms and will remain vigilant as regards future reforms.

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