The European, and therefore Swiss, biotech ecosystem has fallen behind the United States. At the same time, China is emerging as a fierce competitor. We need to translate European research more effectively into industrial applications, and mobilize more venture capital to keep pace with the American and Chinese giants.
Europe’s biotech ecosystem lagging behind USA and China
Coface economists have determined that the gap between the European and Swiss biotech ecosystem and its traditional competitor, the USA, as well as the emerging Chinese biotechnology industry, is widening. Europe is not falling behind in the creation of expertise, but rather in translating this into industrial projects in particular.
Within Europe, the biotech clusters are concentrated in Switzerland and the UK. Almost one third (91 out of 310) of all publications from European researchers included in major scientific journals are attributable to authors from Switzerland and the UK, i.e. from countries outside of the EU. This raises questions about the robustness of basic research in Europe. In addition, more than 80 percent of European investment in biotechnology projects goes to companies in the UK and Switzerland.
Challenges and future directions for European biotech
Generally speaking, small biotechnology companies tend to be responsible for innovations in this field at the European level. Their biggest challenge is securing financing for clinical phases I and II, as profitability is still difficult to gauge at this stage. However, just 30 percent of financing in Europe is attributable to phase I, compared with a value of 56 percent in the USA. In fact, the USA accounts for the lion’s share of all global biotech investments. Coface states that owing to the symbiosis of universities, research centers, financing institutions, private venture capitalists, clinical trial agents, and pharmaceutical producers stateside, Europe’s deficit in this regard is only getting bigger.
At the same time, China has established itself as a strong competitor. Moreover, the trade tensions between China and the USA have impacted the biotech segment.
To ensure that Europe is not left trailing in the wake of this fierce competition, the European biotechnology ecosystem must strive to attract additional financial resources, above all from venture capital firms and industrial partners across the continent. This would facilitate the development of the requisite production capacities, including in collaboration with major pharmaceutical laboratories. After all, these labs boast acknowledged expertise in drug development processes and have significant financial resources at their disposal that could make it easier to promote growth at European biotech companies.
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