Biotech boom

The European biotechnology sector experienced its greatest year on record in 2006 according to Ernst & Young’s annual report into the industry, Beyond Borders.

The figures for 2006 confirmed European biotech is back on the road to recovery, marking a four-year turnaround. From the 12% revenue decline recorded in 2003, revenues in 2006 increased by 13% to €13.3bn, market capitalisation increased 43% to €62.1bn, financing increased by 45% to reach €4.7bn, and venture capital financings reached an all-time high of €1.5bn.

The public markets proved themselves to be open to biotech investing last year when Europe saw 32 biotech companies float in 2006, seven of which were UK companies. The IPOs raised a total of €722m, a 29% increase on 2005. Sixty-four M&A deals were notched up, with eight out of the top 10 deals involving UK companies.

William Powlett Smith, leader of Ernst & Young’s UK Biotech Team, said: “The strength of the industry, driven by the US, is having a positive impact globally, particularly across Europe. Last year there was cautious optimism in the European biotech industry as the sector emerged from a prolonged period of restructuring. This year, double-digit revenue growth – supported by sustained success across pipeline, products and financing – prove Europe’s biotech sector has bounced back.”

Globally, the biotech industry raised US$27.9bn last year compared to US$19.7bn the year before, and the revenues of the world’s publicly-traded biotech companies grew 14% to US$73.4bn. Venture capital reached US$5.4bn, a record high, and R&D expense grew by 31% to US$5.2bn.

Looking forward Powlett Smith said: “After years of downturn and painful restructuring, the European biotech industry is firmly back on the right path, and is sustaining newfound progress and momentum. The challenge in years ahead will be to translate two years of sustained progress into an ongoing future of sustainable growth. The US industry’s recovery and maturation have been fuelled by product success, and Europe’s path will need to be similar.”