17 March 2009

The crisis is a good time to buy European biotech firms

Every fifth European biotech company may be bankrupt in 2009Ilya Dugin, Pharmaceutical Bulletin

This can lead to the dismissal of 20 thousand highly qualified specialists. The financial crisis has had a particularly hard impact on the European biotech industry, since European biotech companies are mostly in the early, unprofitable stages of formation, unlike the more mature biotech sector in the United States. A new study conducted by the French research company Alcimed, commissioned by the division of the European Pharmaceutical Association representing the interests of biotech companies (EBE), showed that the vast majority of companies need to attract financing within the next 18 months and that they may have serious problems with this. The desire of investors to avoid risks amid the crisis has left the European biotech industry with nothing – the IPO market has closed, and venture capitalists give much less than before. According to researchers from Alcimed, the number of bankruptcies by 2010 may still increase if the merger of the crisis on the liquidity of small and medium-sized biotech companies continues over the next year. In total, according to analysts, more than 50% of companies will be at risk of bankruptcy. Companies engaged in the development of new drugs from the very beginning are very dependent on external financing, because bringing the drug "to mind" and preparing to bring it to market can take up to 12 years. Alcimed experts estimate that the European biotech sector needs at least 2 billion euros (2.6 billion US dollars) per year to maintain the existing level of activity and innovation. One way out is licensing or selling a product to a larger pharmaceutical company, but the latter offer extremely unfavorable conditions. The lack of available private capital puts the bioindustry in line for state aid on a par with companies from other industries. Norway plans to allocate 300 million euros to the biotech industry rescue fund, similar measures are expected in the UK, Germany and Belgium. According to EBE President Carlo Inserti, a potential solution could be assistance from the European Investment Bank. EBE has already started negotiations.

Portal "Eternal youth" www.vechnayamolodost.ru17.03.2009
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