2nd quarter 2004
German biotech sector continues its consolidation phase and still holds lead in Europe
According to Ernst & Young, investors are again showing more confidence in the biotechnology sector in Germany. This is reflected by an increasing willingness to invest once again: the volume of risk capital financing in 2003 was up on the previous year - and this despite a period of economic stagnation over the past two or three years.
Germany remained a top player in the European biotech industry also in 2003. With a total of 350 companies, Germany boasts the most biotech companies in Europe. The decline due to closures, insolvencies, takeovers or mergers was less than 10%. 23 new companies were founded. The total drop in German biotech firms was only 3%. The number of staff employed in the industry went down by 14% to around 11,500 and total sales were reduced by 5% to €960m. The number of companies active in both product development and the provision of services rose from 36% to 50%. Over 80% of biotech companies in Germany employ less than 50 staff. Most companies are involved in "red" genetic engineering, i.e. medical applications, an additional focus being on diagnostics and services. Companies concentrating on "green" or environmental genetic engineering applications are still in the minority.
According to other reports dealing with the situation of biotechnology in Germany, such as BIOCOM or the Information Secretariat for Biotechnology (ISB) of DECHEMA, there are approximately 60% more biotech companies. The reason for this is that in their report Ernst & Young use a very narrow definition for the companies they assess: these are mainly startups which aim to commercialise mordern biotechnology by using risk capital. And so they tend to refer only to companies that concentrate exclusively on biotechnology. The other definitions used are broader and take in all of the companies that research, produce and work predominantly using modern biotech processes or that are heavily engaged in modern biotech research. Or their main field of business in modern biotechnology entails Germany-based research or production facilities.
By way of comparison, Ernst & Young estimate that there are just under 1,900 biotech companies in Europe employing some 78,000 people. Apart from Germany, countries strongly represented are the UK, France, Sweden and Switzerland. At about 1,500, the number of biotech companies in the USA has been fairly stagnant since 2001.
In international terms, the still relatively young biotech industry in Germany is maturing fast. In 2004 a German company succeeded for the first time in obtaining an approval for a biotech product, a drug called Eligardâ used to treat advanced cancer of the prostate gland: the company in question is MediGene, which has offices in Martinsried and San Diego. Over 200 other substances are currently in the development pipeline: according to Ernst & Young, this again represents a further 14% rise in 2003 against the previous year. Some 70 substances are undergoing clinical trials. Biotechnology is here to stay as far as medicine and pharmaceuticals are concerned. Sales of such products are currently running at about US$ 30bn worldwide. Estimates by Ernst & Young suggest that this figure is likely to double by 2010.
The German federal government last year outlined a so-called high-tech master plan and last autumn passed a €100m investment programme that will help to fund young technology-intensive companies. The federal government also earmarks more than €700m a year for biosciences. According to Minister Bulmahn, there is no alternative to a strong biotech sector in Germany. The federal government will continue along this road.