Europe’s Brain Drains
Date: 23.6.2006
Mature companies are still heading west for funding.
It’s nothing new to hear Europeans crying about a brain drain as companies keep crossing the Atlantic in search of funding. The latest cry comes from The European Association for Bioindustries (EAB), which just published a study warning that scarce late-stage funding for biotechnology companies is driving mature biotech companies to the United States, leaving Europe with young and less profitable biotech firms.
Sixty percent of recent venture capital invested in Europe’s biotechnology sector went to young firms started between 1997 and 2000, the EAB found. Only 40 percent of biotech funding in the U.S. went to companies founded then.
Surprising no one, the report also said European VCs invest less in biotech than their U.S. counterparts. In Europe, the average round in 2004 was €10.6 million ($13.6 million), two-thirds the U.S. figure. “Europe’s biotechnology project is in danger of foundering,” writes John Hodgson, author of the EAB study. While a few companies have raised money on stock exchanges, the overwhelming majority depend on revenues “or quietly fade away.”
It’s not all gloom and doom in Old Europe by any means. Total fundraising in 2005 brought in €60 billion ($70 billion), more than double 2004 figures, according to another study by the European Private Equity and Venture Capital Association (EVCA). Venture funds raised €12.6 billion ($16.2 billion) of that, 44 percent up on 2004.
And 2006 looks to be another growth year, according to a recent report by Dow Jones VentureOne and Ernst & Young. In the first quarter of 2006, biopharmaceuticals saw 36 deals and raised €373.25 million ($478.2 million). Software followed with €205.12 million ($263 million).
Meanwhile, not everyone sees the migration of European biotech as a bad thing. Micromet, a biopharmaceutical company that develops antibody-based drugs, recently underwent a back merger with Carlsbad, California-based biotech company CancerVax. Micromet CEO Christian Itin says such exchanges are not a loss for Europe.
“You have talented people who contribute to the U.S. economy and while they’re there, they make connections and learn a lot. At some time they may come back and build companies [in Europe],” says Mr. Itin. “I think it’s a positive thing that at times gets side-tracked by politics, perception, and, probably, talking heads.”
"Source":[ http://www.redherring.com/Article.aspx?a=17214&hed=Europe%E2%80%99s+Brain+Drains]
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