What you give is what you get: Investment in European biotechnology

Abstract

The European biotechnology industry receives less funding, and less funding per company, than the North American industry, especially at the sensitive early stages of company development, and the European industry is substantially smaller in terms of employment, products and capitalisation than the US industry. The cause and effect of this relationship are explored in this paper. It is shown that if the European industry is immature it is because its growth has been slower, most probably because of low investment levels, and that the relatively lower value of biotech companies at initial public offering (IPO) is a result of the lower amount of investment they receive, not a reason for. This suggests that poor investment levels are a primary cause of the small size of European biotech companies and the European industry as a whole, not an effect of it. Investor mistrust and investment mechanisms are plausible reasons for this under-investment.