Europe’s piece of the pie
Where European life science innovators can take the lead
With China’s rising infrastructure for life science innovation and the unabated growth of U.S. science, Europe has two cards to play that can help it compete globally: expertise in key core technologies and its centralized clearinghouses to support translation and access early stage investors.
The core strengths, which include cell and gene therapies, biomarker discovery, rare diseases and neurodegeneration, could position Europe as a driving force as precision medicine and genomics become central to biomedical innovation.
In the landscape of increasing cross-border innovation and investment, the competitive challenge doesn’t come from a lack of high quality science emerging from Europe’s top-tier universities.
“In terms of basic research capabilities, our history has been strong. The structure of DNA came out of the University of Cambridge, the first antibody was also discovered in the U.K., and CRISPR gene editing was even co-invented here,” said Jeanne Bolger, VP of venture investments at the J&J Innovation-JJDC venture arm of Johnson & Johnson. “Academic institutions here are certainly capable of pulling their weight in innovation.”
As always, the question is where the money will come from to translate the globally competitive research into homegrown technology and companies.
The picture is improving, according to five VCs and four leaders of European translational centers who spoke with BioCentury.
Since 2013, private funding raised by preclinical companies in Europe increased from $316 million to $585 million last year, peaking at almost $957 million in 2016 (see Preclinical Financings: Private vs. Public).
Figure: Preclinical financings: private vs. public
For European preclinical-stage companies, VC funding fell in 2017 from a large leap the year before, still showing an overall upward trend over five years in both the total amount raised and number of companies. The peak in both values in 2016 reflects several large-scale series B and C rounds. Public financing for preclinical companies is generally less predictable, with large rounds from a few companies such as CRISPR Therapeutics AG (NASDAQ:CRSP), which went public in 2016, having an outsized impact on the data. Debt is included in the figures. Source: BCIQ: BioCentury Online Intelligence
Still, BioCentury’s annual review of the European biotech financing environment shows that figure remains about one-fifth of the amount raised in the U.S. for preclinical companies.
Meanwhile, China’s rush to modernize could knock Europe off its perch as the second most prolific engine for innovation with commercial potential. That national investment in life science research is coupled with a huge influx of Chinese investor money into healthcare.
According to a McKinsey & Co. report presented on May 15 at BioCentury’s 2018 BioEquity Europe conference, VC investment in China healthcare more than doubled from the prior year to reach $11.7 billion, while the size of Chinese VC and private equity funds nearly doubled to $40 billion.
Playing to its strengths will help Europe compete with both a rising China as well as U.S., according to VCs and industry executives who told BioCentury that Europe can leverage several advantages.