It is clear that Europe has hotspots of innovation that are discovering and developing the next wave of new therapeutic modalities. Nearly every category of new modality has a European champion, with clusters forming around some modalities and attracting dedicated capital. But despite improvements, the fundamental gaps for translating its science mean Europe will struggle to match the pace of development in the U.S. and China.
To play on par, Europe will need to secure its hotspots more long-term capital, increased manufacturing capacity and infrastructure, and better access to entrepreneurial management teams.
Two distinct pictures are crystallizing for Europe’s contribution to the development of new modalities.
First, the pace of scientific discovery and company formation has increased markedly in the past five to ten years.
A McKinsey & Company report, Biotech in Europe: Scaling Innovation, presented at BioCentury’s BioEquity Europe conference in May, shows immunotherapy and gene and cell therapies were the fastest growing segments in Europe since 2012 in terms of investment and company formation.
The data converge with the sentiment among eight European VCs interviewed by BioCentury, who ascribe the progress in part to intiatives aimed at building the infrastructure necessary to develop and manufacture these new modalities.
They pointed to the Cell and Gene Therapy Catapult in the U.K. as a prime example. The government-led initiative provides support across clinical development, process optimization, logistics and manufacturing, and is a contributing factor to the U.K.’s dominance in the region for the discovery and development of advanced therapies.
More than one third of European biotechs launched since 2012 were created in the U.K., which also has the largest concentration of cell and gene therapy companies. Other growing hotspots for cell and gene therapies are appearing in Switzerland, the Netherlands and Denmark (see “Europe: Some Spots Hotter Than Others”).
“When you compare with the numbers a few years ago, it is just a completely new level of funding.”
Pan-European VCs are also raising larger funds, some of which are dedicated to investing in new modalities.
For instance, U.K.’s Syncona Ltd. is deploying large amounts of capital focused on cell and gene therapies. These modalities will also be the focus of a new Italian fund being raised by Sofinnova Partners.
The increased capital means VCs are also better equipped to attract top talent, even from premier hubs like Boston.
But the second picture sees Europe being eclipsed by China, and needing to find a new gear for keeping pace with the U.S.
Europe remains dependent on U.S. funds for growth capital. While two thirds of European IPOs between 2012 and 2018 were filed on European exchanges, 98% of the follow-on capital was raised on U.S. exchanges.
And the pace