Economic situation

At the end of 2005, the Biotech organization France Biotech published the data from its annual report. The results are hardly euphoric, being largely based on a bad financial situation. The 300 existing French Biotech companies only managed to acquire 50 million euro starting capital in 2005, as opposed to 70 million in 2004. The breakdown of secondary round financing is also surprising: While in the previous year 159 million euro was collected, only 27 million euro was pulled together in 2005. With this, the pipeline of the companies came to a standstill: In all phases, the number of products sank (see table 1). France Biotech sees the reasons for this in a fear of the existing investors to continue to support innovative enterprises. The tax reforms from the French government was received positively: Since 2004 there is the Young Innovation Status with tax and social security contribution relief for companies which are younger than eight years old who invest a certain portion of their budget in research and development. 74 per cent of the Biotech enterprises were given this status, which resulted in an increase of the employee numbers in 2005. The success of this program has also inspired other European countries: In a shared initiative, Biotech trade associations from Norway, Sweden, Finland and Estonia made a demand for similar tax benefits for Biotech enterprises.

As regards the most active areas of the French Biotech industry, the companies are particularly emphasized on health, followed by cosmetics and nutrition, but the emphasis remains on research. Many market watchers also criticize this. In their view, it will be difficult to create a genuine company culture from this scientifically-oriented field. What is more, there is a lack of sufficient risk capital. According to OSEO, the organization funded by the Finance, Economics and Research Ministries, and which supports small and medium-sized enterprises, there are too few financial sources that are investing in biotech companies in France. In 2004, in an analysis of the financial situation, they counted five national funds and seven regional funds, from which however only one - Bioam – is focused exclusive on biotechnology. Bioam, founded in 2000 and set up to operate for ten years with public funds of 51 million euro, has so far invested in ten biotech companies. In 2004, Pharmavent was established as a VC fund and was set up with, amongst other contributors, 75 million euro assistance from Sanofi Aventis. In 2005, the Fonds de Technologique (FFT), with a budget of 150 million euro, was added to the reserves of the OSEO, from which 50 million euro came from the European Investment bank.

At the beginning of 2006, the biomedical ‘incubator’ Inserm-Transfert presented its own risk capital fund for the first time, at a value of 4.5 million euro, which will be used in order to support promising scientists with funds of up to 300.000 euro, long before the establishment of a company. "Inserm Transfert initiative" is supported by CDC Entreprises, Ventech and Sofinnova Partners.

Among the most important Biotech companies in France are: Cerep, Flamel technologies, Genfit, Biogemma, ExonHit, IDM, Greentech, Proteus, Idenix, Innate Pharmaand Transgène.

Table 1: Key datas of the french biotech sector

Source: France Biotech (Date: 12/2005)

Table 1: Biggest financing rounds 2004 in pharma and biotech

Source: France Biotech (Date: 12/2005); OSEO (Date: 2005)

Table 3: Biggest financing rounds 2005 in pharma und biotech

Source: France Biotech (Date: 12/2005)