Current standing and perspectives

Looking back at the year 2008, it was marked by different developments. On the one hand, key figures again showed moderate growth: Slightly more turnover, a constant high level of R&D expenditure, and stabile employment numbers.

On the other hand, due to the current difficult financial environment a further slump can be expected in 2009. Especially, for drug developers, that have to pay their costly clinical studies, the search for investors will not be easier during the crisis. Now, creative financial instruments as well as concrete success stories are badly needed. With biopharmaceuticals playing a growing role in the sector, this should be possible in the years to come. 

This development is also reflected in recent data published by the German Association of research-based pharmaceutical companies (VFA). It shows that the role of biotechnology in medicine is constantly growing, and biopharmaceuticals made 16% (4.4bn euros) of the total pharmaceutical turnover in Germany. The large amount of candidates in early clinical development suggests, that this percentage will grow in the next years. Those companies offering services again serve as the stable backbone of the German biotech sector. They may not be in the limelight of public attention, but behind-the-scenes, companies such as Qiagen and Miltenyi have continuously been advancing. In the meantime, Qiagen, which was founded 20 years ago as a spin-off of the University of Düsseldorf, is the largest German biotech company.

It remains open, as to how the financial situation of biotechnology companies will develop. During the last four years, the total amount of invested capital constantly decreased. In light of the crisis improvement does not seem realistic. The public market situation is especially tense. In an environment like this, listing is not an attractive option. Verified success alone will make way for change. In addition, more creative financial instruments are required, such as those used by the companies Wilex and Micromet in 2008.

Regarding venture capital, up to now German biotech companies were backed by billionaires who are prepared to take risks. In 2008, this was demonstrated impressively by the sensational high financing round of Ganymed. Now, their efforts seem to be diminishing. Nevertheless, hope remains that young companies with good ideas will  still be able to raise money for their projects in the future.

Further more, new options are given by close cooperations with industry. This is especially true for Big Pharma. Faced with the expiration of their patents on blockbusters, they show growing interest in projects that are still in an early research stage. This is a situation to be profited from. As a location, Germany seems to offer sufficient potential, as demonstrated by the three multi-million takeovers by pharma companies in 2008.