Financial situation

Turnover and R&D expenditure of dedicated biotechnology companiesSource: biotechnologie.de

In 2008, the crisis had not shown in the turnover of the dedicated biotechnology companies. On the contrary, it has even grown to 2.2bn euros, 9% more than in 2007. This figure includes proceeds from the sale of products and services as well as up-front and milestone payments from license agreements.

A comparison of the distribution of turnover along main activities shows, that the majority stems from laboratory reagents and services. With 1.3bn euros they make up the lion´s share (59%) of German biotech turnover, although the total number of companies has decreased in this field, turnover has increased compared to 2007 (1.15bn euros). Another situation can be seen in the health sector.

Distribution of turnover and F&E expenditure of dedicated biotechnology companiesSource: biotechnologie.de

Although slightly more companies are active in this field, the turnover has gone back down to 776m euros in 2008 (2007: 783m euros). On the other hand, a small plus was recorded in industrial biotechnology, with a turnover growing from 50 to 54 million euros. The agrobiotechnology remained largely unchanged, with a turnover of 49m euros (2007: 48m euros). The continuing high expenditures on research and development are a sign for the innovative force of the companies. In 2008, they again invested about 1 billion euros, 1.1 % more than the previous year.

Financial sources of biotechnology companies 

Alongside conventional turnover, venture capital is a substantial source of financing for biotech companies in Germany. At present, a third of the dedicated companies is at least partly financed by VC investors. However, the attractiveness of biotechnology for venture capitalists has clearly decreased. In light of the financial crisis, for most of the companies it was more difficult to acquire private money in 2008.

Sources of financing for dedicated biotechnology companiesSource: biotechnologie.de

According to a survey carried out by the German biotech magazine |transkript, 16 financing rounds totalling approximately 202 million euros were completed in 2008. Compared to 2007, this is less than a third. Nevertheless, a record has been broken: With 65 millionen euros, the Mainz-based company Ganymed has closed the largest financing round ever in Germany. The money stemmed again from the twin brothers Andreas and Thomas Strüngmann (founders of HEXAL). Together with SAP-Founder Dietmar Hopp they are the most biotech-affine German billionaires.

However, apart from Ganymed there were no other surprises. Activities diminished overall. In 2008, raising money from public capital markets was even more difficult than in the years before. In total, listed companies saw capital increases of 94m euros (source: |transkript) which is a third less compared to 2007. With this, a downtrend has started, which may not be stopped in the coming years of the financial crisis. There has not been one company listing – since 2008 did not provide the right financial setting.

According to the information given in the survey, a total of 205 companies received public grants in 2008. These subsidies amounted to 51 million euros, which amounts to 15 % of the total external financing of German biotech companies.

As in previous years, 2008 saw a number of takeovers and mergers in the biotechnology sector. According to information from the biotech magazine |transkript, there were 16 operations, in which at least one German biotech company was involved as a partner. Especially, a range of pharma activities were in the headlines. For 150 million euros, Japanese pharma company Daiichi Sankyo bought the Munich-based U3 pharma which was founded by the renowned cancer researcher Axel Ullrich. Bayer Healthcare layed 210 million euros on the table to take over the medical part of Cologne-based Direvo AG. British Shire bought Jerini AG for 328 million euros.

German Biotech-companies listed at the stock-echange