Frankfurt German biotech companies were able to raise around 2.3 billion euros in capital last year. This was the second-highest amount of financing for the industry in its 30-year history. Only in the exceptional year 2020 did more than three billion euros flow into the industry. However, around half of the sum went to the two Covid 19 vaccine developers Biontech and Curevac.
“The financing situation in the German biotechnology industry is developing positively. This is a good sign and is also urgently needed so that our innovative small and medium-sized companies can fully develop their potential,” says Oliver Schacht, CEO of the Bio Deutschland association, assessing the situation.
The success of Biontech has put the German biotech industry in the international limelight. Companies in this country have become more interesting for international investors: on the one hand, because many drug developers are pursuing promising research approaches, and on the other hand, because they are cheaply valued compared to biotech companies in the USA. The industry in Germany has more than 700 companies that achieved sales of around 6.5 billion euros in 2020.
Venture capitalists accounted for the largest share of financing last year, providing some particularly large rounds of financing. A total of 851 million euros flowed into the industry.
Top jobs of the day
Find the best jobs now and
be notified by email.
In December, for example, the Duisburg-based biotech company Emergence Therapeutics raised a total of 87 million euros in what was then the largest German biotech first-round financing of the year. The money of the so-called Series A comes from international and existing investors.
The cancer specialist T-Knife and the company Cardior from Hanover registered large second round financings of the Series B. T-Knife collected almost 94 million euros in August. The company, which was only founded in 2018, develops new cell therapies against cancer and had already secured around 66 million euros in first-round financing last year.
Cardior, on the other hand, is researching a new class of drugs against heart failure and also received 64 million euros in fresh capital in the course of a second round financing in August.
A dozen German companies are listed in New York
Overall, the trend of the past few years is confirmed that there are more large rounds of financing for just a few companies. The biotech company Atai Life Science, which produces psychedelic compounds based on mushrooms that are said to be used against depression and other mental illnesses, secured around 130 million euros in an advanced financing round (Series D) in the spring before going public in June at the US stock exchange Nasdaq dared and collected the equivalent of another 235 million euros.
More and more German biotech companies are going public in the USA. They hope that a listing there will give them better access to US investors and a higher valuation. Because the experts and analysts with the relevant know-how are based in the USA. In the largest financing market in the world, a multiple of capital and a greater willingness to invest in biotech attracts.
In venture capital, for example, more than $15 billion flowed into drug developers in the first nine months of 2021, according to the US Biotech Industry Association, and 66 US biotech companies raised more than $10 billion on the stock exchange over the same period.
In contrast, the four companies that went to the Nasdaq from Germany look modest with a total of 694 million euros. Incidentally, the traditional biotech company Evotec delivered the largest German IPO on the Nasdaq last year. The Hamburgers collected the equivalent of 435 million euros.
Evotec is researching various therapeutic approaches with many pharmaceutical and biotech companies in research alliances and development partnerships. With a recent turnover of 500 million euros, Evotec is one of the largest German biotech companies. Among other things, the company wants to use the fresh money to expand its options for the production of biologics in the USA, create additional capacities in Toulouse, France and expand the precision medicine business.
The Hamburg-based company was listed on the Nasdaq for a few months in 2008 as part of the takeover of the US biotech company Renovis. In 2009, however, the company decided not to be listed, among other things for reasons of cost.
More than a dozen German biotech companies are now listed on the US stock exchange: and there are likely to be even more this year: the Munich company ITM (Isotope Technologies Munich) is a hot candidate. Founded in 2004, the company develops and produces precise cancer therapies in which radioactive isotopes are combined with tumor-specific target molecules, as well as the appropriate diagnostics.
The USA lures with money and good framework conditions
With capital increases via the stock exchange, German biotech companies were able to collect around 748 million euros last year. Most of this was accounted for by the Tübingen Curevac. The equivalent of 432 million euros flowed into the company. However, Curevac is no longer pursuing the approval of its first-generation Covid-19 vaccine due to disappointing study data and is concentrating on other corona vaccine projects.
The topic of Covid-19 as a whole had a negative impact on many companies in the industry: supply bottlenecks, protective measures and export bans ensured that gross value added fell. The corona effect is now significantly lower and the mood in the industry is good: According to an industry survey, 64 percent of companies consider their business situation to be good, and 52 percent expect an improvement. The majority of companies (69 percent) want to increase their workforce, and 57 percent want to increase their investment in research and development.
What is still missing is a political tailwind. The election of the traffic light coalition did not arouse great expectations in the biotech industry and therefore does not lead to a significant change in the assessment of the future political climate. 61 percent expect things to get better this year (2020: 58 percent). On the other hand, nine percent assume that it will get worse (2020: four percent).
There is still a lot of room for improvement if Germany, as written in the coalition agreement, wants to seize the opportunity to become a leading biotechnology location, believes Bio-CEO Schacht. “The traffic light government should now make biotechnology a top priority so that we can soon tell even more success stories, not only in the field of health, but also in combating climate change and in sustainable bio-based production, circular economy and nutrition,” he says.
And Association Managing Director Viola Bronsema adds: “It is crucial for the industry’s loyalty to the location whether, how and when the positive approaches in the government program for our industry are also implemented.”
More: These could be the biontechs of tomorrow – five German biotech hopes of investors.