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Still the cultural problem remains. "There are two things that are not accepted in France," Pouletty told an audience of several hundred people at a recent France Biotech breakfast. "Success and failure." That helps explain why Jean-Paul Clozel, a French doctor and researcher, says, "In France the dream of a successful student is to become a bureaucrat, not to become an entrepreneur." Nevertheless, he and his wife Martine, a physician, created Actelion, a Swiss-based firm that has just had a drug approved by the U.S. Food and Drug Administration and is one of Europe's hottest emerging biotech companies.
The U.K. has always been an easier place to be an entrepreneur, so it is little wonder that until the mid-1990s, British companies dominated biotechnology in Europe, accounting for a quarter of the companies and a third of the industry's total capitalization, according to Ernst & Young. Today the scenario is different, with a large increase in the number of companies in Germany, France and Switzerland and a consolidation of the biotech sector in Scandinavia. Still, British companies are well ahead in terms of employee numbers, revenues, market cap and the number of products in the pipeline. And the U.K. continues to do a better job of attracting entrepreneurs, through measures such as reducing the capital-gains tax from 40% to 10%. "That's better than the situation in the U.S.," says Christopher Evans, a British venture capitalist and entrepreneur who worked in the U.S. and then created 14 biotech companies in Europe, including four quoted companies. "There are lots of reasons for coming back to Europe now," he says. "You can make more money than you could even in the States.''
Even in a sickly stock market. His venture capital firm is planning an initial public offering for its Ark Therapeutics, a British start-up that develops drugs for treating cancer, vascular and circulatory diseases. The IPO, which hopes to raise € 60 million in the U.K., is expected to value the company at € 225 million. "If it goes well this could rekindle the fire all over Europe," says Evans.
That would certainly be welcome in Germany, where the capital markets have been less than bright. In fact, Ger-many's impressive recent growth in the biotech industry is due in a large part to state support. In the mid-1990s, Berlin granted three regions including Munich € 25 million to be used to match private capital going into start-ups. Under separate programs, federal and state banks also matched private investment.
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That means each biotech start-up could triple its venture capital by loading up on matching grants, says German entrepreneur Horst Domdey, co-founder of two biotech start-ups and managing director of Bio-M, in Martinsried, one of the most successful regional innovation clusters in Europe. Critics say the ready availability of government money meant that too many biotech companies were funded, including ones with less than stellar business plans. Now, many of them are likely to die or be taken over.
Charlie Cohen, an American who heads German-based Cellzome, is another entrepreneur who says that Europe is a more attractive place to launch a biotech company than the U.S. "There is a lot of investment capital, energy and enthusiasm in Europe right now. If you want to make a significant impact in health care, there is a good chance to do it because of the support of politicians and government," he says.
But for France Biotech's Pouletty, there is still much to do. At the Gerona meeting of research ministers, he urged them to set two goals for European biotech: head-to-head with the U.S. in 2007 and ahead by 2015. To get there, Pouletty argued for uniform European patent and litigation laws, the doubling of university research budgets every five years and the creation of a European Corporation for Innovation, which would provide tax exemptions to entrepreneurs, investors and corporations across Europe. He also asked for a merging of Europe's technology-oriented stock markets to create a European rival to NASDAQ in the U.S. And he recommended a goal of six months for new drugs to get regulatory approval. Last year the U.S. Food and Drug Administration typically took 17 months to sign off on new drugs. Of course he argued for subsidies like the U.S. too — € 5 billion in annual support to private biotech companies — as well as E.U.-guaranteed long-term bank loans to help promote mergers and acquisitions within Europe or to take over U.S. firms.
The list is long and ambitious but a number of initiatives are already under way. And the European Commission has got involved, recently drafting an action plan for the biotech industry that calls for the strengthening of sources of risk capital and a common, simplified regulatory framework. Scientists like Avrameas say they are optimistic about Europe's future in biotech. As he has learned, you have to keep innovating and experimenting to come up with the right formula.
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