Europe's future in biotechnology is being decided right now

How attractive is Europe to biotech investors?

Europe is extremely attractive because of its incredible level of science. We have publications at world-class level. We have scientists that are in the entire world, but we also have some negatives in Europe because we have too little translation of this knowledge into application, into companies. Actually, we’re losing biotech companies rather than gaining more. And those that we’re gaining are typically not financed sufficiently.

Why are investments in biotech so small in Europe?

Investments in Europe are small because a), we probably don't have the same type of rigorous selection criteria that is needed to finance a biotech in countries like the United States or in America. So here it's very often public funding at 1st and that's pretty much across the board and not really going after what is the most promising innovation. And then from there onwards the follow on financing is missing. So it's very often then a question of financing. And while US venture is coming to to Europe, it's not sufficient. Very often instead some of the best innovations that are coming out of academia in Europe are very quickly migrating over to to begin incorporated in the US and then completely leave Europe at some point.

What can we do to reverse this trend?

So it always starts first with quality. The basic science is there but the quality when we translate it into companies needs to match the same type of rigor that we have in the US. Secondly we need financing and we can’t just rely on US based financing, so we need to create capital markets that are available to actually have the liquidity to finance in Europe. Those are totally inexisting today. So we have very few Europe based ventures. We need more of those and those will only exist if we also have capital markets in Europe. Compared to NSADAQ where we can ultimately take companies public.

How can corporate companies help to improve the situation?

Corporates, like in big pharma, are typically the recipient of biotech. So biotechs get funded either to be taken public or to be acquired by industry. If you look at industry, it's investing a big portion of its free operating cash flow into acquiring either REITs or entire companies out of the biotech universe. So external innovation is absolutely key for the pharma industry to remain innovative. So we are sort of like a major part of the process for these biotechs actually to be financed ultimately.

How does Pharmaceutical industry support biotech?

There are multiple examples on how the Pharmaceutical industry actually supports biotech. The first way that I can think of is that they need our machine to do the clinical development. Typically biotech companies are not capable of really covering the entire value chain from first clinical development, then into pharmacovigilance, into regulatory approval of products and ultimately commercialization. So they need to partner, which is why they either partner giving rights to pharma or they entirely divest into the pharma environment. Secondly, what we're doing is we're serving also very often as incubators and as also venture to support these type of biotech companies. We have here in Berlin and then four other locations around the world, so-called incubators where we're actually creating biotechs and helping them get up on their own feet and create an environment in where innovation can grow. And then very often we invest into those. So, we have a venture arm like many other pharma companies have, which functions just like other private ventures, but very often more with a strategic focus in mind. In the case of Bayer, we're trying to actually solve 10 of the biggest science challenges that exist in the world through the investment into biotech companies.

What is your vision for the European biotech scene?

Europe has clearly expressed that the pharmaceutical space is an area for growth and development. Actually, you could read it up in the Draghi report and it starts with biotech. Biotech is where we translate academic knowledge into products, into companies, into start-ups. So Europe has every reason to win in this space. So if we want to be successful, we have the science. We now just need to translate it into products and companies. These companies need to be financed sufficiently then ultimately in the end need to be partnered with pharma company or acquired by pharma company. And if we can get that flywheel to get going in Europe, we have nothing, no one to hide behind and to stand behind. We can be as successful as our American examples or lately, the examples from China.

When do you think your vision will materialize?

It's actually materializing as we speak, even though it can get much, much bigger. But here in our backyard, we're actually creating a translation centre, which does translate science in the sciences of cell and gene therapy into products and ultimately into companies. That's the kind of flywheel that we need to create for multiple modalities, multiple indication areas across Europe. And then we need to have the capital markets that actually help finance these companies. Those can come either from venture or from large companies like ourselves. We're doing it here, and I'm very proud that this is hopefully a crystallization point for such an ecosystem to be created here in Europe.

How can platforms like bio:cap help strengthen Europe’s biotech ecosystem?

Today, we have very few formats that actually support biotech development here in Europe. So biocap can be such a platform. We will see. It's the first year, so we will have to give it a little bit of time, but we need commitment from the locals, local players like Bayer for example, to support this type of format and that's what we do. And I do believe that Berlin is the perfect place for this. I'm actually also happy to see that stakeholders from politics and academia as well as from industry are supporting it. We need more of this.