The future of European biotech investment

3 min read

The future of European biotech investment

Everybody needs healthcare. Especially in Europe, where more than 20% of the population was aged 65…

know more

Everybody needs healthcare. Especially in Europe, where more than 20% of the population was aged 65 and over back in 2019. And when there are something everyone needs, there is a certain opportunity for investment.

While healthcare investment has traditionally been focused on pharmaceutical, medical equipment, insurance, distribution, and healthcare facilities, delphai data reflects a strong investment trend emerging in the biotech sector. Specifically, we are seeing scientific innovation open up new possibilities for the treatment and prevention of diseases. 

We spoke about European biotech investment with Hans-Georg Höllerer, Hans-Georg Höllerer, Program Officer for Global Health Advocacy and Innovation Scoutingat the Bill & Melinda Gates Foundation, “If you look at what many investments in healthcare/life sciences in Germany right now have in common, it is that they are mostly in the digital health or platform space, where success can be realized more easily in the short-term. Companies in this space are generally easier to scale, the addressable markets are bigger, regulatory hurdles are less cumbersome, the science behind is easier to understand for investors, and they often make use of replicable business models from other sectors. In recent years, there have only been a handful of VCs that understand the high-tech life sciences sector well, but that’s changing and more capital is willing to move into the biotech & Medtech space. Strategic investors are more willing to take bigger risks in life sciences, even though this sector is a hundredfold more complex in so many aspects”. Mr Höllerer scouts innovators in healthcare across Europe as potential investment targets.

According to delphai data: the biotech sector has attracted 61% of the funding of European Life Sciences investors since 2019, with 137 out of 222 transactions involving biotech companies.

Even though the healthcare industry has always carried inherent growth prospects and is often economy-proof, many European investors hold back due to healthcare being highly regulated. Moreover, pharmaceuticals and medical device makers often fail to secure the necessary approvals to market new products. Regulatory changes can drastically alter a healthcare company’s growth prospects, without mentioning uncountable litigation risks. 

The COVID-19 pandemic has definitely taught the world the non-negotiable value of healthcare and innovation. Now, despite the risks, we see an upwards investment trend in Europe. Investment in biotech jumped 40% from 2019 to 2020. With the German Federal Government taking the lead and investing 300 million in CureVac AG, raising the importance of the biotech field to a global political arena.

The life sciences sector is definitely one of the most interesting currently, especially now that there is so much available capital and so much willingness, and also pressure, to challenge how we have been doing things. — Hans-Georg Höllerer

Another major investment in biotech originating from the German-speaking DACH region comprising of Germany, Austria, and Switzerland in 2020, was led by Apeiron Investment Group, the family office of Christian Angermayer, investing in ATAI Life Sciences, in a round of €112 million. ATAI focuses on developing psychedelic and non-psychedelic compounds for various mental health indications.   

Despite the upwards European investment trend in biotech, DACH region investment firms were sidelined in 2020 as their turf was seized by much faster American firms. Investors like General Atlantic and Viking Global backed promising swiss startups like Pharvaris, while RA Capital and Versant Ventures chose to fund German startups like TKnife.   

The hopes of the DACH region investment sector in biotech are on Nextech Invest and HBM Healthcare Investments, Swiss investment firms with an almost exclusive focus on biotech, active in the US and Europe. While Nextech Invest closed nine deals between 2019 and 2020, most of them for US companies like Kronos Bio, HBM focused on investing in fellow Swiss companies like MonterosatxSwixx Biopharma, and Polyneuron

European biotech investment landscape in 2021‍

As the world emerges from the economic pause brought by the Covid-19 pandemic, investors try to predict what the future has in store. As the two major life science markets in the west, there is no doubt that both Europe and the US will play a vital role in shaping our future. 

Our data reveals that although the US is by far the largest biotech market, Europe is also thriving, with governments, corporations, and investors playing a crucial role in the international landscape. 

Unlike their US counterparts, most active European investors look across the Atlantic for investment opportunities, while the most active US investors tend to bet on their own turf. 

Although US investors currently dominate European investors across all investment stages in the biotech sector, our data shows an upward trend in early-stage funding, indicating Europeans are becoming bolder.  

Poised to take advantage of some underlying fundamentals that fuel growth, European investors take into account factors including:

  • An aging population
  • Widely spread adoption of technology such as smartphones
  • Reliable logistics as well as energy sources
  • Treatment advancements in chronic diseases and conditions
  • Technological advancements such as telehealth and remote monitoring

Biotech beyond 2021

What’s next for biotech in Europe? How should investors in the DACH region not miss out on the opportunity? Where should you acquire, partner, or invest? delphai answers all your questions about global emerging technologies, market trends, risks, and competitors. Going from macro views to detailed industry insights. Get in touch to find out more.