VC drought for biotech hits hard in Europe with 44% drop in 3Q investment

Tools

European biotechs appear to be feeling the same pain--or worse--from scarce venture dollars as their U.S. counterparts. Biopharma outfits in Europe raised 44% less venture capital in the third quarter than they did during the same period a year ago, making biopharma the hardest hit group in the healthcare sector, according to figures from Dow Jones VentureSource.

The report shows that €163 million was funneled into 29 biopharma deals in Europe. On top of the sharp decline in total euros, there was a 9% decline in the number of deals. Across all sectors in Europe, VC bets were down 12% in terms of total money invested and 13% in deal flow, according to the report. Clearly, these numbers demonstrate the sticky situation for European biotechs aiming to land VC dollars to move drugs through trials, and that available venture money has taken an even greater dive in the biopharma field than most other sectors.

To be clear, the drop in VC money for European drug developers doesn't equate to doomsday in every case. Biotechs have been learning to get along on leaner budgets than in years past, with outsourcing and virtual models emphasized to limit spending. Still, the VC drought in biotech has gained the attention of folks at all levels of the drug industry. Last week, Chris Viehbacher, the chief executive of French drug giant Sanofi ($SNY), cited the lack of venture dollars for young groups in his industry as a concern. Eying opportunities to aid fledgling developers, many Big Pharma companies such as Merck ($MRK), Eli Lilly ($LLY) and others have stepped up their own VC games.

In Europe, the problem appears to be even more acute in some ways than in the U.S., where, according to the National Venture Capital Association and Pricewaterhouse Coopers survey, there was an 18% drop in dollars invested in biotechs during the third quarter. Yet U.S. biotechs saw a sharper decline in deal flow, down 20%, than their European brethren.

Venture capitalists appear to hunting where the hunting is good, dumping a growing amount of money into companies in the rising China market. There's been lots of finger pointing as far as declining venture bets on biotechs are concerned in the West, with the FDA being a favorite target of investors. A lack of IPO exits for biotechs has been another cause for VCs to fret.

- here's the release

Recent Articles:
Report: UK's Chris Evans shops $750M R&D startup plan
PwC: Life Science VC funding dips in Q3 2011