The French government is planning to triple the size of its biotech investment fund after the industry balked at the initial proposal. Officials now intend to hive off €340 million ($380 million) for the fund, more than three times the amount earmarked when they first floated the idea last year.
Marisol Touraine, the French health minister, originally unveiled the fund in October, at which time the intention was to set aside €100 million to invest in local biotechs. The proposal received a frosty reception from trade group France Biotech and other industry representatives, primarily because the sum of money involved was seen as too small to make a meaningful difference. Now, having added €240 million to the "Fonds accélération biotech santé" investment vehicle, the government has won round the industry.
"It is a very good initiative," France Biotech President Pierre-Olivier Goineau told La Tribune. Having founded and held senior positions at Erytech Pharma (EPA:ERYP), Goineau has firsthand experience of the fundraising challenges that the €340 million fund is intended to address. Erytech relied heavily on Auriga Partners for investment during its years as a private company, before turning more and more to U.S. financiers for money once its stock started trading publicly in Europe. Goineau is among those concerned that without more local VC money, French biotechs will target U.S. cash sooner.
The fear is a lack of money will force biotechs to shift their centers of gravity stateside. "It would be a shame," Goineau said. Ultimately, nearly all ambitious biotechs will find themselves pulled toward the U.S. biotech and finance hubs, but the €340 million should mean more companies can get their starts in France and delay the need to head across the Atlantic. Yet, while the ratcheting up of the amount of cash controlled by the fund answers one of the criticisms of the initiative, other concerns about its likely impact remain.
As with anytime a government gets involved with the challenging business of deciding which biotech is worthy of investment, doubts remain about how successful the fund will be at identifying and supporting the best France has to offer. When the government outlined the process for choosing investments in November, it put state-backed investment group Bpifrance and a committee made up of representatives of various wings of the government at the heart of the process. As it stands, it is unclear when the fund will start operating.