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German biotech companies continue to raise capital despite uncertainty

Last year, German biotechnology companies raised approximately $957 million (€860 million) in capital from venture capital and capital increases via the stock exchange. This included two initial public offerings (IPOs). However, more than half of this amount was raised by one company, BioNTech from Mainz. Despite uncertainty German companies are broadly content with the prospects for the economy.

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In 2019, private biotech companies raised approximately $584 million (€525 million) in venture capital. A year earlier, this figure was only $410 million (€369 million) with a further $370 million (€333 million) raised on the stock exchange (2018: $1 billion (€900 million)). More than $206 million (€186 million) of this amount was raised through two IPOs, both on the Nasdaq in the U.S.

The Mainz-based immunotherapy specialist BioNTech and the company Centogene, a diagnostics expert for rare diseases, ventured onto the trading floor. For this reason, the total capital raised, $954 million (€858 million), failed to hit the financing record of $1,41 billion (€1.27 billion) set in 2018. Nevertheless, the total is still almost a third higher than the 2017 figure ($750 million (€674 million)).

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Business Perspective Survey

Every year, six questions are presented to German companies in a trend survey. According to the survey, around 90% of those researched consider their current and future business situation to be good, better, satisfactory or constant. 60% state that they want to expand their workforce in Germany, while only around 7% want to cut back.

In addition, half of the respondents plan to increase their investment in research and development (R&D). Meanwhile, only 20% of those surveyed expect the political climate in Germany to improve in 2020. This compares to 29% in the previous year. Nevertheless, 28% still consider the current political climate to be good.

In four of the six categories surveyed, the index is broadly stable in a multi-year comparison. A clear trend can be observed in the assessment of the future business situation. Here the index has been falling continuously over the years. After a low point in the wake of the last federal elections, the assessment of the current political climate has improved significantly again.

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Well-filled development pipelines

“It is a good sign that German biotechnology companies have once again succeeded in raising a lot of capital, even if they were unable to reach the peak value of 2018,” said Oliver Schacht, CEO of BIO Deutschland. The excellent financing situation also confirmed the quality of the German development pipelines. “Another positive aspect is that there has been some political movement in Germany in favor of our sector. The tax incentives for research are coming – at last, one might say!” he continued.

The new bio-economy strategy is pending and the dialogue platform Industrial Bio-economy is operational. In addition, the Federal Government is using the Bio-economy Science Year 2020 to focus on the bio- and knowledge-based industry and thus create more awareness for the sector.

Brexit and trade conflicts have an impact

Despite good financing figures and encouraging political signals, the assessment of the future business situation has deteriorated over the years. “We also see this as a result of current international developments,” added Viola Bronsema, Managing Director of BIO Deutschland.

“The years of wrangling over Brexit and trade conflicts have led to great uncertainty and also have an impact on our industry. It is strongly networked internationally. All the more reason for Germany to focus more on promoting biotechnology as a key technology. We must make a contribution so that biotechnology can be used sustainably to master challenges such as climate change and global health,” Viola Bronsema commented.

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(Featured image by Bill Oxford via Unsplash)

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Suzanne Mitchell juggles the busy life of a full-time mom and entrepreneur while also being a writer-at-large for several business publications. Her work mostly covers the financial sector, including traditional and alternative investing. She shares reports and analyses on the real estate, fintech and cryptocurrency markets. She also likes to write about the health and biotech industry, in particular its intersection with clean water and cannabis. It is one of her goals to always share things of interest to women who want to make their mark in the world.