Biotech Industry Could Face Major Shakeout
17 June 2002 00:00 [Source: ICB Americas]
The European biotechnology industry will have to consolidate more
if it wants to avoid a "significant shakeout," according to
management consultants Ernst & Young in a recent report on the
global biotech sector.
"The long promised wave of consolidation among European biotech
companies has remained fairly muted," says Glenn Crocker, UK head
of biotechnology at Ernst & Young and European editor of the
report. "The need to broaden pipelines, platforms and geographical
reach will continue to underpin the need to engage in merger and
acquisition activity." European biotech companies have continued to
attract investment funds. Last year, they raised $2 billion, their
second best year ever. Private equity funds invested over $20
million in 23 biotech companies against 15 in the previous year,
but much of this finance was focused on Germany and the UK.
"There is some concern over the sheer number of early stage
companies in existence in Europe," says Mr. Crocker. "If the
biotech venture capital community does not have the appetite to
continue to sustain all 1,700 private companies in the sector, a
significant shakeout could be on the horizon."
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