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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