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European biotech revenues fall back

Published on 20/05/04 at 10:25am

Revenues from the European biotech sector have fallen back for the first time in 2003, as many companies across the continent struggle to consolidate their position.

Global revenues from the sector rose 17% to E46.6 billion in 2003, buoyed largely by rising stars in the US, but their European counterparts saw turnover fall 12% to E11.3 billion, according to an Ernst & Young report.

Many companies responded to dwindling cash reserves by cutting back on R&D costs and non-core areas, signs of good business sense which contributed to a 17% growth in market capitalisation for the EU sector.

William Powlett Smith, leader of Ernst & Young's Health Sciences Group in the UK, said: "On the whole, the European industry has not enjoyed the buoyancy seen in the US. It has been forced to respond to challenging funding conditions and a lack of investor confidence by cutting costs, curtailing programmes and adjusting business models. In short, the industry is reappraising priorities and redefining the essentials to move forward - it is being forced to refocus."

The UK still leads the European market in terms of revenue and market capitalisation, but continues to lag behind the US.

Mr Smith explained: "Whilst the UK remains the dominant player in the European scene, this is not much consolation for the UK's position globally, which, like the rest of Europe, looks vulnerable.

"There is no doubt that Europe has plenty of examples of world-beating science, but scientific advances are not enough. The right financial and regulatory infrastructure must be balanced by the appropriate level of management ability," he added.

"Companies, investors and governments must take bold steps to ensure that they realise all the benefits of knowledge and hard work.  From our report, it appears that many CEOs have realised this, taken a sustainable look at their businesses, and made hard decisions. This can only be a sign of maturity."

Lack of funding from venture capitalists continues to be a major problem for Europe's smaller biotech companies; it has fallen by 18% across the continent to E920 million.





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