A study conducted by L’Atelier BNP Paribas, in collaboration with Biotechnology, reveals that the European biotech sector is moving upward. The best biotech company in Europe are increasingly forming partnerships to expand their global reach and scale up their operations. Here’s how.
European Biotech Companies Are Scaling up Their Global Presence
According to the study, 61% of European healthcare companies plan to make at least one international acquisition over the next 12 months. This figure is nearly double that of the previous study conducted in 2011-2012.
This acquisition strategy is designed to support business diversification and compensate for funding challenges by tapping into new sources of capital. As a result, many have become involved in M&A deals through public offerings or private investment.
Funds Raised via IPOs Are Vital for European Biotech Companies
The vast majority of funds raised by the best biotechnology companies in Europe came from IPO activities (76%). The remainder was either raised via private investment or venture capital. YTD trends show that Europe has become an attractive destination for investors.
Public and Private Investment Is Fueling the Growth of European Biotech Companies
According to the study, Europe currently accounts for 25% of all healthcare IPOs globally, and on average, more than 2/3 crossover deals between 2012 and 2014 involved European partners. In 2015, bioMérieux partnered with Sigma-Aldrich to form a new business unit focusing on bacteriology diagnostics. ‘
BioMérieux strengthened its presence in North America (80% market share). At the same time, Sigma-Aldrich benefited from the transaction through access to an international sales network and expertise in immunology, virology, and molecular biology.
This illustrates how cross-border M&As can help facilitate knowledge-sharing, improve operational efficiency and strengthen market share.
Similarly, MiNA Therapeutics raised $40M in a Series B round from Novartis, providing the opportunity to develop its lead candidate in China with the support of Novartis’ local Chinese team. As a result of this deal, MiNA Therapeutics has enhanced its global presence while also accessing new markets.
In October 2015, Algeta sold its US subsidiary to Bayer for $2B to develop the portfolio acquired from Bayer into a leading oncology company. Algeta strengthened its financial position and continued growing by pursuing an active business strategy instead of focusing exclusively on M&A deals.
In Europe, Healthcare Companies Are Increasingly Collaborating across Borders
The study found that most European biotechnology companies (51%) have partnered with at least one partner in another country. Collaboration has become an essential strategy for European biotech companies to increase their global footprint and accelerate innovation.
This trend is particularly significant in France, where 40% of healthcare companies have partnered with foreign partners.
In October 2015, Boehringer Ingelheim and Regeneron announced a new agreement to discover, develop, and commercialize four undisclosed immuno-oncology targets. The deal was structured as an R&D collaboration (including up to $90M in milestone payments) followed by a commercialization agreement.
The collaboration was intended to foster the development of novel antibody therapeutics for unmet medical needs, which would not have been possible under either company’s current R&D organization alone.
The goal was also to leverage existing infrastructure and expertise to reduce time-to-market. As a result, the alliance has made it possible for both companies to expand their global reach while competing independently.
Cross-border M&As are likely to remain a critical funding mechanism for European biotech companies seeking expansion capital. Meanwhile, public and private investment will continue fueling growth as European biotechnology companies seek access to new scientific knowledge and markets through collaborative efforts that promote innovation across borders.