Over the last few years, the biotech space has undergone phenomenal growth. The bioscience industry in particular has grown 7.2% since 2016, with the global biotechnology market size expected to reach $2.44 trillion by 2028.1 Today, one fifth of all current medicines — and up to half of all new medicines — were derived from biotech.
Despite wide-scale growth, many biotech companies still struggle with raising funds, finding co-development partners, and knowing when to divest their asset. This is especially true for the European biotech market where there is a less mature, albeit growing venture capital ecosystem compared to other markets like the United States.
The European biotech market is particularly complex, with many smaller markets contained under the umbrella of the European Union (EU) and the European Medicines Agency (EMA). Within these smaller markets, there are dozens of differing pathways and distinct healthcare and reimbursement systems. These differences also mean that biotech companies must approach Research and Development (R&D) differently depending on the country in which they are located.
The Covid-19 pandemic has had a dramatic impact on the biopharma industry, with many biotech companies benefitting financially from the increased attention granted to the pharmaceutical industry in general. General investors who may have previously been uninterested saw the value inherent in the life sciences, leading to new funds and more capital being made available to biotech.
Below, we discuss three ways biotech companies can better secure funding to bring their life-changing products to market.
1. Seek out region-specific funding
Although public funding can sometimes take longer to acquire and may require additional outside funding, its region-specific nature makes it an attractive option for some biotech companies. For example, the Invest in Holland initiative’s focus on health and life sciences allows startups and innovative companies in the Netherlands to receive partial compensation from the Dutch government for R&D costs, including wages and expenditures — leading to an annual two billion euro investment in life sciences R&D.2
Broader support across the EU has also been made available through financial initiatives like Horizon 2020 and Horizon Europe, both of which focus on driving economic growth and innovation in Europe.
2. Partner with an experienced and specialized investor
Although finding venture capital funding can be significantly more competitive in the EU, these types of funds usually offer more than just a monetary investment. Venture capital funds typically invest in fields in which they already specialize, which means these partners also bring experience and expertise to emerging biotech companies whose teams are often smaller and can be less experienced with fundraising. The VC fund will often take a board seat with the biotech, through which they can offer either management or operational support, or both.
Many small to mid-size biotechs and executives without a proven track record of raising funds may also lack the networks needed to find the right co-development partner. Recognizing a clear need, a number of European venture capitalists have focused their investments on promising startups in an attempt to alleviate this challenge.
3. Focus on quicker, cheaper funding opportunities
Over the last year, Special Purpose Acquisition Companies (SPACs) have become another quick and affordable option for biotech companies looking to gain a public listing without going the traditional IPO route.
SPACs provide an innovative funding vehicle for biotech companies by raising capital through an IPO with the goal of acquiring an existing operating company. These “blank check companies” have become one of the preferred funding methods for biotech companies in the US and are now starting to gain speed in Europe, allowing biotechs to go public within months and providing more market stability than a traditional IPO. Whilst recent months have shown a slight flattening of the SPAC market, partly due to some uncertainty over how certain aspects of the model should be considered by financial regulators like the SEC, interest is returning.
ICON is committed to helping biotechnology companies launch their therapies throughout the drug development process by facilitating partnerships with venture capital firms. Once these biotechs receive funding, ICON applies its expertise to assist them in accelerating their assets, including clinical trial planning and execution, regulatory assistance, consulting, and commercialization.
Learn more about funding for emerging biotechs, and how a co-development partner can help at iconplc.com/biotech.