Facts about Biotech in Europe

 

Source: Ernst & Young and company financial statement data.
Numbers may appear inconsistent because of rounding.

 

  • In 2011, the industry was on the path to recovery from the financial crisis but, while biotech's financial metrics continue to be healthier than they were in the immediate aftermath of the crisis the sector is not completely out of the woods.
  • R&D spending by public companies in the four established biotechnology centers (the United States, Europe, Canada and Australia) grew by 5% — well below the 9% growth rate achieved in 2011.
  • In 2012, the industry's net income improved by US$1.4 billion, to reach a new high of US$5.2 billion.
  • The industry's revenues grew by 8%, a couple of percentage points below the 10% (after adjusting for large acquisitions) achieved in 2011.

 

Source: Ernst & Young and company financial statement data.
Numbers may appear inconsistent because of rounding.
Commercial leaders are companies with revenues in excess of US$500 million.

 

  • The revenues of European publicly traded biotech companies grew by 8% in 2012 2012 — identical to the growth rate of US companies, but slightly below the European industry's performance in 2011, when the sector's top line had increased by 10%.
  • However, R&D expenditures decreased by 1%
  • Capital raised by European public companies soared in 2012 on the back of large debt financings by a few companies that were able to take advantage of low interest rates.

 

 

European biotechnology financings by year (US$m)

 

Source: Ernst & Young and company financial statement data.
Numbers may appear inconsistent because of rounding.
Commercial leaders are companies with revenues in excess of US$500 million.

 

  • In Europe capital raised rose by 44% to  US$4.2 billion, the highest total since before the global

financial crisis.

  • The large year-to-year swing was entirely driven by debt financing, which increased by 392%
  • In the four years preceding the financial crisis, the average IPO capital raised per year was US$831 million.
  • In the four years since the crisis, the comparable number was US$111 million. Over the last two years, the average has fallen even further, to US$41million —95% decline relative to pre-crisis levels.
  • Venture capital has fallen from an average of US$1.8 million raised between 2004 and 2007 to an average of US$1.3 million in the four years since the crisis.

 

Source: Ernst & Young, Capital IQ, MedTRACK and company news.
Chart excludes transactions where deal terms were not publicly disclosed.
  • In 2012, the total value of mergers and acquisitions involving US and European biotech companies increased 9%
  • In 2011, the industry had experienced a marked decrease in both the volume of strategic alliances and the aggregate "biobucks" potential value of these transactions.
  • In 2012, the number of deals increased by 4% to 153.,however, their potential value fell by 9% to US$27 billion

 

Source: Ernst & Young, Capital IQ, MedTRACK and company news.
Chart excludes transactions where deal terms were not publicly disclosed.
  • While M&A activity rose in the US (on a European M&As, 2006-12 megadeal-adjusted basis), in Europe both the volume and value of transactions was down.
  • The value of M&As declined 28% to US$2.9 billion, and the number of deals with announced terms fell to 13 — the lowest level since at least 2005.

 

Source: Ernst & Young, MedTRACK and company websites
  • Europe's pipeline is about half the size of the US pipeline
  • In 2012, the UK, Germany and Switzerland accounted for nearly 40% of the European total.
  • The UK has the largest number of drug candidates in preclinical studies and Phase II trials, while France has a small lead in the number of Phase III trials.

 

Read the full Ernst and Young 'Beyond Borders 2013' report.