To summarise the French biotech industry in a short newsletter seems absurd. Biotech, by its nature, is multi-national and it is particularly nebulous: it is still in its infancy; it encompasses vast fields of interest and is usually structured around multi-national partnerships. But nevertheless, we will try to highlight the main characteristics of the French biotech industry, particularly through comparing it with its European homologues.
France boasts one of the largest pharmaceutical industries in Europe, underpinned by the domestic consumption of prescription drugs. Despite this and a long history of pharmaceutical innovation, the French government only woke up recently to the importance of biotechnology. To date, French biotech companies are a heterogeneous group as can be seen in the table below:
Human Health
47%
Cosmetics
10%
Research Material
9%
Animal Health
7%
Plant Production
7%
Human Food
5%
Animal Food
4%
Environment
4%
Other
7%
In Human Health:
Cancer
29%
Infectious diseases
21%
Immune systems
18%
Central nervous systems
13%
Other
19%
Cross-border statistics are to be taken with care in this industry but it seems clear that France is in a distant third place in Europe, after the UK and Germany. Some 4,500 people are employed in the French biotech sector versus 18,700 in the UK and 13,400 in Germany. The following table gives some rough comparisons.
One of the striking things about the above table is that the number of biotech companies in Europe is greater than that of the USA but the total sales for American companies is 6 times that of Europe. This is indicative of the maturity of the businesses as sales come only after many years of research in biotech. It is common to see 10-15 years between conception and bringing a biotech product to the market. A similar pattern is true of the comparison between France and the UK and Germany. While there are marginally fewer French biotech companies, the number of employees is a quarter that of the UK sector. Again this reflects the age of the industry: more than one third of French biotech companies are less than 3 years old and only 10% are more than 10 years. Sales and Empoyment in Biotech relative to GDP and Total Workforce
Countries
UK
Germany
France
Europe
USA
Biotech Sales/GDP
0,12%
0,03%
0,05%
0,08%
0,19%
Biotech Workforce/Total Workforce
0,70%
0,30%
0,20%
0,35%
1,20%
The above comparisons are more striking when set against the GDP per country or the total workforce, as seen in the graph below: the proportion of the active workforce in European biotech is less than half that of the US and France is less than half that of Britain. So not only are there fewer French biotech companies than UK or German, but the French ones are also significantly smaller. The inevitable outcome is that the French groups have greater difficulty in attaining critical size. This is borne out by the limited number of quoted biotech companies in France. Today there are only 5 quoted companies in France: in the UK some 12 companies came to the markets over the last 4 years alone.
Fundamentally, the French biotech industry suffers from a continued lack of financial incentives. Indeed, the fiscal and regulatory environment, so key to an industry with huge start-up costs, has simply not been conducive to starting up biotech companies. This arguably makes the French companies vulnerable to takeover by UK, German or other biotech groups.
The good news is that the French government has woken up to the longer term importance of biotechnology and has made the sector one of its key growth areas for the future. In 2002, the French public sector invested 60 million € in direct aid to biotech, or 7 times less than Germany and 8 times less than the UK. For the 2002 French Budget, however, the government put in place a “Plan Biotech 2002” whose mission is to establish a separate biotech fund that underwrites start-up investments and encourages private sector and venture capital investments for the biotech sector. The aim of the plan is to generate some 400million € for direct investments and underwriting over the medium term with an additional 150million € for co-investment. This would at least put France on a similar footing to Germany although still lagging the UK.
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