Biotechnology industry pessimistic about the new year

After two years of record financing, the German biotech sector was only able to raise around 920 million euros in equity in 2022, less than a third of the amount raised in 2020, the first year of the pandemic. Almost half of this amount was shared between private and listed companies. In the annual trend survey conducted by the biotechnology industry association BIO Deutschland, board members and managing directors were significantly less satisfied with their current business situation than in previous years. The outlook for the coming year is also gloomier, even worse than during the financial crisis in 2008, with more than half (54 per cent) of those surveyed stating that the energy crisis was having a negative impact on their business situation. A fifth or half felt that inflation was having a strong or moderate impact.

Significantly fewer respondents than in 2021 stated that they wanted to increase their workforce. In addition, the willingness to increase investment in research and development (R&D) fell considerably. While business leaders still considered the current and future political climate to be extremely positive for the industry in the last two years, this index value has now fallen back to pre-pandemic levels.

In 2021, 64 per cent of respondents still considered their current business situation to be good, whereas in 2022 this figure was down to 40 per cent. With regard to the future business situation, 26 per cent said they expected an improvement, which corresponds to around half of 2021. An increase in the R&D budget is planned by 39 per cent (2021: 57 per cent). Overall, however, almost 90 per cent stated that they intend to invest in R&D, which illustrates the industry's sustained research intensity. Around 45 per cent of companies still want to increase their workforce, around a third less than in 2021. 31 per cent (2021: 59 per cent) thought that the current political climate was good for the industry. A similar picture emerged for the assessment of the future political climate. Here, too, only 28 per cent expect an improvement, compared to 61 per cent in 2021.

Oliver Schacht, Chairman of the Board of BIO Deutschland, states: „The results of our survey show that the mood in biotech companies has deteriorated significantly. This is very regrettable, but not too surprising in view of the global developments over the past year. The reasons for the dwindling optimism are certainly manifold. In addition to war, the energy crisis and inflation, a shortage of skilled labour and a lack of financing options are slowing our companies down. The slump in stock market prices, especially on the US technology stock exchange Nasdaq, which is so important for us, has also led to a massive devaluation of many companies. This makes it all the more important to strengthen Germany as a biotech location in the long term. We must concentrate all our efforts on securing our technological sovereignty in the field of biotechnology as well.

Viola Bronsema, Managing Director of BIO Deutschland adds. „The potential of biotechnology for many other areas besides pandemic control and health research, such as sustainable industrial production, nutrition or the circular economy, is now well known. However, many people do not realise that when assessing the framework conditions, a distinction must be made between the application of the key technology and the contribution of the industry. Without venture capital, patent protection and opportunities for cooperation, the biotech star BioNTech would certainly not have got this far so quickly, despite public funding. Our companies have the impression that politicians are all too quick to forget the role of innovative biotech companies. This is reckless, also and especially with regard to future challenges.

Press release "BIO Deutschland e.V." from 18 January 2023