New possibilities for accessing the capital markets for small and medium-sized biotech enterprises

Directorate-General For Research And Innovation European Commission

Description

Medical and biological research
Industrial policy

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• Publié par: DIRECTORATE-GENERAL-FOR-RESEARCH-AND-INNOVATION-EUROPEAN-COMMISSION
• Nombre de lectures: 3
• Langue: English
• Poids de l'ouvrage: 3 Mo

Extrait

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QUALITY OF LIFE AND
■¿-J MANAGEMENT OF LIVING RESOURCES EUROPEAN COMMISSION
DG Xll/Coordination Unit BO
Science, Research and Developement — Quality of Life and Management of Living Resources
Contact: Mr Alessio Vassarotti
Address: European Commission, rue de la Loi 200/Wetstraat 200 (SDME 9/29)
B-1049 Brussels — Tel. [phone]: fax [phone] European Commission
New possibilities for accessing the
capital markets for small and
medium-sized biotech enterprises
Dr. Klaus MENRAD
Dr. Michael LOHNER
Fraunhofer Institute for Systems and Innovation Research
Breslauer Str. 48
D-76139 Karlsruhe
in cooperation with
Professor Dr. Pier Paolo SAVIOTTI
Jacqueline ESTADES
INRA-SERD, Université Pierre Mendès
P.O. Box 47
F-38040 Grenoble
Directorate-General
Science. Research and Development
1999 —EUR 18908 A great deal of additional information on the European Union is available on the Internet.
It can be accessed through the Europa server (http://europa.eu.int).
Cataloguing data can be found at the end of this publication.
Luxembourg: Office for Official Publications of the European Communities, 1999
ISBN 92-828-6925-3
© European Communities, 1999
Reproduction is authorised provided the source is acknowledged.
Printed in Italy
PRINTED ON WHITE CHLORINE-FREE PAPER Foreword
The development of Biotechnology and its applications raise a number of important
questions about its impact on people, society, and markets. In the frame of RTD
programmes in the field of biotechnology, the Commission services are mandated
by the European Council and sponsor activities to study those impacts. In particular
they sponsor the socio-economic dimension and public attitudes to biotechnology
thus contributing to the wide debate that is presently taking place in the society. The
Fifth Framework Programme confirms the importance of such activities and stresses
that they should continue and be developed further.
The Biotechnology 1994-1998 programme has foreseen four calls for proposals for
studies to support experts working on specific subjects. Grants have been allocated
to a wide range of subjects (risk analysis, education in biotechnology, public
perception, industrial strategies, employment aspects, etc.). The selection of grant
recipients took place on the basis of a peer review evaluation.
The studies collect relevant facts, discuss and explain them, and thereby generate
reports useful to the general public or for public policy. In order to make these
reports available to the general public as well as specialists in the field and civil
servants, the Commission services are publishing a series of studies of which New
Possibilities for Accessing the Capital Markets for Small and Medium-Sized Biotech
Enterprises (BI04-CT 972011) co-ordinated by Dr. Klaus Menrad is one more
illustration. Other recently published studies include Looking at the Biotechnology
Consumer by Prof. V. Moses, Consumer Acceptability of Biotechnology in Relation
to Food Products with Special Reference to Farmed Fish by Prof. C. Ritson and
ACELLUVAX: Social Acceptance and Economic Impact of a Recombinant Vaccine
by Prof. F. Terragni. All of these publications are now available upon request, as
well as the Eurobarometer Survey.
E.Magnien A. Vassarotti
Head of the Biotechnology Unit Responsible for Socio-Economie sector
Practical Information
For more information on the activities carried out in the frame of the Biotechnology
programme, access the Web page Europa server at the following www site
(http://europa.eu.int/comm/dgl2/biot.html) or send a fax to 00322- 2991860. or mail to The
European Commission. Rue de la Loi 200, Β-1049 Brussels Belgium. For more specific
information on socio-economic aspects, contact Dr. A. Vassarotti via E-mail:
[e-mail], or via fax [phone]. List of contents
Executive summary i
1. Introduction 1
2. Working programme of the project 3
2.1 Overview over the field and elaboration of questionnaires 3
2.2 Interviews in three countries of the European Union 5
2.3 Organisation of an international workshop 6
2.4 Final report 7
2.5 Structure of the final report 8
3. Going public of biotech SMEs in Europe 9
3.1 France
3.2 Germany 17
3.3 United Kingdom 26
3.4 Benelux countries 41
4. Strategic decision of going public 53
4.1 Targets of the company
4.2 Expectations of potential investors4
5. Organisation and management of going public9
5.1 Planning of going public
5.2 Legal form of the company 62
5.3 Elaboration of an issue concept
5.4 Selection of the stock exchange
5.5 Valuation of the company 70
5.6n of the prospectus5
5.7 Investor Relation activities7
5.8 Criteria for selecting advisers 81
5.9 Costs of going public
6. Timetable of going public9
7. Literature 9
Annex
List of tables
Table 2.1 : Number of interviewed biotech companies 6
Table 2.2:r ofd financing institutions
Table 3.1 : Capital raised by listed French biotech companies
(in mio. ECU) 9
Table 3.2: Private placements of biotech companies in France
(in mio. ECU) 11
Table 3.3: Venture capital investments in biotechnology in France 13
Table 3.4: Stages of investment of venture capital funds ine4
Table 3.5: Private placements of biotech companies in Germany
(in mio. ECU)8 VI
Table 3.6: German biotech companies (number of companies,
employees) 20
Table 3.7: Venture capital investments in biotechnology in Germany 24
Capital raised by listed UK biotech companies (in mio. Table 3.8:
ECU)9
Private placements of biotech companies in UK (in Table 3.9:
mio. ECU) 32
Table 3.10: Venture capital investments in biotechnology in the United
Kingdom5
Table 3.11: Private placements of Dutch and Belgian biotech companies
(in mio. ECU) 41
Table 3.12: Venture capital investments in biotechnology in the
Netherlands and Belgium6
Table 4.1 : Important institutional investors in pharmaceutical and
biotech companies in the UK in 1997 (% of total equity of
the company) 5
Table 5.1 : Prerequisites for biotech companies when preparing an IPO 60
Selected listing requirements at different European stock Table 5.2:
exchanges 69
Example for valuation of a biotech company using a Table 5.3:
discounted cash flow model 73
Table 5.4: Fees at Neuer Markt 86
Table 5.5: Feesat EASDAQ
List of figures
Figure 3.1 Capital acquisition of biotech companies in France 10
Figure 3.2 Venture capital investments in biotechnology in France4
Figure 3.3 The organisation of the stock market in Paris7
Figure 3.4 Capital acquisition of German biotech companies9
Figure 3.5 Application areas ofnh SMEs 21
Figure 3.6 Stage of development of products in the biotechnology
industry 22
Figure 3.7: Venture capital investments in biotechnology in Germany 23
Figure 3.8: Capital acquistion of UK biotech companies8
Figure 3.9: Development of biotech stock prices 30
Figure 3.10: Venture capital investments in biotechnology in the United
Kingdom 36
Distribution of the BBSRC budget by scientific areas in Figure 3.11:
19957
Figure 3.12 Distribution of the MRC by research areas in 1995/96 39
Figure 3.13 Capital acquisition of Dutch and Belgian biotech companies 4
Figure 3.14 Venture capital investments in biotechnology in the Benelux
countries 45
Figure 5.1: Target groups of Investor Relation after IPO 79
Timetable of a biotech IPO 90 Figure 6.1 : Executive summary
Small and medium-sized enterprises (SMEs) in the biotech field are facing a
number of specific difficulties in financing their business activities. In general, high
R&D investments are necessary to develop new biotechnological processes or
products. For instance, between 10 to 20 mio. ECU have to be invested for the
development of a new diagnostic, or 290 to 420 mio. ECU for a new drug. In
addition, the market introduction and diffusion of new products (especially in the
healthcare sector) is very time-consuming and costly due to specific regulations for
product approval. Another problem of start-up high-tech companies is that the
entrepreneurs often underestimate the time and the costs needed for completion of a
specific product development. In addition, most of the biotech SMEs depend on the
success of one or two products, so that an investment in such a company might
entail more risks than in a start-up company in another technology field.
In most member states of the EU investments in biotechnology by venture capital
companies were rather limited until the mid 90s. Most of the private investment s in Europe prefer relatively low risk investments in high-tech companies.
These requirements are relatively rarely fu