Record investment in biomedicine sector
Companies in the sector obtained €153m in 2016, twice that of the previous year, says a study by CataloniaBio that highlights the growing interest of pharmaceutical firms
Biomedicine is in good health in Catalonia. The sector attracted record amounts of investment worth 153.1 million euros in 2016, double that of the previous year. That is the main conclusion of a study by the CataloniaBio association with the EY consultancy. The news is particularly welcome because it is a sector that requires huge amounts of capital to develop projects: “The record amount of investment is confirmation that this ecosystem that first appeared just 10 years ago has entered a stage of maturity,” points out the secretary general of the CataloniaBio business association, Melqui Calzado. This association set up in 2006 brings together a hundred firms, including start-ups, biotech SMEs, service companies and pharmaceutical companies.
The study reveals that the firms in this sector employee some 46,700 people in Catalonia, and that a total of 50 investment operations were carried out in 2016. It is significant data given that, “according to the companies surveyed, the highest risk of failure is the financial area, followed by the scientific sphere,” says Calzado.
Sources of capital
As for the companies in the sector focused on developing products, the report shows that most of the capital obtained came from venture capital firms (35% of the total), followed by revenue from license agreements for the final product (un 33%). Some 7% came from industrial partners, another 4% from the alternative investment market, MAB, some 3% from private investors and family office funds, with 2% from crowdfunding. Only 16% of the investment obtained last year was funded by debt. Among the most active Catalan investors in the sector last year, CataloniaBio highlight the funds of Caixa Capital Risc, HealthEquity, Inveready and Ysios Capital.
Above all, the study shows the growing interest of the pharmaceutical industry to fund these biomedicine companies. Thus, some 60% of pharmaceutical laboratories consulted had shares in biotech. Last year, biotech comapanies signed 42 license agreements worth 65.5 million euros that have a potential value of 250 million euros in the next five years. Calzado believes that this means work needs to continue so that companies “learn to sell the value of the products.”
R&D comes first
Where investment in 2016 is concerned, the report points out most of the funding, some 78%, went to R&D projects in Catalonia. A lower percentage of 13% went to projects in other parts of Spain, some 9% went to other European countries, and the rest of the capital, some 3%, went to projects in the rest of the world.
The study also shows where investors came from, with most of the capital in the biomedical industry in Catalan hands (82%). Yet, the growth of the sector and its solvency –some 80% of the companies made a profit– has seen increasingly more capital come from abroad so that today international investors make up 12% of company shareholders. It is still a minority figure, which is why Calzado believes that one of the challenges will be to obtain the involvement of “more international investment funds to complement what already exists.”
Concerns about the politics
The biomedicine sector is particularly sensitive to the tense political situation between the Catalan and Spanish governments. The state authorities seizing control of the Catalan government’s finances in September seriously affected many research centres, as many projects are dependent on public funding. The head of CataloniaBio, Melqui Calzado, says the sector needs stability to avoid a negative impact on growth in 2017. “We hope our political leaders can find formulas to bring about a peaceful situation that respects the public, the institutions, research centres and firms to ensure the growth that Catalan biomedicine has experienced in recent years.” For now, the investment figures in the first quarter of 2017 do not show any impact due to the political situation, although CataloniaBio’s numbers hint that investment this year will stabilise.