Stefan Oelrich, president of Bayer’s pharmaceutical division and newly appointed head of the EU’s pharmaceutical foyer EFPIA, identified the pressing want for capital market reform to help biotech improvement in Europe.
“We’d like the equal of a Nasdaq in Europe the place we are able to elevate capital for biotech. As a result of biotech isn’t just about authorities finance,” Oelrich mentioned throughout a press convention final week.
Launched in 1971, the Nasdaq (initially the Nationwide Affiliation of Securities Sellers Automated Quotations) was the world’s first digital inventory market.
Recognized for its totally digital buying and selling mannequin, the change has traditionally been engaging to fast-growing sectors, together with life science, itemizing a number of the world’s largest tech corporations, together with Apple, Microsoft, and Google.
Oelrich argued that Europe should urgently develop an analogous equity-driven financing ecosystem.
“At the moment, there may be very restricted enterprise capital out there, which is essentially as a result of approach we handle equities. We make investments our equities not in enterprise, however elsewhere,” he mentioned.
In response to him, the dearth of early-stage capital means European biotech improvements usually migrate elsewhere — particularly to the US, the place funding and commercialisation alternatives are extra strong.
“The transition from fundamental analysis to patented functions tends to observe the place the capital is. We should be certain that innovation generated in European universities and analysis establishments stays in Europe,” he warned.
‘Why don’t we do it?’
His remarks got here simply forward of the revealing of the EU’s long-awaited Life Sciences Technique, which goals to revive Europe’s place as a hub for biotech analysis and improvement.
The technique acknowledges that the hole in enterprise capital funding is widening in Europe. It factors to the continent’s fragmented capital markets and heavy reliance on financial institution loans, which are sometimes restricted in quantity and length, as main structural points.
The technique additionally recommends strengthening innovation hubs and integrating them into worth chains to higher entice personal funding.
Nevertheless, it doesn’t place vital emphasis on finishing the EU’s Capital Markets Union (CMU), a key demand from Oelrich.
“This may increasingly sound formidable, nevertheless it’s completely doable. Apparently, everybody I speak to recognises the necessity: So why aren’t we performing on it?” Oelrich requested.
He additionally steered that a part of Europe’s pension and life insurance coverage capital might be redirected towards enterprise funding if applicable political frameworks had been put in place.
“Innovations can discover a market right here because it’s not solely a few lack of capital in Europe: It’s about how we allocate it. We have to do a greater job,” he concluded.
The broader context
The EU’s Capital Markets Union stays incomplete, with progress hindered by regulatory divergence, inconsistent enforcement, and political resistance to deeper integration.
Whereas the CMU doesn’t instantly intention to create new inventory exchanges, it does help efforts to broaden entry to capital, notably for small and medium-sized enterprises (SMEs).
This improved entry may encourage the event of specialized or regional exchanges, although the broader aim stays integration moderately than fragmentation.
At present, Europe lacks sector-specific inventory exchanges. Main platforms like Euronext, the London Inventory Alternate, Deutsche Börse, Nasdaq Nordic, and SIX Swiss Alternate checklist corporations throughout a variety of industries.
As a substitute of devoted exchanges, sector-focused funding is facilitated by indices such because the STOXX Europe 600 household, which tracks sectors like banking, automotive, and leisure.
Nonetheless, for a lot of within the biotech sector, the absence of a specialised capital-raising platform stays a barrier. Whether or not the EU will — and may — transfer to handle this stays to be seen.