Government backing, deep scientific talent and a robust pharma heritage are helping France punch above its weight, but turning research into investable companies remains a challenge.
France is one of the stronger countries in Europe in terms of government support for biotech, underscored by a strong scientific baseline and France-based pharma ecosystem.
Regardless, the country needs to improve converting said science into new companies on a more expedient basis, two investors said. Homegrown companies face a dearth of sufficient capital at the growth stage, like elsewhere in Europe.
France’s Health Innovation 2030 plan, sponsored by three government bodies, is set to end this year. The program “aims to establish France as the leading European nation in healthcare innovation and sovereignty.” This €7 billion ($8 billion) initiative focuses on enhancing France’s biomedical research capacity and invests in future healthcare areas.
The country also has one of the most generous R&D tax incentives in Europe, with up to 30% of research expenditure reimbursed up to €100 million. In addition, and for particular benefit for small-to-medium enterprises, there is expenditure claim allowed “on the design of prototypes of new products that have not yet been launched on the market or that have superior characteristics, or pilot installations for new products.”
Strong science, pharma foundation
France is relatively diverse in terms of regions for excellent scientific research, said Thierry Laugel, managing partner at Paris-based Kurma Partners. While Paris, the capital, has a heavy concentration, there are excellent research institutes from northeast to southeast and southwest, he added.
Besides Paris, Lyon is a strong hub, added Ksenija Pavletic, partner and chief commercial officer at Paris-based Jeito Capital. France has world-renowned research centers such as The Institut Pasteur and Inserm, she added. Oncology, immunology and virology have all been well-represented.
In addition, Paris has a long history of successful pharma companies like Ipsen, Servier and Sanofi, Pavletic said.
Systemic shortfalls
The rub lies in that France doesn’t have abundant company-building infrastructure, Laugel said, with most of the deal flow from academia rather than industry spinouts. Tech transfer can slow momentum if negotiations are extended; if timelines push put out to one year or longer, this can frustrate investors and they’ll pursue other options.
France is still early in the journey compared with the U.S. in scaling companies, Pavletic said. In that vein, Europe needs more entrepreneurial energy, speed and willingness to build companies around science, Laugel added. “We don’t exploit to the right level the quality and experience of science we have in Europe,” he said.
Capital availability
To date, early stage fundraising in Europe remains difficult because risk appetite is limited, Laugel said. In a step to diminish that financial hurdle, Kurma announced in April that it has closed its fourth biotech venture capital fund after raising €215 million ($252 million) to support European startups.
There is also hope in France that institutional investors are now more open to healthcare and biotech, with banks and insurance companies also becoming more educated about the sector, Pavletic said. Still, France lacks the pension-fund depth that supports U.S. biotech financing.
Jeito’s contribution to increased capital for European companies most recently grabbed headlines with its April announcement of the final closing of its second fund, exceeding its target above €1 billion ($1.2 billion).
The fund’s closing is “the largest raise ever achieved by a fully independent European fund dedicated to Biopharma,” according to the press release.
The bridge from the early-stage funding Kurma provides to the later-stage capital Jeito offers is a good example of the continuum needed for European biotech to flourish. Otherwise, companies will continue to go to the U.S. to attain larger financing rounds, Pavletic noted.
Both Laugel and Pavletic expressed optimism for the future. “Europe is transforming itself little by little and showing its ability to compete in the industry,” Laugel said.
