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French biotech sector shows lively signs in bad economy

Posted on behalf of Barbara Casassus.

PARIS — Despite the continuing economic crisis, the balance between start-ups and failures in the French life-science sector bounced back last year to the 2010 level, after tilting sharply in 2011. The number of new firms created in 2012 rose from 24 to 35 in 2011, and the number of closures fell from 25 to 14.

Funding has rebounded, too, according to a report by France Biotech, a trade group with 120 member companies. The report shows that in 2012 biotechnology firms raised €364 million (US$482 million), 27% more than in 2011. Stock-market launches (initial public offerings) were a particularly generous source of cash in France, although venture capital started to pick up, says André Choulika, who is France Biotech president and co-founder and chairman and chief executive of genomic-engineering firm Cellectis.

Human health, especially oncology, was the prime focus among the 186 companies whose data were used for the survey, and animal health and cosmetics remained an important activity. With less spending on research and development, French biotech firms bring more products to the clinical-trial stage than do the large pharma groups, adds Choulika.

But battles still lie ahead for the sector. Firms are reluctant to expand because of draconian labour codes, and only 4% of them employ more than 100 people. Moreover, large companies still regard smaller ones as suppliers or sub-contractors rather than partners. Large groups’ investments in small and medium-sized enterprises (SMEs), known as corporate venture, is negligible in France compared to Switzerland, the United Kingdom or Germany.

Choulika also fears that because of France’s massive public deficits, French president François Hollande will renege on his promise to improve tax breaks in the Young Innovative Enterprise scheme, which supports start-ups. “I am afraid that the 2014 budget will bring no improvement,” Choulika says.

He also castigates the government for widening the definition of innovation to marketing and other sectors, and for deciding that only European SMEs will be entitled to develop French public-research agency discoveries. “This will be catastrophic”, as it means discoveries could be shelved for lack of firms with the right specializations, he adds.

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