New possibilities for biotech SMEs
The European Commission's Research Directorate-General has recently published a study on 'New possibilities for accessing the capital markets for small and medium-sized biotech enterprises'. The Commission funded this study under its Biotech programme (1994-98), to appraise the reasons why venture capitalists have been slow to support biotech SMEs in Europe, and offer solutions or suggest incentives to assist growth in this sector. The study cites a number of reasons why biotech SMEs in Europe might find it hard to find financial backing. For instance, the researchers say, high R&D investments are often needed to develop new biotechnological processes or products, and entrepreneurs often underestimate the time it takes for a biotech product to reach the market - particularly in the healthcare sector - because of rigorous testing and product certification legislation. Investments in biotech SMEs, which often depend on just one or two successful products are also risky for entrepreneurs. These are just a handful of the barriers facing SMEs that the report identifies. It explains in some detail the European stock markets' role in this area and how changes in the Member States financial systems have impacted supports for biotech SMEs. The researchers present their findings on the behaviour of investors in biotech stocks and explains the organisation and management of biotech SMEs going public, including information on biotech companies' criteria for selecting advisors and the costs of going public.