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New possibilities for accessing the capital markets for small and medium-sized biotech enterprises

Obiettivo



Because of the necessary high R&D investments and the costly market introduction and diffusion of biotechnology products (especially in the health care sector), small and medium-sized enterprises (SMEs) in the biotechnology area face specific problems in financing their business activities. In most Member States of the EU investments by venture capital companies in biotechnology are rather limited. As one reason for this fact investment managers primarily note the missing of a specific segment on the European stock market where shares of technology based SMEs are quoted. For this reason venture capital and other investment companies have some difficulties to find an adequate exit possibility if they intend to sell their investments in biotech companies via the stock exchange.
Since a few years several stock exchange markets in Europe lower the requirements for the listing of small and medium technology-based companies. In this context the London stock exchange has taken the leadership by amending the rules for entry to the official list in 1993 and the opening of the Alternative Investment Market (AIM) in 1995. In addition, "Le Nouveau Marché" opened for business on the stock exchange in Paris in February 1996. On the stock exchange in Frankfurt/Main a so-called "Neuer Markt" is planned for 1997 in which start-up or R&D intensive high-tech companies shall achieve a listing. In addition, a European pendant to the US NASDAQ located in Brussels was scheduled to open at the end of 1996 (EASDAQ).
Therefore, a study is proposed which will systematically collect, analyse and critically evaluate the experience of biotechnology SMEs and investment companies which have already tried to go public on one of the above mentioned markets. In addition, it will be analysed under which circumstances the new or planned possibilities are used from investors and biotech companies. Recommendations on the practical implementation of these results will be worked out covering successful investment strategies and their prerequisites, requirements and measures taken to achieve a successful listing on a stock exchange and existing constraints or gaps in the current possibilities on these markets. The results of the study will be especially beneficial for SMEs which need funding for their business activities but lack the experience and the resources in developing appropriate investment strategies on their own. The study will be fruitful for investors as well who want to optimise their profits in the biotechnology field in the long-term.
Thus, the proposed study will contribute to reducing the financing barriers existing for European biotech companies, improving the financing possibilities of these companies and extending the exit possibilities of potential investors. These activities are regarded as crucial in order to fully exploit the possibilities of biotechnology in the European economy.

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Coordinatore

FRAUNHOFER-GESELLSCHAFT ZUR FOERDERUNG DER ANGEWANDTEN FORSCHUNG E.V.
Contributo UE
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Indirizzo
Breslauer Strasse 48
76139 Karlsruhe
Germania

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