The European bio-industry is less mature than its 25-year-old US counterpart. Actelion of Switzerland qualified as the world's fastest-growing drugs group in sales terms following the launch of its first drug, Tracleer, but it had just only achieved profitability in 2003. Similarly, barely a few European biotechnology companies earn money. Only Serono SA – the Swiss powerhouse of European biotechnology that grew out of a hormone extraction business with a 50-year record of profitability – has a market capitalization to rival US leaders (Firn, 2003). Serono SA, which is the world leader in the treatment of infertility and also well known in endocrinology and the treatment of multiple sclerosis, had made in 2002 a $333 million net profit from $1,546 million of sales, and devoted 23% of these sales to its research-and-development division where 1,200 people were working. The Spanish subsidiary of Serono SA in Madrid is now producing recombinant human growth hormone for the whole world, while the factories in the USA and Switzerland ceased to produce it. The Spanish subsidiary had to invest
€36 million in order to raise its production, as well as another 5 million to upgrade its installations to the production of other recombinant pharmaceuticals to be exported worldwide.
In spite of a wealth of world-class science, the picture in much of Europe is of an industry that lacks the scale to compete and faces financial crunch, which may force many too seek mergers with stronger rivals (Firn, 2003).
Germany has overtaken the United Kingdom and France, and is currently home to more biotechnology companies than any country except the USA. But far from pushing the boundaries of biomedical sciences, many companies are putting cutting-edge research on hold and selling valuable technology just to stay solvent. Until the mid- 1990s, legislation on genetic engineering in effect ruled out the building of a German bio-industry. Since then, the more than 400 companies set up in Germany needed to raise at least $496 million from venture capitalists over 2004 to refinance their hunt for new medicines, according to Ernst & Young. Most were far from having profitable products and, with stock markets in effect closed to biotechnology companies followin the bursting of the bubble in 2000, they were left to seek fourth or even fifth rounds of
private financing (Firn, 2003).
