Bildnachweis: BIO Deutschland, BioM, EY, BCG, Biomed X, VC Magazin, Pixabay.
In principle, Germany has excellent prerequisites, but does not currently play a leading role internationally in the life sciences. Even within Europe, it lags behind locations such as London or Paris in terms of investor interest, although the German biotech centres can score with different strengths. Industry experts outline what is needed to catch up in terms of competitiveness.
Looking at the flow of capital into the life sciences on an annual basis, Germany appears to be on the right track: the segment recorded around EUR 1.9 billion (+78%) in 2024, of which EUR 898 million were venture capital (+68%). Excluding the special effects of the coronavirus pandemic, even a new all-time high was reached. This is shown by figures from the industry association BIO Deutschland and the auditing and consulting firm EY. However, they also put this success into perspective in an international comparison: while the United Kingdom, Switzerland, and Denmark are attracting significantly higher biotech investments in relation to their economic sizes, China has long been playing in a league of its own – and the USA remain the undisputed leader. In addition, investor interest has been rather subdued again since then, as the EY German Biotechnology Report 2025 reveals. ‘In the first quarter of 2025, German biotech companies were only able to raise EUR 41 million in venture capital, which is 83% less than in the same period last year. This development is probably due to the uncertainties associated with the new government formation in Germany and the changed market conditions in the USA,’ explains Klaus Ort, partner at EY and author of the study. ‘Companies need to react early and develop strategies to strengthen their resilience. The ability to adapt to economic and geopolitical changes is becoming a key factor in global competition.’
Building an integrated bio-ecosystem
A recent joint study by the Institute for Deep Tech Innovation at ESMT Berlin and the Bertelsmann Stiftung has identified the strengths of Germany’s biotech centres. While Berlin scores highly with its good public infrastructure and high volume of clinical research, Munich’s advantage lies in the promotion of startups and their financing in late phases. Heidelberg stands out with its excellent basic research. Nuremberg-Erlangen benefits from a specialised ecosystem in the field of medical technology, and Stuttgart has a highly diversified economic structure with great potential for interdisciplinary innovation. Their common weakness: the lack of ability to systematically transform research into market-ready solutions. ‘Germany would have the potential to become the orchestrating centre of European life sciences if we were able to strategically combine the strengths of our bio-clusters and position them as an innovation network,’ explains Bianca Adolphs, Principal at the Boston Consulting Group. ‘A more targeted channelling of public funds into later innovation phases, a translationally oriented objective for research grants, and tax or structural incentives for co-investments by private investors would also be important for this. In order to strengthen confidence in the location, examples of success and scalable translational projects should also be made visible internationally and strategically marketed.’
Changing the culture of innovation
Additionally, the hesitant innovation culture in Germany is problematic. ‘Firstly, we need systematic programmes that bring scientists together with entrepreneurs and investors in a targeted manner – through cross-hub initiatives, for example. Secondly, more courage is needed to specifically promote the translation phase instead of focussing exclusively on basic research. Thirdly, we need to initiate a change in mentality in the academic world: error culture, speed, and entrepreneurial action should be encouraged and no longer criticised,’ says Adolphs. There are already some promising examples. For example, UnternehmerTUM at the Technical University of Munich shows how the interplay between science, business, and capital can succeed. Since last year, the Berlin Institute of Health at Charité has been home to the GeneNovate programme, which provides entrepreneurial training for scientists in the field of gene and cell therapies – covering everything from patent protection to choosing the right company form and the requirements for an IPO. Adolphs: ‘Germany needs such initiatives in order to consistently transform research into real innovations. The problem is known, the discussion is intense – now we need to implement it.’
Modernising regulation
There is certainly no shortage of promising ideas. The European Patent Office registered more than 25,000 inventions from Germany in 2024; only the USA had more. ‘German universities, research institutions, and bioclusters have traditionally been characterised by scientific excellence in major research fields such as oncology, neurodegeneration, and metabolism. Artificial intelligence has also long been part of our new reality – it is increasingly shaping everyday life in biotechnological research, diagnostics and drug development,’ says Prof. Dr Ralf Huss, Managing Director of BioM Biotech Cluster Development GmbH in Martinsried near Munich. ‘In regulatory terms, however, we are lagging behind this development. Since my beginnings, the time to market launch of innovations has not accelerated significantly. I like to compare this to the situation with electric cars in Germany: we have modern vehicles, but not enough charging infrastructure.’ The fireworks have therefore so far been set off in the USA, China, India, and Korea, where technological innovation, clinical trials, and translation are implemented more quickly. Huss: ‘In Europe, the US players have mainly been drawn to the UK, where they are facing no language barrier. In our country, they are only hearing a faint background noise. In order to reach critical mass, we need to reduce bureaucracy and streamline authorisation processes. It is also important to bundle the strengths of all German bioclusters and seek to join forces with leading European centres such as Basel, Paris, Amsterdam, Copenhagen, and, last but not least, the Golden Triangle of Cambridge, London, and Oxford.’ One thing is certain: the life sciences are an important growth market. The ageing society and the increase in chronic diseases are driving global demand for modern therapies and medicines. The increasing cost pressure in the healthcare sector is also making prevention and proactive health promotion ever more important. ‘The new technologies, but also the current geopolitical upheavals, are our opportunity to reposition ourselves strategically,’ says Huss.
Strengthening the flow of capital
The current weakening of the US science system must be used as a historic window of opportunity to strengthen Germany and Europe as centres of research and innovation, demands Oliver Schacht, President of BIO Deutschland and Managing Director of Life Science Nord: ‘To the extent that the US government is abolishing predictability and reliability and cutting funding, we need to expand it.’ To this end, more private European capital needs to be mobilised. The recent fund closings of Forbion and Sofinnova are positive examples. However, the political will is also needed to finally allow pension funds, insurance companies, and other institutional investors to invest in higher-risk asset classes such as venture capital funds in biotech. Schacht: ‘Basically, we are on the right track in Germany. For example, we welcome the new coalition agreement – such a high priority for biotechnology, the healthcare industry, and entrepreneurship is unprecedented in the last three decades. It stands for the increasing rethinking that our economy needs strong and innovative alternatives to the automotive, machine tool manufacturing, and steel industries in order to achieve more growth.’ At European level, the aim is to prepare the planned Biotech Act in the best possible way with colleagues from neighbouring bioregions. ‘This is also the first time that biotechnology has been deemed worthy of its own law at EU level. This offers in particular a way to strengthen the value chains from research to end users, to create coherent regulatory pathways and to build an innovation ecosystem with skilled and high-quality jobs,’ says Schacht. He is certain that any progress made by Europe in the current situation will be followed with great interest throughout the world, in particular by scientists in the USA.
Venturing into new alliances
BioMed X, an independent biomedical research institute based in Heidelberg, is aiming in this direction with its recently launched XBridge programme. ‘There is currently an opportunity to rethink the way translational research is supported worldwide. Many US-based scientists and universities – especially those affected by NIH funding cuts and hiring freezes – are looking for funding models that are more flexible, less dependent on political agendas, and based on cross-sector collaboration,’ explains Christian Tidona, founder and CEO of BioMed X. ‘We see the potential to bring them together with international pharmaceutical partners so that they can continue their work in a highly supportive environment at one of our institutes in Heidelberg, Germany, or New Haven, Connecticut.’ As he sees it, the future of biomedical innovation is inherently international. The opportunity lies in facilitating global scientific exchange and mobility: US researchers gain access to new sources of funding and innovation ecosystems, while European and German institutions benefit from the world-class scientific rigour that American researchers bring to the table. Tidona: ‘The biggest challenge is to create frameworks that enable this type of
collaboration – from expedited visa procedures to easy access to intellectual property for exploratory research. We believe that organisations that can manage this complexity will be at the forefront of the next wave of innovation in the life sciences.’ The upheavals in the industry and geopolitics are thus leading to new alliances and funding initiatives emerging. This is also an opportunity for the life sciences sector in Germany to reposition itself – more strategically, more internationally, more translationally.
