Bildnachweis: Institute of Pathology of the Charité University Hospital.
The focus of biotech company formation is primarily in the United States, followed by Europe, with Germany being well behind. This article examines the current biotech landscape, actionable steps to encourage biotech company formation in Germany, and how we can turn recent geopolitical uncertainties caused by the US administration into strategic advantages.
The United States have long been the leader in biotech company creation, historically founding about twice as many biotech firms as Europe (Figure 1). Encouragingly, the gap is slowly narrowing, with the ratio of US to European company formation declining from 2.1 in 2015 to 1.6 in 2020. Interestingly, the number of biotechnology companies founded in all regions declined between 2020 and 2023. This is roughly in line with the downturn in the NASDAQ Biotechnology Index between September 2021 and June 2022 (the index lost 35% during this period), which can be viewed in part as a natural correction following the COVID-19-associated hype. While private markets do not always follow public markets, there is a correlation between the two, and a downturn in the public markets does impact the private markets (i.e., through reduced availability of capital). In a previous article, we looked at investment trends in the European life sciences sector and indeed noted a decline in the number of deals, particularly in early-stage financing. However, it’s worth noting that the total deal value continues to rise, suggesting a pivot towards later-stage (growth) investment rather than an overall market decline. Within Europe, only 10% of new biotech companies are founded in Germany – far below what would be expected for a country that contributes nearly 25% of Europe’s GDP. Moreover, Germany invests only 0.01% of its
GDP in biotech, compared to 0.02% across Europe and 0.05% in the US. Clearly, Germany is underperforming and has significant room for growth. Part of the problem may indeed be limited access to sufficient capital, but it’s not just about funding – it’s structural complexity that is paralysing progress.
Biotech creation in Germany: What needs to change?
To unlock Germany’s potential, we need to create more competitive conditions for spin-offs. Three key areas require immediate attention:
1. Speed, flexibility, and agility
Although equity participation in university spin-offs has improved – typically 2% to 10% today versus up to 50% in the past – many institutions still lack an entrepreneurial mindset. Decision making is slow and bureaucratic. We need a cultural shift towards a more agile, business-oriented approach. One solution could be a set of legally binding, pre-negotiated terms between the universities and investment funds, allowing spin-outs to be launched quickly.
2. Bridging the experience gap
First-time founders do need funding, and while there’s still a need for more accessible capital, the more critical shortfall lies in hands-on expertise. We need to bring in seasoned industry professionals, ideally as executive chairs, to provide consistent, step-by-step guidance and mentorship through the early stages.
3. Fostering academic entrepreneurship
We support physician-scientists through programmes such as the Clinician Scientist Initiatives; we should offer similar support to academic founders. A compelling model could be for universities to fund founders at 50% for three years in exchange for a larger equity stake. This would provide stability for entrepreneurs and offer upside for public institutions.
Opportunities amid US policy shifts: A brain drain advantage?
The US administration’s recent tariffs and unpredictable policies have introduced significant uncertainty for the global biotech industry. Several research grants and contracts have been frozen or cancelled. The National Institute of Health (NIH) alone has terminated nearly 800 research projects, with infectious diseases (specifically HIV/AIDS-associated research) being most affected. Nearly 30% of US-listed small- and mid-cap biotech firms are trading at or below cash; a record level that signals the market sees little value in their operations or drug pipelines. Yet, some of these challenges could become Europe’s opportunity. An estimated 75% of US-based scientists are considering relocation, with Europe and Canada as preferred destinations. This talent migration could provide Germany with much-needed human capital. To capitalise on this, the EU should act quickly: discard bureaucracy, optimise regulatory frameworks, and move forward with bold, innovative ideas. For instance, a fast-track approval pathway for highly personalised CRISPR/ antisense oligonucleotide (ASO) therapies (such as Milasen) could position Europe as a global leader in next-generation medicine.
About the author:
Dr med. Selina Greuel, MBA, worked as an assistant physician at the Institute of Pathology of the Charité University Hospital and supported the creation of biotech start-ups at Oxford Science Enterprises, a company investing in spin-offs from the University of Oxford. Dr Greuel is now Managing Director at Bioscience Valuation, a boutique consultancy supporting private equity and venture capital funds as well as biotech and pharma companies with scientific, commercial, and value assessments.
