Industry collects billions Record sums for biotech companies

Status: 15.06.2021 10:46 a.m.

The successes of biotech companies such as BioNTech attract investors: The industry has a new financial record in Germany. But the exuberance could be followed by disillusionment. By Thomas Spinnler, tagesschau.de The entire biotech industry is currently benefiting greatly from the attention generated by the rapid and successful development of corona vaccines. The pandemic has given a boost to a sector that is already in the focus of many investors due to technological and medical advances in recent years. As the “Financial Times” (FT) reports, the venture capitalist Flagship Pioneering – one of the major investors in the Vaccine manufacturer Moderna – around $ 3.5 billion for a new fund. Its aim is to promote the next generation of biotech companies.

Fund tries a new model

When investing in the biotech industry, investors must calculate with particular risks. Many of the companies to invest in do not yet have a product on the market. It is uncertain whether this will ever be the case, as the path from research to a marketable product is very long and often fails.

01/06/2021

Flagship Pioneering is now trying a different way. What is special, according to “FT”, is that the fund’s goal is not the usual search for newly founded companies in which to invest. Rather, modern biotechnologies are to be developed in-house in certain segments under the umbrella of the fund. Only then are plans to set up companies as offshoots.

The profits are gushing

Unsurprisingly, financiers are on the lookout for business ideas; they smell a gigantic business. Just a look at the rapidly rising share prices of many companies in the past few months shows how convinced the market players are of a lucrative future for the sector. In fact, profits are gushing – at least for the best-known representatives who have successfully launched products. BioNTech generated a net profit of 1.1 billion euros in the first quarter of 2021. In the first quarter of 2020, the Mainz-based company had to accept a net loss of 53 million euros due to high research and development costs.

05/10/2021

The US vaccine manufacturer Moderna made in the first quarter profit – equal to a billion dollars. In the previous year, Moderna had to cope with a loss of 124 million. The turnover multiplied from eight million to 1.9 billion dollars. $ 1.7 billion of this comes from corona vaccine revenue. While Moderna shares rose by more than 200 percent in the past twelve months, BioNTech shares gained over 340 percent in the same period.

Lighthouse companies in particular benefit

In Germany, the biotech industry set a new financial record last year. As the experts from the testing and consulting company EY calculated in their Biotech Report 2021, financing in Germany reached a peak of 3.1 billion euros in 2020. A comparison with the USA shows the order of magnitude. According to EY, around $ 100 billion went into biotech financing for venture capitalists.

02/27/2021

“Covid-19 is a huge catalyst for the entire biotechnology industry,” said Alexander W. Nuyken, Head of the Life Sciences Sector in Strategy and Transactions at EY and co-author of the study. In their report, the experts at EY point out that the investments essentially relate to the flagship company BioNTech, which alone accounted for 51 percent of the financing volume in 2020. According to Nuyken, biotechnology is part of the solution to a problem that is a matter of fate for humanity. “That has come to mind.”

More help from the state?

This year it’s going on at a high pace: The “Handelsblatt” quotes from preliminary figures from the Bio Deutschland Association. Accordingly, the industry received a total of 870 million euros in capital from January to May. That is around three and a half times as much as in the same period last year. Nuyken campaigns for the state to help even more: “I hope that politicians show more will to improve framework conditions.” There is now an opportunity for the biotech scene to play a major role in this country in the long term or to play an even greater role in the future.

Hope for new products

In fact, taxpayers have already made a major contribution to making the industry so successful: Since the beginning of the pandemic, governments have allocated tens of billions to research and development on vaccines, which are now generating sales and profits for companies. However, it is uncertain whether, thanks to the many fresh billions, the supply of innovative medical products will make a leap. Nuyken warns of disappointing expectations: “If investors with no biotech experience think they can make a quick buck here, they’re wrong.” After the boom, the expert warns, disillusionment could quickly set in.

Mr. Linh shared about Do Bau tree. Mr. Ho Tan Linh (resident in Bac 2 village, Tra Son commune, Tra Bong district) is known as a “veteran” in growing do Bau. Mr. Linh’s garden currently has about a hundred trees that are over 20 years old. Mr. Linh said: 20 years ago, he went all over the mountains and forests of Tra Bong to look for gourds. At that time, all had to walk, climb passes and wade streams, sacred forests and poisonous water could not stop his footsteps in order to earn money in the hope of changing his life. Then Mr. Linh also planted a few hundred trees. Care, medicine, how much effort he put into the trees. As the years went by, the hope kept dwindling when there was no tree that gave off the desired fragrance. Many trees planted in Tra Son commune have their roots cut down. “Three years ago, a trader asked to buy a tree for 1 million to pump chemicals to create oil, but I shook my head and refused. The money has already been spent, so keep it. I hired a mechanic to drill holes in the body of the gourd. If this hole is ant it gets in, it will create oil. However, up to now, these trees have not been able to produce agarwood, “Mr. Linh said. While many people still dream of changing their lives from agarwood, Mr. Ho Van Chan (residing in Bac 2 village, Tra Son commune) has lost all hope. Pointing to the planting ground that has been razed and leveled, there are only a few roots left, Mr. Chan said that he only sells trees here, but has never seen agarwood. “I can’t see the bass until the wind blows, so the tree falls down. So I cut it down, and the garden that I planted has just rented a flatbed car,” he shared. Mr. Linh shared some cores of Do Bau tree. According to Mr. Dinh Van Phong, Chairman of Tra Son Commune People’s Committee, the Do Bau tree whose special products are agarwood and sage has a very long history. Many people think that when they grow up to 7-8 years old, they can drill and then give acid or biological products and wait a few years to create agarwood, they will become a billionaire. A few decades ago, the movement of growing dó bau strongly developed and spread throughout the mountainous communes. The tree grows well but does not produce bass. Many Do Bau orchards were toppled by storms at the end of 2020. “In Tra Son, all hamlets grow do bau, but so far no one has made agarwood from do bau, people cut it down to switch to growing acacia. A few are sold cheaply to businesses,” said Mr. Phong.