Britain 'falling behind US in biotech sector'

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Too few scientific entrepreneurs are coming forward to start up biotechnology companies in Britain, venture capitalists said yesterday.

Speaking as Vanguard Medica, the latest biotech entrant to the Stock Exchange, shot to a hefty price premium, Jeremy Curnock Cook of Rothschild Asset Management said Britain was running five to six years behind the US. It had only 15 listed biotech companies compared with 275 in the US.

Mr Curnock Cook said interest had returned to the biotechnology sector because tangible results in terms of drugs receiving regulatory approval, could now be seen.

At a biotechnology investment conference at the Dorchester hotel in London, he said, there had been 170 alliances between major pharmaceutical companies and start-up biotech firms in the past year, whereas in 1993, there were only 60 such alliances.

In 1995, about $4.5 bn (pounds 3bn) of new funding was raised on the markets for biotechnology, while the eight biggest deals last year between European pharmaceutical companies and US biotech firms were worth more than pounds 550m.

"If you analyse the balance sheets of the pharmaceutical industry, then about $15bn to $20bn is available to support collaborations of this nature," Mr Curnock Cook said.

Rothschild Asset Management is investment adviser to Biotechnology Investments Ltd (BIL). Responding to criticism that BIL had a disproportionate amount of its portfolio in the US, Mr Curnock Cook said: "We would like to see more opportunities in the UK. There is no shortage of funds, capital is available, but only recently have we seen the quality of investment opportunities matching those of the USA."

The UK needed to have one or two "role models" to convince investors that biotechnology was not merely an American phenomenon. The Oxford-based British Biotechnology company was turning into just such a role model, following recent stock market excitement about its prospects, he added.

British Biotechnology is expected to report further results of clinical trials of its Marimastat anti-cancer drug shortly. Even if the drug does not fulfill all the expectations which have been created, Mr Curnock Cook did not believe there would be a flight of confidence from biotech.

"That might have been true of the early 1990s, but given the increasing weight of the sector as a whole, I doubt if even failure of one company would influence the success of the sector as a whole."

Others at the meeting were less sanguine, with one executive of a big pharmaceutical company warning privately that if Marimastat fails it could be a disaster for other biotech start-ups as they will find it impossible to get funding.

Vanguard bonanza, page 3