European biotech lags US but gap narrowing

By Olesya Dmitracova and Rajiv Sekhri

LONDON (Reuters) - Aversion to risk, lack of management experience, limited funding and few incentives to find new drugs in Europe have kept the continent's biotech firms lagging behind their U.S. counterparts, executives say.

Yet industry leaders told the Reuters Biotechnology Summit that although the gap was wide, the European sector may finally be on the right track to catch up.

"Europe was a little bit late in making the investment and the jump into biotechnology," Robert Ruffolo, head of research and development at U.S. drug maker Wyeth (WYE.N: Quote, Profile, Research, Stock Buzz) said.

"When you're catching up from what I'd consider a pretty distant position, it will take time," he said. "As funding becomes more difficult in the U.S., Europe has an opportunity to close that distance."

U.S. investors injected $3.6 into biotech firms in 2004, more than twice the $1.4 billion invested in Europe, according to the latest figures compiled by Ernst & Young. But last year there were more biotech IPOs in Europe than the United States.

RISKY BUSINESS

Stephen Bunting, managing director of British venture capital group Abingworth, sees signs of change.

"The interesting thing is that ... Europe will become the better source of capital at some point -- easier to go public than has been the case. We had 21 IPOs in 2005 versus 17 in the U.S.," he said.  Continued...