European Life Sciences Sector Faces Challenging Climate

The controlling shareholder of Novo Nordisk has joined a coalition of European venture capital firms to mobilise increased funding amidst concerns that Europe’s life sciences sector may fall behind its global counterparts. This coalition, which includes Novo Holdings, Sofinnova Partners, Omega Funds, and Forbion, manages approximately €24 billion and was established in response to the alarming trend of European innovation struggling to compete with the investments and growth seen in the United States and China.

Europe attracts only 7 per cent of the global venture capital investment in health biotech, a stark contrast to the United States which secures 63 per cent of this investment and China with 14 per cent. The European Commission highlights the urgency of addressing this imbalance, underlining a significant funding gap that has emerged between 2019 and 2025. Remarkably, 66 out of 67 European Union biotech companies opted to list their ventures outside the EU, indicating a troubling trend for local markets.

The share of global commercial clinical trials based in Europe has exhibited a worrying decrease, falling from 22 per cent in 2013 to just 12 per cent in 2023, while China’s share has tripled during the same period. Delays in regulatory approvals also contribute to this decline; multinational clinical trials in the EU take roughly 113 days to approve, compared to just 60 days in the US and China. This lag adversely affects time-to-market, patient access, and investor confidence.

Naveed Siddiqi, a senior partner at Novo Holdings, asserts that the future of Europe’s economic growth is at stake. The region has a precedent of losing leadership in various industries. Without decisive action, the life sciences sector could similarly regress, leading to substantial losses in innovation and economic benefits.

In the UK specifically, concerns about the retention of promising growth tech companies persist, even as it remains the leading national biotech market in Europe, representing 30 per cent of all European venture financing. A diminishing trend in equity financing within the UK biotech industry has been noted, marking a third consecutive year without new listings. A recent report from the UK BioIndustry Association indicates a significant decline in investments.

A separate report from the House of Lords science and technology committee warns that the failure to nurture and scale biotech companies has reached crisis point, negatively impacting the UK economy. In response, the government is working to implement its industrial strategy and collaborate more closely with crucial tech companies.

The coalition established with Invest Europe, an association of private capital providers, is not advocating for financial handouts. Its focus is on mobilising greater levels of investment from both private and public entities while addressing structural barriers that hinder the scaling of companies within Europe’s life sciences sector.

Industry leaders have long raised alarms regarding Europe’s declining standing in life sciences compared to the US and China. Political actions taken in the US, including proposed tariffs aimed at increasing multinational investment and lowering drug prices, contribute to this competitive landscape. Meanwhile, China’s biotech market has experienced rapid growth through regulatory reforms designed to attract international collaboration.

Sir Pascal Soriot, chief executive of AstraZeneca, underscores the potential consequences for the European sector. He cautions that if current trends continue, Europe may find itself reliant on India and China for generics, while cutting-edge medicines originate solely in the US and China.