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European Biopharmaceutical Review

Beating the Catch-22

Sandrine Cailleteau at Plethora Solutions looks to a number of European biotech companies for examples of innovative partnership strategies and asks what will it take to catch up with the US?

Today’s pharmaceutical industry is bearing witness to an emerging continental divide as the market growth of European-based companies continues to fall short of their US counterparts. This is particularly relevant among early-stage European life science companies, which often struggle to find the financial resources necessary to diversify their businesses, leaving them reliant on limited start-up funds and narrow pipelines, as innovative as they may be. Investors instintively perceive these European players as high-risk options that require significant long-term investments to see their targeted returns and hence are slow to engage in larger financial commitments. This creates a catch-22 scenario for these companies, as the limited size of their current portfolios hinders their own ability to expand. When combined with still fragmented markets, these cash constraints limit the opportunities for European biotechs to prove their business models and demonstrate returns on investment.

In this environment, it has become clear that the era of the ‘one big idea’ model has come to a close, and that the growth of such companies is difficult to sustain. In an effort to overcome this challenge of obtaining the necessary funds for development, many companies have adopted a number of atypical business development models. Although one could argue that there are as many new models in existence as there are biotechs in Europe, most share a common set of key features, including a growing reliance on partnerships, a concentrated therapeutic focus and a greater openness towards mergers and acquisitions – both within the US and Europe.

PARTNERING IS THE NEW IPO

One of the most common methods for small- and mid-size biotechs to quickly raise capital is still to enter a public market as a traded company. Public listing provides European biotechs with an alternative to venture funding, enabling them to raise liquid capital. They can also use such funding to implement more creative M&A transactions that include payments with shares. Nevertheless, the amounts raised remain smaller than those achieved by US companies. European secondary/alternative markets are still too fragmented and their investors more conservative than in the US.


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Sandrine Cailleteau brings more than 15 years’ experience in strategic planning and licensing, joining Plethora Solutions from Laboratoires Fournier where she was Head of Global Business Development and Licensing. Before working at Laboratoires Fournier, Sandrine was Director of Strategic Planning and Partnerships of Hesperion, now part of Cerep. Prior to that, she spent 10 years with Sanofi, and then Sanofi-Synthelabo in different positions, the most recent being Licensing Project Director at the Paris headquarters. Her other roles at Sanofi included Manager Investor Relations, M&A and Strategic Planning Manager, where she was responsible for both acquisitions and divestitures, and Public Affairs, where she spent three years in Washington DC, representing Sanofi with international organisations and notably the World Bank.
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