Policy Note 67: Biotechnology in Austria and Europe

Policy Note 67: Biotechnology in Austria and Europe:
Structural Barriers and Policy Options

Europe has a strong scientific foundation in the life sciences, but is increasingly losing ground in the global biotechnology race. While the U.S. continues to expand its dominance in research, venture capital, and corporate growth, Europe is far less successful at translating scientific excellence into internationally successful companies. Our new Policy Note analyzes the structural causes of this lag along the entire value chain—from university research through startups and scale-ups to IPOs and global expansion.

Austria is generally well-positioned. The domestic life sciences sector now comprises 1,174 companies with more than 73,000 employees and annual revenue of around 40 billion euros. The pharmaceutical industry is one of the country’s most dynamic industrial sectors and now accounts for about ten percent of Austria’s goods exports. At the same time, Austria boasts a high level of research activity and internationally renowned research centers.

However, the analysis shows that Europe faces structural disadvantages, particularly during capital-intensive growth phases. European biotech companies suffer from fragmented capital markets, weak venture capital financing, and lengthy regulatory processes. Of the 36.5 billion euros in global venture capital investments in biotechnology, approximately 29.5 billion euros go to the U.S., while the EU-27 accounts for only 3.6 billion euros. At the same time, approval procedures in Europe take significantly longer than in the U.S. EcoAustria therefore advocates for comprehensive economic policy reforms. These include greater mobilization of funded pension systems for growth capital, the creation of an integrated European capital market for biotechnology companies, and faster and more efficient approval procedures. At the same time, the tax and regulatory attractiveness of employee stock ownership plans must be improved to better retain top international talent and entrepreneurial talent in Europe. Furthermore, the study advocates for the targeted development of fewer, but more internationally visible, clusters of excellence in Europe.