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Cluster Hope Setbacks

Drops in valuations may make European biotech startups more susceptible to being bought by their US counterparts, the Financial Times reports, adding that this would set back European hopes to build stronger life sciences clusters.

According to FT, a drop in the Nasdaq biotechnology index has made it difficult for biotech firms across the world to raise funding and that that has had a particular impact on European firms that tend to have smaller funding rounds. It notes that though venture funding has risen in Europe, it is not as robust as it is in the US or China. This, it says, could lead to US-based buyers to come in and buy European start-ups.

It notes that while a purchase could be best option for a small company itself, such purchases could weaken the wider European life sciences clusters.

"It is the same in any kind of industry ecosystem," Pierre Jacquet, vice chair of LEK Consulting's healthcare practice, tells FT. "If you attract investors, partners, talent, and reach scale, it becomes pretty sustainable and resilient to a downturn in the market."

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