INTERVIEW - EU needs venture capital market for biotechs
Date: 04-Feb-02
Country: SPAIN
Author: Daniel Trotta
European governments also must play a role in educating the public about the safety of genetically modified foods if biotech companies are to exploit this market culture, EU enterprise and information society Commissioner Erkki Liikanen told Reuters in an interview late last week.
Liikanen, of Finland, is the leading public figure at the EU's first informal seminar of ministers of industry and research in this Mediterranean resort near Barcelona.
Among their tasks is elevating the cutting-edge field of biotechnology, listed as a priority in the EU's plan to make Europe the world's most competitive economy by 2010.
The field brings together life sciences, material sciences and information technology with applications in the pharmaceutical, manufacturing, food and environmental industries.
"We in Europe are lagging in supporting venture capital. We have to create a European risk capital market. It is very important to have debt and liquidity in the market," Liikanen said.
Officials here say Europe first must create a single stock market for such specialty markets to thrive.
And the funding task for the capital hungry sector can be accomplished without violating EU rules on state aid, Liikanen said.
"The public sector can invest in the early stage. We have accepted guidelines," he said. "Under certain limits governments can put money in risk ventures. That can be very important in the early stage. In Germany for example the government is a very efficient lender."
This is also where the European Investment Bank can play a role, he said, by investing in venture capital funds which in turn invest in companies.
"They need equity, and this is a very good way to channel European money," said.
KEY TO COMPETITIVENESS
Although European biotech companies outnumbers those of the United States by 1,570 to 1,273, the American firms boast three times the stock market worth and generate three times the revenue as 28 percent of them are publicly listed versus only six percent of those in Europe.
The European industry is acknowledged to be behind - European Commission President Romano Prodi estimates by four or five years - which shut many companies out of the bull market.
There were just four European biotech IPOs in 2001 after a record 39 in 2000.
The EU must also improve regulation, intellectual property rights and education, Liikanen said.
FEAR OF FRANKENFOODS
He said education is needed in the area of genetically modified foods - dubbed Frankenfoods by opponents who fear them harmful to human health and the environment
"The only solution is open discussion," Liikanen said.
"The role of government is to guarantee that a product is safe and if it is it can be made available to the market. But the citizens must have full knowledge. This is where it is very important to have proper labels with traceable information. It is not our task to say what the consumer should choose but to make sure it is safe."