The US advantage: Why every European biotech company should aim for a presence in the USA

01/07/2016 | Posted by:

US Presence

The United States’ biotech sector is by far the world’s largest. It’s a global success story that continues to grow, and for European biotech companies it represents a compelling opportunity.

America has the wealthiest, most dynamic biotech industry in the world. It dwarfs European biotech and in recent years has significantly outpaced it in growth. In 2014:

  • US biotech had a market capitalization of more than $850 billion dollars compared with $162 billion for Europe.
  • US profits exceeded $10 billion in 2014 while Europe’s profits were just over $3 billion.
  • US biotech firms raised $45.1 billion compared with $9.2 in Europe.

Chart showing US biotech market share vs EU

Ideal conditions for growth

chart showing increased biotech in USThe US is the world’s biggest economy, with more than 300 million people. Biotech hub areas concentrated on the East and West coasts benefit from world-leading research, skilled workers, complimentary industries, strong infrastructure, a commercial mindset and a culture of innovation. Under these conditions US investment and growth in biotech has remained consistently strong. In Europe by contrast, biotech is still relatively young and capital markets are less developed, with fewer venture capital firms that have the institutional knowledge and expertise to back young biotech companies. As such, the European sector still lacks the critical mass of companies to support investors that specialise in biotech. The difference is clear when comparing the US-Nasdaq biotech and Europe-Next biotech indexes over time.

 

Raise capital in the USA

The surging Nasdaq reveals one aspect of the opportunity for European biotech businesses: creating a presence for your company in the US gives you access to mature capital markets, with venture capital firms that specialise in biotech. The majority will only invest in biotech firms with a US presence; their money rarely travels overseas.

chart showing capital raised by US biotech companies

The benefits of having a US business presence

Establishing your company in the USA enables you to forge direct connections with investors in the biotech industry. As part of the US biotech community you can build your network, create awareness of your company, and benefit from serendipitous relationships with others in the industry. The size of the US biotech industry gives you access to a wide variety of service providers and other companies that can support your growth. And if you decide to pursue a listing on the Nasdaq, you can develop vital relationships with investors in the US to support your IPO.

The US biotech success story looks set to continue, and for European biotech companies considering a growth strategy, the prospect of an American foothold looks more compelling than ever.

Are you looking to expand into the US to take advantage of all the opportunities the US offers? Foothold America offers an easy way to hire US employees without the headaches of forming a US legal entity.