The quantitative texture of the interviews reinforces the qualitative alarm. When researchers coded the sentiment expressed across all of the conversations, they found that 74 percent of coded sentiment statements were negative. That figure is remarkable for a sector that is frequently celebrated as a pillar of Europe’s future economic strategy, and it suggests that the pessimism is not the grumbling of a vocal minority but a systemic assessment shared across the innovation chain. Crucially, the respondents did not attribute the sector’s difficulties to a single failing. Instead, they identified multiple structural bottlenecks that compound one another at every stage of the journey from laboratory discovery to market-ready product. The report frames these failures through the well-established concept of “valleys of death,” the perilous transitional phases in which promising scientific ideas and young companies routinely perish before reaching commercial viability.

The first valley of death concerns translation: the process of converting scientific discoveries into viable, financeable companies. Here the report offers a genuinely paradoxical picture. German and European biotechnology research is described as world-class, with the underlying science fully capable of anchoring a globally competitive industry. Yet the machinery that should carry that science out of universities and research institutes and into the hands of entrepreneurs is badly malfunctioning. Technology transfer offices, the institutional intermediaries responsible for licensing discoveries and supporting spinout formation, received a positive assessment from only 17 percent of respondents. That overwhelming dissatisfaction points to offices that too often act as bureaucratic gatekeepers rather than enablers, imposing slow procedures, inconsistent licensing terms, and limited commercial expertise on researchers who are attempting to move at the speed that competitive markets demand.

The second valley of death opens when young companies need substantially larger amounts of capital to develop and scale their technologies. It is at this stage that Europe’s disadvantage relative to the United States becomes most visible and most consequential. According to market data cited in the report, European venture capital funds account for only around seven percent of the global life sciences venture capital market, while US funds command 63 percent. That imbalance shapes corporate geography in tangible ways. Several founders interviewed for the report said that US investors made the establishment of a US entity or subsidiary a condition for participating in later financing rounds. Six of the eight founders questioned on this specific issue had already considered moving part of their operations to the United States, a migration of entrepreneurial activity that, once it begins, tends to be self-reinforcing as talent, suppliers, and follow-on capital cluster around the relocated companies.

What gives the report its distinctive tension is the argument that this grim picture coexists with a genuine, but temporary, opportunity. The authors cite market data showing that some areas of early-stage financing in the US biotechnology sector declined by 38 percent between the first quarters of 2025 and 2026. Several of the experts interviewed view this American retrenchment as a window during which Europe could capture deal flow, talent, and momentum that would otherwise flow to Boston, San Francisco, and other established US biotech hubs. The opportunity is conditional, however. It exists only if the necessary reforms are implemented now, while American investors are pulling back. Encouragingly, almost half of those interviewed expressed optimism that Europe can close the gap, suggesting that the pessimism documented in the sentiment analysis reflects frustration with current structures rather than despair about the continent’s underlying potential.

De Véricourt frames the stakes in explicitly strategic terms. “The window is closing rapidly. If we do not act now, we will not only lose individual companies to the United States. We risk permanently losing our ability to build internationally competitive biotech companies from our own research. In the long term, this would also weaken our ability to pursue fundamental research,” he says. The causal chain he describes runs in both directions: strong company formation justifies and funds fundamental research, while the erosion of the commercial pathway eventually starves the scientific base itself. For a continent that has staked much of its economic future on strategic sovereignty in critical technologies, the prospect of a permanently atrophied biotech sector carries implications that extend well beyond the industry’s own balance sheets, touching public health preparedness, industrial resilience, and the attractiveness of European research careers.

Perhaps the report’s most important diagnostic conclusion is what the problem is not. The authors are clear that the issue is not primarily a lack of research, funding programs, or institutions. Europe has scientists, it has grants, and it has agencies. What matters, the report argues, is whether existing resources are deployed in the right form, at the right time, and with a clear focus on successful company formation and growth. “More of the same will not be enough. The underlying structures and incentives must change,” de Véricourt adds. This framing shifts the policy debate away from the familiar demand for larger budgets and toward the harder work of institutional redesign: rewiring incentives so that universities, investors, and public programs are rewarded for producing companies that survive and scale rather than for the volume of patents filed or grants disbursed.

On the financing and scaling side, the report’s priorities include mobilizing institutional capital from pension funds, insurers, and other pools of long-term capital that currently sit largely on the sidelines of European venture investing. It also calls for more reliable tax incentives for private venture capital, giving individual investors and funds a predictable framework for backing risky early-stage science. A third proposal would establish a pan-European biotech listing segment, a dedicated public-market venue that would allow European companies to secure later-stage growth financing and complete initial public offerings on European exchanges. The strategic logic is direct: today, a European biotech that needs serious scale-up capital typically faces a choice between being acquired by a large pharmaceutical company or listing in the United States, and either outcome exports the value created by European science. A functioning European listing venue would keep that value, and the companies that generate it, inside the European economy.

The recommendations for the earliest stages of company formation are equally concrete. The report proposes opening public funding programs to companies that do not originate from universities, acknowledging that valuable biotech ventures can emerge from paths other than academic spinouts. It urges faster access to initial financing for founders, faster company formation through digital procedures, and fewer notarial and administrative hurdles, the accumulated friction that can add weeks or months to the incorporation of a startup in parts of Europe. Interviewees further emphasize the need to connect founders more systematically with investors, experienced entrepreneurs, and the pharmaceutical industry, building the relational infrastructure that in the United States has historically compensated for formal gaps in the system. On the translation side, the report recommends independent, professionally run translation institutes to complement existing university technology transfer structures, supporting research teams early with validation, team building, and financing. Technology transfer offices themselves should evolve from gatekeepers into facilitators, adopting standardized licensing terms, faster procedures, and stronger commercial expertise. The report builds on a 2025 predecessor, “Assessing Deep-Tech Innovation Hubs in Germany: The Case of Biotechnology,” which assessed Germany’s biotech innovation performance through a comprehensive index, and together the two documents sketch both the scale of the problem and a detailed roadmap for solving it before the window closes.

Subject of Research: Structural barriers to biotechnology innovation and company formation in Germany and Europe

Article Title: Concern over European biotech: the window for change is narrow – and closing fast

Article References: Concern over European biotech: the window for change is narrow – and closing fast. (n.d.). Original publication

Image Credits: AI Generated

DOI: Not provided

Keywords: biotechnology, Europe, venture capital, technology transfer, startups, ESMT Berlin, valleys of death, strategic sovereignty, innovation policy, Germany, pharmaceutical industry, reform proposals