Europe's Biotechs Face a Capital Gap, Not a Science Gap

European life sciences venture capital accounts for just 7% of the worldwide market. The US accounts for 63%. That disparity framed the discussion at Nordic Life Science Days in Stockholm, where investors, executives and policymakers debated why Europe's scientific output so often gets commercialized, financed and scaled elsewhere.

The European Union has moved to support research talent, announcing a €500 million ($568 million) pledge last year to back "the best and the brightest researchers and scientists from Europe and around the world." Money for science, however, is not the same as money for companies.

"Private capital won't back a European biotech company unless there's a credible path to market and to exit. If those stay weak, it won't happen," said Magnus Björsne, CEO of AstraZeneca's BioVentureHub, who also advised that "progress needs to be slow and project-oriented if Europe is to build global products."

For Kristina Ekberg, partner at HealthCap, the diagnosis was straightforward. Europe's difficulty is not a shortage of science or a shortage of deal flow; it is a shortage of capital. She argued that private investors need to step forward in far greater numbers if the region's science is going to translate into globally competitive companies.

A fragmented system

Anand Rajasekharan, cofounder and CEO of Sweden-based biotech Amferia, said his problem was not global expansion. "I didn't see the problem as scaling globally. Our real issue was scaling within Europe."

"The challenge in Europe is regulatory. We have a system that's fragmented, confusing, and complicated to navigate. Cross the Atlantic to the US, and things are clearer, and clarity matters enormously for any start-up, especially in biotech. There's a big difference between what we see in Europe and in the US."

A single meeting with the US Food and Drug Administration gave Amferia clear expectations, Rajasekharan said.

"The FDA's centralized system gave us real clarity on what they wanted and expected of us. End of story. That made it an easy call - we had a big enough market, so we focused on the US."

Without stronger regulatory pathways and better support for clinical trials, Europe risks undermining its own ecosystem. Companies that cannot find what they need at home will look elsewhere.

Fixing the pipeline, not just the funding

Niklas Blomberg, executive director of the Innovative Health Initiative, located the bottlenecks earlier in the value chain. "These are in the innovation chain itself, and in adoption by healthcare systems, patient access and reimbursement," he said, describing constraints that limit any scalable home market for European companies.

Ari-Pekka Laitsaari, growth capital and venture debt lead at the European Investment Bank, argued that too much attention has gone to financing. "While financing is essential, too little emphasis goes on people. I strongly believe we need to attract more people to the Nordics who've done this before, who've built companies."

He added that scientists and founders are "the essence of it all, but they don't hold the keys to scaling on their own," calling for focus on talent, regulatory clarity and financing clarity. The EIB, he said, is "trying to fill a genuine gap in the market rather than just be another player in it," taking more risk than VC typically accepts and opening a dialogue with VCs on that basis.

Corporate venture arms see their own role differently. Nadiya Ishnazarova, senior director at Johnson & Johnson's venture arm, said on another panel that evergreen capital structures position corporate VCs to absorb scientific risk. "We're willing to pay for that risk if we believe it's truly breakthrough innovation," she said.

Europe's new life science strategy, the Biotech Act and the proposed European Competitiveness Fund are, in the panelists' view, laying the groundwork. Ekberg set the bar for what comes next: "We should be focused on truly mobilizing private capital, because we need it. Public funding alone can't carry the life sciences ecosystem indefinitely. We need to crowd in private capital, which is exactly what the institutions here are trying to achieve through this incoming architecture."