The party is over for biotech. After the splendor of the Covid-19 years, which brought the sector to its peak in 2020 and 2021, the euphoria of investors has fallen sharply in 2022. Money, which once flowed freely, has become scarcer on the financial markets, forcing biotechs to count every euro from now on.
The first symptoms appeared in the United States in 2021. “Investor disaffection has begun. After realizing capital gains, those who had opportunistically taken an interest in this sector at the start of the pandemic began to distance themselves », explains Jamila El Bougrini, analyst at Invest Securities. The global economic uncertainty coupled with the rise in interest rates and inflation have finished hurting the sector.
In a few months, the cold snap turned into the flu. On the stock market, biotech valuations have plummeted. “Many companies today are undervalued. Several even have lower capitalizations than their cash position »emphasizes M.me El Bougrini. IPOs followed suit. In the United States, the world biotech scene, only 18 American companies ventured there in 2022, compared to more than 70 in 2021, raising a total of 1.4 billion dollars (1.3 billion euros), the lowest level observed for ten years.
France escapes the global downturn
Unsurprisingly, the poor health of stock markets has contaminated all biotech financing channels. In its 2022 panorama, unveiled on February 17, the France Biotech association notes that all health financing, Europe and the United States combined, has increased from 55.2 to 29.5 billion euros over one year. . Venture capital investment also declined, although more modestly, falling back to levels close to those of five years ago. « Despite the slowdown in 2022, there is still a large investment capacity. Admittedly, it is a little more difficult for companies to raise funds, the discussions are longer than before, but the investments continue »tempers Raphaël Wisniewski, manager at Andera Partners.
Bankruptcies and layoff plans have multiplied across the Atlantic, with many health start-ups finding themselves short of money
Despite everything, bankruptcies and layoff plans have multiplied across the Atlantic, with many health start-ups finding themselves short of money. Many have tightened the purse strings, cutting back on their expansion plans or pausing some lower-priority research programs.
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