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The Birth of German Biotechnology Industry: Did Venture Capital run the Show?

  • Heneric, Oliver
  • Engel, Dirk
  • Champenois, Claire

The goal of this paper is to point out the role played by private equity investors (venture-capital companies and corporate investors) in the emergence of a new biotechnology industry in Germany in the second half of the 90?s. This analysis takes into account the different business models and business fields to be found in the biotechnology industry. Based on theoretical arguments, a great relevance of VC-companies in financing young innovative biotechnology firms developing health care applications and technology platforms is expected, whereas corporate investors like pharmaceutical and chemical industries should play a more important role in financing supplier companies. Corporate investors are also expected to be significantly present in the equity financing of health care biotechnology companies. Empirical results from descriptive and multivariate analyses confirm all hypotheses but one: surprisingly, corporate investors invested only marginally in the equity funding of biotechnology firms developing new health care products or services.

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Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 04-09.

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Date of creation: 2004
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Handle: RePEc:zbw:zewdip:1610
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