BioWorld International Correspondent

LILLE, France - The French biotechnology industry took off in 2006-2007, which were record years in terms of funding, according to the industry association France Biotech, which presented the results of its sixth annual survey, "French Biotechnology Panorama," at EuroBio 2007 here at the end of September.

At the same time, France Biotech pointed out that the biotech industry in France still was lagging behind that of other European countries and stressed the need to complete the reform of France's public-sector research system and introduce new tax regimes for innovative companies.

In that regard, France Biotech said it had alerted the government and the French Parliament to the fact that a number of welcome measures - such as wealth tax rebates on investments in small and medium-sized enterprises (SMEs) and the forthcoming research tax credit reform - might have little or no impact on innovative firms because they were poorly designed and the authorities lacked a detailed, global vision of the leverage effect that public funding has on private-sector research.

"The personal wealth tax reform in favor of investment in SMEs will, as it currently stands, be ineffective because the investment is capped at a derisory €200,000, and furthermore, investments by specialist funds are not eligible," declared Philippe Pouletty, chairman of France Biotech.

That said, 2007 could be a record year in terms of investment in life science companies, according to France Biotech. It estimated that a total of €625 million (US$880 million) had been invested by mid-September, of which €499 million was raised on the stock market and €126 million was provided by venture capitalists. Thirteen French companies now are listed on the stock exchange, up from just four at the beginning of 2005. Four companies have obtained listings so far in 2007 - Cellectis, Genoway, Vivalis and Metabolic Explorer - while three others completed secondary offerings (NicOx, Transgene and Eurofins Scientific).

France Biotech claimed that the special tax regime for Young Innovative Companies (which it conceived and promoted) still is having a major effect three years after its introduction. That regime exempts firms from social security contributions on the salaries of research staff, provided their research and development outlays account for at least 15 percent of their total expenditure, and it has been adopted by two-thirds of biotech firms.

The additional funds the regime releases for investment in R& D, together with public-sector funding for SMEs, have resulted in a significant number of drugs being developed by small biotech firms, France Biotech noted.

It estimates that 46 SMEs currently have 68 products in clinical trials, of which 41 are in Phases II and III.

However, the association stressed that "these encouraging results must not cause us to lose sight of the persistent performance gap between France and its neighbors and, of course, the fact that Europe as a whole lags behind the USA."

Depending on the indicator used, France is in third or even fourth place in Europe, with only one-fifth the number of listed companies as the UK and a total stock market capitalization only one-third that of British companies.