Executive Briefing 18 September 2025 - Global Security and Innovation Summit

GSIS Executive Briefing

18 September 2025

European opportunities in biotechnology

The European biotechnology sector is at a geopolitical crossroads. The combination of political uncertainty in the United States and growing demand for dual-use technologies globally presents a major opportunity for European companies and governments. Yet across the continent, the industry still struggles with funding shortfalls and an urgent need for regulatory simplification.

Since US President Donald Trump’s announcement of sweeping government funding cuts, international interest in US science jobs has dropped. Data from Nature Careers, a science-oriented recruitment platform, showed a 41% decline in European applications for jobs in the US and increased interest from American scientists in Canadian and European positions in March 2025 compared with March 2024.

The European Union’s Biotech Act, set for discussion in 2026, aims to simplify the regulatory landscape for investment and ease the commercialisation of discoveries.

According to private equity groups, venture capital (VC) funding in European biotechnology and healthcare increased by more than 300% from 2007 to 2021 but still lags behind funding in the US and China. Across all sectors, EU start-ups attract just 5% of global VC, compared to 52% in the US and 40% in China.

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“We’ll be putting an initially small tariff on pharmaceuticals, but in one year – one and a half years, maximum – it’s going to go to 150% and then it’s going to go to 250% because we want pharmaceuticals made in our country.”

US President Donald Trump to CNBC, August 2025

Mergers and acquisitions flows in biotechnology in the last five years

FUNDING PACKAGE ANNOUNCED AS PART OF THE ‘CHOOSE EUROPE’ SCHEME TO SUPPORT NON-EU RESEARCHERS MOVING TO EUROPE

INCREASE IN US APPLICATIONS FOR EUROPEAN JOB VACANCIES POSTED TO NATURE CAREERS IN MARCH 2025 COMPARED WITH MARCH 2024

PERCENTAGE OF RESEARCHERS IN THE US WHO RESPONDED THAT THEY WERE ‘KEEN TO LEAVE’ THE US IN A NATURE POLL

Seizing the opportunity

In May 2025, the US government announced sweeping budget cuts for 2026. This included a reduction in funding of 40% for the National Institutes of Health and 55% for the National Science Foundation – funding bedrocks for biotechnology innovation – and halting new grants to foreign partners. The decision triggered a backlash from the US biotechnology sector, with CEOs warning of a ‘catastrophic’ fallout that could potentially ‘devastate’ the systems of American innovation.

This situation presents opportunities for European biotechnology companies. For example, growing vaccine scepticism in the US has led to major cuts in funding for mRNA treatments, with 22 federal contracts worth half a billion dollars terminated in one day in August. With the largest market share in mRNA vaccines and therapeutics globally, Europe is well positioned to attract increased investment and capture an even greater portion of the market, projected to be worth US$8.7 billion by 2030.

The funding squeeze is also pushing US scientists to seek employment abroad, providing Europe with a chance to attract world-class talent. Despite a strong track record in foundational research and patenting, Europe has historically struggled to attract US biotechnology experts due to an inability to match US salary packages. In response to this ‘once in a lifetime opportunity’, the United Kingdom announced a £54 million global talent scheme to recruit foreign researchers in June 2025, echoing similar moves by France and the EU. However, more funding will be required to take full advantage of this opportunity.

ACTIVE BIOTECHNOLOGY COMPANIES IN EUROPE (MARCH 2025)

PERCENTAGE OF TOTAL VENTURE INVESTMENTS THAT WERE INVESTED IN BIOTECHNOLOGY AND HEALTHCARE IN EUROPE, 2017–21

Playing to European strengths

Europe’s biotechnology sector includes a blend of large, established companies (such as Novo Nordisk and Pfizer) and innovative start-ups. Clusters such as the UK’s ‘Golden Triangle’, Germany’s five key research hubs, Denmark’s life sciences sector and Switzerland’s ‘BioValley’ showcase Europe’s scientific depth. Cambridge alone hosts more than 470 biotechnology firms, while Germany produces more biotechnology patents than any other European country. Collectively, these ecosystems make Europe the second-largest biotechnology market globally, valued at US$426.2bn in 2024 and projected to exceed US$1.1 trillion by 2033.

The European market is boosted by innovations in a few key medical areas: 51% of European biotechnology companies founded after 2015 focus on cell and gene therapy, immunotherapies and antibodies. Additionally, European research is of particularly high volume: a 2024 European Commission report found that in 2022 Europe contributed to 18.1% of all scientific publications, second only to China. These strengths, combined with new research talent from the US, could be leveraged to provide a real advantage for Europe in this space.

Funding and regulation challenges

However, beneath this promising potential lies structural weakness, notably affecting the innovation-to-commercialisation pipeline. Despite a 13% compound annual growth rate (CAGR) in early-stage investment between 2015 and 2021, significant funding gaps remain. Promising firms are often lured abroad in their infancy or struggle to navigate the ‘valley of death’, where early-stage businesses have started operations but not generated sufficient revenues as they are unable to secure financing beyond Series A. The EU accounts for only 5% of the share of global VC funds, versus 52% in the US and 40% in China.

Regulation also poses challenges. Unlike the United States’ centralised Food and Drug Administration or China’s state-led oversight system, the EU’s framework reconciles 27 national regimes with supranational rules. This complex, multilayered structure of approval pathways and regulatory obligations is regularly cited as burdensome by start-ups and established pharmaceutical firms alike. In September 2024, Mario Draghi released his Competitiveness Strategy for Europe, which highlighted that there are over 100 technology-related laws and over 270 active regulators in digital networks across Europe, limiting the appeal for investors. Moreover, the multiplicity of regulations on data access and storage across the 27 EU member states deter investors because of the complexity facing biotechnology innovation. While the European Commission’s newly established Biotech and Biomanufacturing Hub and the proposed EU Biotech Act, expected to be debated in 2026, seek to simplify these processes, delays have already fuelled investor concerns.

The consequences are significant. In 2022, the median approval time for new medicines by regulatory bodies was 430 days in Europe versus 334 days in the US. Furthermore, average patient access time to new medicines in the EU is 578 days. Meanwhile, US and Chinese firms benefit from greater private and state investment, simpler data access and storage procedures, and less onerous regulatory obligations than their EU counterparts; all of which encourages shorter journeys from the lab to market.

Still, Europe has advantages. Its legislation and initiatives, such as Horizon Europe, actively support small- and medium-sized enterprises (SMEs), start-ups and scale-ups, ensuring that innovation is not monopolised by large corporations. However, unless regulatory pathways are streamlined, businesses will continue to struggle with funding and regulatory fragmentation and delays.

The promise of dual use

An emerging promising development in the sector is the increasing focus on dual-use technologies. From advanced materials and alternative fuels to biosensors and military medicine, biotechnology is proving to be a fertile ground for defence innovation. Following its Biotechnology and Human Enhancement Technologies strategy, in June 2025 the NATO Innovation Fund awarded its first accelerator contract to a UK-based biotechnology firm that uses protein sequencing to detect and defend against biological threats.

Aware of the critical need for strategic autonomy in this sector, the European Commission is actively seeking to encourage dual-use R&D. This includes the introduction of the Strategic Technologies for Europe Platform (STEP), in which biotechnology forms one of three targeted investment areas, as well as the European Defence Fund’s allocation of part of its 2024 €1bn budget to biotechnology projects NEUROQUAD (€4m), RESILIENCE-D-2024 (€9.8m) and RESILIENCE-R-2024 (€15m). Moreover, the EU is considering moving beyond its traditional exclusive focus on civil applications when allocating research funding, a shift that could pave the way for the next framework programme, FP10, to directly support projects with both civilian and defence applications.

“This fascinating new science and technology transcends different industrial sectors and is based on the use of and work with living organisms, of the force of nature. It does not only enable ground-breaking innovations and manufacturing processes, it is of strategic importance in several different areas such as sustainability, economic security, food security and public health.”

European Parliament, June 2025

Looking ahead

Cuts to scientific-research funding in the US, combined with an uncertain policy environment, present a real opportunity for Europe to innovate and gain ground in the biotechnology sector. Europe already has a strong position in scientific publishing and houses multiple regional biotechnology hubs with a diverse ecosystem. However, a fragmented regulatory environment and difficulties in gaining VC funding make Europe less attractive for start-ups, which tend to need to move to the US to grow. Meanwhile, China, which leads the world in scientific-research output and comes a close second to the US for VC funding, will increasingly challenge Europe’s efforts.

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