The European Investment Bank (EIB) plays a key role in financing innovative companies, particularly in the health and biotech sectors. Investment Officer at the Life-science & Biotech Unit, Nicolas Di Prata tells us more about EIB’s role, the businesses it invests in and why the risk capital sector still needs to be further developed.
What is the role of the EIB’s Life Sciences Department?
As the EU bank, the EIB supports life science and healthcare projects that aim to ensure universal access to high-quality and affordable products and services. Our main role is to support the European life science sector by investing in R&D and activities that enable the launch of innovative products. The value-added impacts are multiple: Increasing the quality of life of millions of patients, addressing unmet medical needs, preserving and increasing highly skilled jobs in the EU as well as fostering the creation of European IP.
What type of businesses are you looking for? And what kind of investments have you been making?
We are looking for innovative companies bringing something disruptive to the market, ideally in a field that is a strategic priority for the European Union such as life sciences and biotechnologies. In these sectors, we typically target projects that address unmet medical needs such as new and better vaccines, therapeutics, diagnostics, medtech or digital health solutions.
We provide them with different innovative financing solutions such as venture debt financing, a specific type of patient capital in the form of a loan, which is between equity and debt. The instrument is designed for pre-commercial companies, to provide liquidity in the crucial phase of the development of the business, when access to traditional bank financing is difficult, if not impossible. It is important to note that we provide bespoke venture debt loans to companies that have already raised at least one or two rounds of funding from private investors, have a sustainable business model and business plan and have a solid corporate governance in place. Indeed, the EIB will not dictate to companies how to run their own businesses. Our aim is to rely on the companies in which we invest and their own governance structures.
So far, we have financed almost one hundred life science companies with our venture debt product, out of which some are particularly visible, given the high public health impact of the investment plan such as BioNTech (COVID-19 vaccine) or Carmat, (artificial heart). The complete list of companies that have benefited from an EIB venture debt loan can be found here.
What innovation trends are you observing in the European Life Sciences industry?
The European life science industry is more dynamic than ever; As an illustration, in 2021, more than 15,300 patent applications were filed with the European Patent Office (EPO) in the field of medical technology, the second highest among all industrial sectors in Europe, around 9,000 applications were filed in the pharmaceutical field and around 7,600 in the field of biotechnology[1]. Also the European medical technology industry employs directly more than 800,000 people[2] and the jobs created by the medical technology industry account for around 0.3% of total employment in Europe[3].
However, we still see a concentration of the industry in some countries. In this regard, we very much welcome the initiative to promote the emerging life science sector in Luxembourg through networks of clusters, public and private actors. Last but not least, we observe that the European risk-capital sector is not yet developed enough to support the numerous promising biotechs and medtechs active in the EU. There is only a limited number of capital risk providers for investments above EUR 7.5m, ticket sizes which are generally required to access the market. As the biggest equity-risk venture debt provider in Europe in the life science sector, the EIB sets the pace and we hope to crowd in additional investors.
[1] The European Medical Technology Industry in figures, 2022, MedTech Europe
[2] MedTech Europe, 2021, National Associations Survey
[3] Eurostat, 2022, Employment and Population Statistics
This article was first published in the Silicon Luxembourg magazine. Get your copy.
