Europe, despite excellent science, lost its co-equal status in drug development to the U.S. due to restrictive pricing and lack of growth capital. These same challenges are now emerging in the U.S., threatening its innovation leadership as China accelerates its efforts.

While European biotechs have historically prided themselves on capital efficiency, this mindset is now seen as a potential flaw in a global race for innovation. The focus is shifting towards bolder financing to generate value-driving data quickly, as efficiency is meaningless if a competitor reaches the market first.

To rival the US and China, a coalition of European VCs is focusing on three pillars: 1) simplifying and speeding up regulations, 2) attracting more institutional capital (e.g., pension funds) into life sciences, and 3) building a robust, NASDAQ-like public market to foster growth and retain wealth generation within Europe.

The UK produces world-class academic discovery but struggles to create scalable biotechs. The primary reason is a lack of venture capital with an appetite for the inherent risks of life sciences, forcing promising UK innovations to move to the US to secure funding.

The huge funding gap for European biotech is structural. European institutional investors like pension funds allocate only 0.02% of their balance sheets to venture, compared to 2% in the US. This factor-of-100 difference creates a major hurdle for the ecosystem's ability to retain its champion companies.

The US biotech ecosystem thrives because failure is viewed as a valuable learning experience. In contrast, European culture often penalizes entrepreneurs from failed startups, creating a more risk-averse environment that stifles innovation and limits the pool of experienced operators who are willing to try again.

Unlike their US counterparts, European biotechs have less access to large venture funds. This forces a culture of extreme capital efficiency and discipline. This need to be "cleverer, smarter with less people and less money" is a defining feature and potential advantage of the European ecosystem.

The coalition's core mission is to prevent the exodus of successful biotechs to the US. By building a stronger capital market, they aim to keep champion companies like Argenx headquartered and operating in Europe, ensuring economic value, market capitalization, and tax revenues benefit the region, not the US.

Despite discussions of European self-reliance, its capital markets remain inadequate for scaling biotech companies. Over the past 10 years, only three biotechs managed to raise over €100 million in an IPO on a European exchange, compared to 27 European biotechs that achieved this on NASDAQ in the same period.