Product Focus Takes Europe Back to Its Roots

01 Mar 2004

• By Mark Ratner

More of Europe's VCs have found the product religion, abandoning platforms. Now they say they need two things to manage product risk: larger portfolios of drugs than most in-licensing companies can create and management teams which can both develop drugs and exercise commercial discipline in choosing programs to bring forward, alone or with a partner. Spin-outs, which provide both management and a relatively large group of projects, are increasingly the European start-up method of choice.

Public investors undeniably prefer companies with products in or near clinical trials. And that's clearly re-focusing European VCs—whose past investments largely tapped into the platform-oriented scientists and entrepreneurs who created the majority of European biotechs. "When we started in '01, in the midst of the bursting genomics bubble, we were still talking technology," notes Michael Steinmetz, PhD, a partner at MPM. "But not by '02. It was clear then that the focus had to be on product plays."

VCs by then needed to see more self reliant businesses, adds TVM's Helmut Schühsler, "as opposed to $60-70 million long-term...