A USERS' GUIDE FOR SMES IN THE BIOTECHNOLOGY FIELD May 1999 35()$&( %\0DUWLQ%DQJHPDQQ 0HPEHURIWKH(XURSHDQ&RPPLVVLRQ In the present emerging global market, new technological advance represents one of the main ways to guarantee EU competitiveness. This is why new technologies constitute a key for our future economic development. Among those, information technologies and biotechnology probably present the biggest opportunities. Modern biotechnology is one of these key emerging technologies which Europe must harness successfully to sustain economic growth and competitiveness. Today, biotechnology related sectors employ between 300,000 and 400,000 people in 1995. In 2005, this could rise to as much as 3,000,0001. The emergence of new technologies is presenting challenges to both industry and the public sector. Some of these technologies have far reaching implications for a large number of industrial sectors, creating wealth and employment, resulting in the increased competitiveness of Europe’s economy. Modern biotechnology in its many guises has developed pharmaceutical products which are viewed as medical milestones. The direct benefits for human beings are without precedence. Human insulin (against diabetes), Interferon (against cancer) and EPO (erythropoietin, against blood deficiencies) are amongst the most famous. Biotechnology doesn’t, however, only encompass health care and diagnostics. For example, food products with higher nutritional values and longer shelf lives as well as dietary and hypo- allergenic products are now being developed. For example, a strain of rice is now being developed which those with gluten allergies could consume. Furthermore, the application of modern biotechnological techniques will have environmental implications: pollution from industry, households and agriculture can indeed be significantly reduced. A strong European research base is vital to the continued success of this fledgling, innovative industry. However, the ability to commercially exploit research in this area is also of prime importance. Europe has made important progress in recent years, but still lags behind the USA in most indicators of economic performance. Unless substantial steps are taken now by those actors involved (industry, venture-capital firms, public authorities, and academia) the gap will only continue to widen in the short, medium and long term. In this, the role of SMEs is of crucial importance, especially because biotechnology firms, by their nature, are often start-ups where new products are developed. Therefore, it is up to public authorities and venture-capitalists, at both the 1 Europabio – µ%HQFKPDUNLQJWKH&RPSHWLWLYHQHVVRI%LRWHFKQRORJ\LQ(XURSH¶(June,1997) A User’s Guide for Small and Medium Enterprises in the Biotechnology Field 3 ________________________________________________________________________ national and European level to help engender a more conducive external business environment for SMEs to succeed and grow. With this in mind, DG III has decided to launch the first edition of this Users’ Guide to encourage industrial operators to make the most of this irreversible trend in our societies, fully aware that opportunities inherent in the field of modern biotechnology are immense both in economic and social terms and that SMEs have a unique and important role to play in this area. This Users’guide on biotechnology for small and medium-sized enterprises (SMEs) aims at providing the industry with practical views on the responsible authorities (Member States and European Union) and on the funding (Venture-Capital, 5th Framework Programme, etc.) available in this area. The European Commission’s role here is, therefore, to identify, for the European SMEs, both the European/National programmes and the actors (both private and public, at national and European level) who can enhance the global transfer of information and expertise to SMEs, helping them to secure a business environment which will grow into the next century, creating jobs and improving the environment in which we live. A User’s Guide for Small and Medium Enterprises in the Biotechnology Field 4 ________________________________________________________________________ TABLE OF CONTENTS 1. SECTION 1: EUROPEAN PROGRAMMES .........................................................11 1.1. Introduction and Purpose .................................................................................11 1.2. The Fourth Framework Programme 1994 - 1998 ............................................12 1.3. The Fifth Framework Programme 1998 - 2002 ...............................................12 1.3.1. Introduction........................................................................................12 1.3.2. Structure of the Fifth Framework Programme...................................13 1.3.3. Implementation of the Fifth Framework Programme ........................13 1.3.4. Proposed Budget for the Fifth Framework Programme.....................13 1.3.5. The Structure of the Thematic Programme “Quality of Life and Management of Living Resources”.............................................14 1.3.6. Specific SME Measures.....................................................................17 1.4. Additional Programmes and Initiatives outside the Framework Programmes, relevant to SMEs within the Biotechnology Sector...................18 1.4.1. SMEAP 3C (1997 - 2000) .................................................................18 1.4.2. COST .................................................................................................19 1.4.3. EUREKA ...........................................................................................20 1.4.4. Industrial Platforms............................................................................21 1.4.5. Biotechnology and Finance Forum ....................................................22 1.4.6. European Biotechnology Node for Interaction with China (EBNIC).............................................................................................23 1.4.7. Promotion, Co-operation and Information for SMEs ........................23 1.4.8. Co-operation Networks: BRE (Bureau de Rapprochement des Entreprises) and BC Net (Business Co-operation Network) .............24 1.4.9. Europartenariat and Interprise............................................................25 1.5. The European Regional Development Fund and the European Social Fund .................................................................................................................26 1.5.1. Introduction........................................................................................26 1.5.2. Accessing ERDF and ESF .................................................................26 A User’s Guide for Small and Medium Enterprises in the Biotechnology Field 5 ________________________________________________________________________ 2. SECTION 2: OTHER SOURCES OF FINANCE....................................................28 2.1. Introduction......................................................................................................28 2.2. What is Venture Capital?.................................................................................29 2.2.1. Accessing Venture Capital Finance ...................................................29 2.2.2. Finding a Venture Capitalist ..............................................................31 2.3. Eurotech and Seed Capital Pilot Action ..........................................................32 2.3.1. Eurotech Capital.................................................................................32 2.3.2. Seed Capital .......................................................................................33 2.4. Innovation and Technology Equity Capital (I-TEC)........................................33 2.5. Stock Markets ..................................................................................................35 2.5.1. EASDAQ ...........................................................................................35 2.5.2. EURO NM .........................................................................................36 2.5.3. The Alternative Investment Market (AIM)........................................37 2.6. The European Investment Fund .......................................................................37 2.7. The European Investment Bank.......................................................................39 2.8. Improved Access to Finance for SMEs under the Third Multi-annual Programme for SMEs ......................................................................................40 2.9. Exchange of Experience and Dissemination of Best Practice in Innovation Financing .......................................................................................41 2.10. The Lift Project................................................................................................41 3. SECTION 3: NATIONAL PROGRAMMES........................................................43 3.1. Introduction and Purpose .................................................................................43 3.2. Austria..............................................................................................................44 3.2.1. A Brief Background to the Industry...................................................44 3.2.2. Current Actions and Programmes......................................................44 3.2.3. Programmes at a Glance ....................................................................45