A new report from Ernst & Young says the biotechnology industry continued to lose in 2005, but saw its combined losses narrow 30% to $4.3 billion, while revenues were boosted 18% and exceeded $60 billion for the first time in the sector’s 30-year history. On a global level, the biotechnology sector received a green light of marketing approval for 32 products in the USA – including 17 first-time nods – and raised a whopping $19.7 billion in capital, almost approaching the figures generated during the so-called ‘bubble’ of 2000.

And the news was good in Europe too, with the biotech industry moving out of an era of disappointing financial results and into a new phase of growth, with 23 initial public offerings during 2005 – compared to 13 IPOs in the USA - taking the total number of public companies across the region to 122. Revenues for the region jumped 7% to 11.7 billion euros, with the figures for public companies looking particularly promising – up 17% to almost 8 billion euros. However, hand in hand with increased revenues goes higher spending on R&D, resulting in net losses up 131% for publicly-traded firms and 41% for private organisations.

But the outlook for 2006 is perhaps not so positive, with less IPOs predicted and more companies being snapped up by their larger pharmaceutical counterparts as the cost of drug development and patent expiries continues to weigh on both sectors. In Europe last year, M&A activity rose almost 60% to an all-time high of 66, with five out of the top 10 involving UK companies. William Powlett Smith, who heads up E&Y’s UK biotech team, noted: “Increasing specialisation as well as increased use of alliances, partnerships to leverage off others and specialist skills to bring products to market will dominate the field.”