#BIOSPAIN2023Interview | "The 'biotech' sector is one of the sectors with the greatest financing needs"

We spoke with Cristina Cortés, manager at Ayming, Bronze Sponsor of BIOSPAIN 2023, about the role of private financing in the biotechnology sector.


One of the most significant characteristics of biotechnology companies is the development of disruptive innovations that have a significant impact on society and the planet. Complexity and high regulation are common elements in the markets where 'biotech' operates, resulting in innovations marked by long cycles, the need for significant investment volumes, and high risk.

The picture we observe shows how R&D+I is at the center of the business model of biotechnology companies. In this sense, it is important to note that most biotechnology companies are SMEs and micro-SMEs that do not have products on the market, so they do not generate the necessary resources to finance their activities. This is why access to external financing is essential for the development of the biotechnology sector.

According to data released by the AseBio 2022 Report, biotechnology companies invested €1.038 billion in R&D, representing a 16% growth compared to the previous year. The report highlights that 64% of 'biotech' R&D investment is self-financed, with only 10% coming from public grants.

This scenario will be analyzed as part of the BIOSPAIN 2023 program, which will take place in Barcelona from September 26 to 28. To delve into the role of private investment in the biotechnology sector, we spoke with Cristina Cortés Lagoa, manager at Ayming, a leading company in innovation financing and Bronze Sponsor of BIOSPAIN 2023.

AseBio. Based on your experience, what is the current picture we see in the biotechnology sector in Spain in terms of financing?

Cristina Cortés. We see a significant need for financing, as has always been the case, although there are now more venture capital funds specialized in the sector that understand its operations and may be able to identify a promising project.

The 'biotech' sector is one of the sectors with the greatest financing needs, and its peculiarities make obtaining it perhaps more challenging than in others. Large amounts are needed - biotechnology research typically requires substantial investments, especially when we talk about red biotechnology, related to health - and very long maturation times. There has been significant progress in recent years, especially since 2020 with the pandemic, when private investment in the sector increased by 50%, according to data from the AseBio 2022 Report.

In this regard, it is necessary to continue to ensure that more private funding reaches biotechnology companies, helping them overcome existing barriers and reach more investors. Building not only a strong scientific project but also a solid business plan is essential.

AseBio. What are the main barriers that 'biotech' companies encounter when seeking financing?

Cristina Cortés. The answer to this question is complex and varies depending on whether we are talking about private financing or public financing. In the former case, there are multiple factors at play, but high competition is probably one of the primary causes, which means that companies must refine their idea, how they present it, and, above all, factors like the business plan, real market need, and medium to long-term projection are decisive.

Regarding public financing, especially at the national level, the main issue we observe in our daily work is primarily related to financial conditions. Many grants in Spain are provided in the form of loans, which limits the opportunities for biotechnology companies to access them due to the guarantees required, primarily. Building a solid strategy for public financing that allows for maximum utilization of the benefits of each incentive is crucial. There are options such as ENISA's participative loans, grants like NEOTEC, and tax incentives such as social security deductions for research personnel or the monetization of tax credits. These options not only provide an economic boost to companies or reduce their operating costs but also significantly contribute to improving the financial ratios of companies.

AseBio. As highlighted by the AseBio Report, we see that funding from public grants represents a very small percentage of the total. Why does this situation occur?

Cristina Cortés. Public grants are a crucial tool in the early stages of R&D+I, providing support for companies' self-financing. In R&D-intensive sectors like biotechnology, this is even more important, although indeed the percentage of grants received by companies in the sector is very low. The reasons can be numerous and varied, but based on our experience with sector companies, there is a particular barrier, especially in national calls, because many grants have a significant portion of funding in the form of loans, with the consequent requirement for guarantees.

Furthermore, this type of assistance increases the debt ratio, and due to the sector's long maturation periods, when the project concludes, it is common for the company not to have a sustainable revenue stream in place, meaning it must start repaying the loan before commercializing its product.

In this regard, alternatives like tax incentives or financial instruments such as Tax Equity are very interesting options, but a proactive plan is necessary for companies to access and make the most of these direct grants.

AseBio. How could it be improved?

Cristina Cortés. Undoubtedly, it is necessary to create a plan tailored to the sector, recognizing its specific characteristics. This undoubtedly involves increasing non-repayable funding and reducing or eliminating the required guarantees.

Furthermore, a dialogue with companies when designing new programs is important, as we have also observed that the themes required by the government in its various programs do not always align with the projects carried out by companies lately.

AseBio. How has access to private financing for biotechnology companies in Spain evolved in recent years?

Cristina Cortés. As we mentioned earlier, the evolution has been tremendous in recent years. Twenty years ago, there was virtually no biotechnology sector in Spain. We have gone from having 50 biotechnology companies to almost 900 in 2022, and from an investment level of 17 million euros to over 140 million euros. This gives us an idea that the sector represents the future, and the pandemic also emphasized this fact.

Twenty years ago, there were no specialized funds, making it very difficult for companies in the sector to access financing. Nowadays, the situation has changed, although it is necessary to continue working so that private investors increasingly support the biotechnology sector, and fewer good projects are left unsupported due to a lack of financial backing.

AseBio. How can public financing be leveraged to access private financing?

Cristina Cortés. Private financing is the most crucial for a company because it genuinely enables it to grow and undertake its long-term project, even from the earliest stages. However, the competition is fierce, and obtaining financing from an investment fund can sometimes be challenging. In this regard, obtaining public financing presents an opportunity not only because of the financial injection itself but also because, when seeking investors, being a recipient of public funding is considered an additional "guarantee" of the project's viability and the confidence of a public institution in it. If we are talking about grants specifically aimed at startups, such as ENISA loans or NEOTEC, this guarantee can be even stronger.

Furthermore, utilizing incentives like grants, tax deductions, or even tools like Tax Equity helps improve the company's financial ratios and reduces the required amount of private investment. Therefore, exploring potential avenues of public financing is certainly a strategic move.

Public financing complements private funding to maximize a company's potential, enabling it to undertake a greater number of projects and fully exploit its capabilities.

AseBio. What does Ayming expect from BIOSPAIN 2023?

Cristina Cortés. We hope to contribute our expertise in financing and support the growth of the biotechnology sector. We aim to offer our knowledge to participants and make a positive impact on the industry.