18 March 2014
On March 13, Britain’s Circassia raised £200 million through a share offering on the London Stock Exchange, one of the largest biotech IPOs in UK history. Circassia caught investors’ attention by developing a drug that helps people overcome cat allergies more quickly and with fewer side effects than other treatments.
Four healthcare companies in Europe have raised $575 million in stock offerings so far this year, more than the sector attracted in all of 2013. Although this is a positive sign for European stock market listings, most companies prefer to float on US exchanges, especially the NASDAQ, because it offers a larger pool of capital and its investors have more specialized knowledge of the sector.
By comparison, US biotech companies reportedly raised more than $1 billion from 18 IPOs in February alone. The NASDAQ Biotechnology Index is up just over 60 percent in the past 12 months, triple the performance of the S&P 500. That also increases the appeal of the NASDAQ for European firms.
But Europe also boasts considerable advantages in the sector, including many of the world’s top universities for biotechnology research, like Oxford and Cambridge in England. Also, European investors – and the companies they invest in – tend to work to a much longer time horizon, which can build stronger, more enduring businesses.
Solving the riddles of DNA has the potential to revolutionize healthcare and reward investors handsomely. Circassia’s IPO shows that European investors don’t have to cross the ocean for attractive opportunities.