Something Is Worrying Me

Well clearly a lot of things are worrying me, many of them right now associated with the grizzly images of human suffering and degradation (both those which are intensely individual and those which are collective and for that seemingly more anonymous) which we cannot avoid contemplating day in day out. Against these images words seem powerless. All I am left with is silence.

So you will forgive me if in place of the big worries which we must all be feeling I share with you some seemingly more trivial ones. In this case the starting point would be an issue which has arisen about the state of the European biotechnology industry. Strange as it may seem, as well as struggling to get through the ‘hell’ that is today today, we could also usefully spare some time thinking about the ‘heaven’ of tomorrow: or what the future might be like when we eventually get there.

So moving adroitly from the truly tragic to the totally mundane Ernst & Young have just published a report on the European biotechnology industry.

“Ernst & Young’s 11th annual European biotech report, Refocus published today, reveals that total 2003 European revenues fell by 12% to ?11.27 billion, the first time the industry has witnessed a fall in revenues. Cut backs in research and non-core areas exacerbated a 17% decrease in R&D expenses and a 5% fall in employees, which improved the net loss significantly by 52%. Public company revenues decreased 16% to ?6.6 billion, with market capitalisation increasing by 17%, gaining almost ?4 billion in value.”

Among the findings: companies cut research and development of on new medicines by 17 per cent. The cuts helped reduce losses by more than 50 per cent, but they also meant various projects were put on hold whilst contributing to a 5 per cent fall in employment in the sector.

Amongst the bad, there are, of course, the less bad: the UK still leads the European market by revenues and market capitalisation. However E & Y point out revenues fell from ?2.9 billion to ?2.4 billion, while market capitalisation increased from ?9.4 billion to over ?11 billion. UK head of Health Sciences at Ernst & Young William Powlett Smith is quoted as saying:

Whilst the UK remains the dominant player in the European scene, this is not much consolation for the UK’s position globally, which, like the rest of Europe’s, looks vulnerable. There is no doubt that Europe has plenty of examples of world-beating science, but scientific advances are not enough. The right financial and regulatory infrastructure must be balanced by the appropriate level of management ability. Companies, investors and governments must take bold steps to ensure that they realise all the benefits of knowledge and hard work.”

As the Financial Times wryly puts it:

The findings will make uncomfortable reading for European politicians, who are faced with almost daily with claims that the Lisbon agenda to reform the European economy is dead. The E&Y report follows a warning by the Economist Intelligence Unit last month that Europe’s large economies will lag well behind the US for the rest of the decade because of their slow adoption of information and communications technology.”

So where’s the point that is worrying me?

Well if each and every time you look at the way we are doing things you find this kind of problem (pension reform, growth and stability pact, 3g phones, internet innovation, applications of IT in business, broadband roll-out, venture capital availability), and you find a political infrastructure that is either unwilling or unable to change, then just what is it that gives everyone so much confidence that all this will have a happy ending? That is what is worrying me.

And, of course I could point out that I’m not the only afoe member to be in worry mode these days: Worried grumbling is a bit of a national sport here in Germany – to mention just one.

Oh, and BTW, since I don’t think it merits a separate post (it is, after all part of the same problem), this would be another example of things that keep worrying me.

The French government is pushing for a stand-alone solution to the financial crisis at Alstom, but the European Commission is still resisting plans to grant more state aid to the stricken engineering group. Nicolas Sarkozy, France’s new finance minister, on Wednesday said he was “making progress” in his talks with the Commission over a government-backed bail-out package for Alstom.”

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About Edward Hugh

Edward 'the bonobo is a Catalan economist of British extraction. After being born, brought-up and educated in the United Kingdom, Edward subsequently settled in Barcelona where he has now lived for over 15 years. As a consequence Edward considers himself to be "Catalan by adoption". He has also to some extent been "adopted by Catalonia", since throughout the current economic crisis he has been a constant voice on TV, radio and in the press arguing in favor of the need for some kind of internal devaluation if Spain wants to stay inside the Euro. By inclination he is a macro economist, but his obsession with trying to understand the economic impact of demographic changes has often taken him far from home, off and away from the more tranquil and placid pastures of the dismal science, into the bracken and thicket of demography, anthropology, biology, sociology and systems theory. All of which has lead him to ask himself whether Thomas Wolfe was not in fact right when he asserted that the fact of the matter is "you can never go home again".

3 thoughts on “Something Is Worrying Me

  1. You are not the only one worrying. A friend of mine talked to a university professor in Belgium. His assessment of the future for Europe? ,,Europe will be plunged into a deep crisis that will last 40 years. Europe will be no more than a Disneyland of old buildings and museums for tourist to visit.”
    The prof. did not reveal the sources for his claim but according to my friend he is well-connected. It is really hard these days to see the difference between alarmism and realism. I simply do not know what to believe any more and I do not dare to trust my own intuition to come up with an answer.

  2. I’m afraid it’s not just biotech. I saw this article about Nanotech today:

    “Early investment in the field was strong, and was reflected in the number of research papers published. Between 1997 and 1999, European research findings accounted for nearly one third of all published work in the field. However, Europe has now slipped behind Japan and the US, and is unlikely to remain competitive, according to the Commission.”

  3. A huge amount of investment in biotech firms has been wasted and the number of major drugs that have come out of the business is in fact hugely disappointing.

    There may of course be a problem but on its own it is only an anecdote. It is in fact a rather unreliable yardstick because its worth has been assumed from well before it delivered any benefits. Across the world big pharma companies have been slashing research budgets. It is just possible that Europe has less credulous VC operations. What has changed over the last five ears to actually make things worse?

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