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Annex 2: Towards a valuation of the Blue Biotechnology sector Biotechnology has been identified as a promising sector of the marine economy within the EU and a feature of the Blue Growth initiative117. Despite the challenges identified in Section 1.2, given the potential contribution to jobs and growth in Europe, it is worth trying to look at orders of magnitude of value of Blue Biotechnology as a guide to prioritising future investments and policy initiatives. Value estimation for European marine biotechnology can begin by looking at the scale and estimates available for the bioeconomy in general. In total, the EU’s bioeconomy sector represents close to EUR 2 trillion in annual turnover, which accounts for 22 million jobs and 9% of the total workforce118. However, the definition of bioeconomy is too broad, as it encompasses food production, forestry and other bio-related industries. Narrowing down the focus, available estimates for the European biotechnology sector suggest – based on a recently published industry analysis119 - that in 2012 it generated revenues of over €15 billion and has returned to growth (8%) and profit (net income) after a loss making 2011. The report estimates, that around EUR 3.1 billion in new capital was raised mainly coming from big publicly listed companies (EUR 2.1 billion). Despite this 2012 saw a fall in the total number of companies as the sector consolidated after a difficult previous period. Consideration of this sector is important as consistent, healthy growth within this sector is a positive indicator of future growth within Blue Biotechnology. The study found that the European sector represents around 17% of the global biotechnology industry in terms of revenue and around 30% in terms of employment, as shown in Table 0.2. The US remains the global industry leader with revenues four times as large and twice as many employees compared to the European biotechnology sector. Furthermore the US has twice as many publicly listed companies compared to Europe, while the US biotechnology sector raised EUR 16.6 billion of new capital in 2012 (or five times more than in Europe). This suggests that although the European biotechnology sector is doing well and growing, it is still small compared to the US, with plenty of space for development and opportunities. Table 0.2 European Biotechnology 2011-2012 (EUR million)120 2011 Public company121 data Revenues R&D Expenses Net Income (loss) Market Capitalisation 2012 % change European sector size compared to global Biotech Industry 14,024 3,656 (14) 52,908 15,085 8% 3,627 175 59,073 -1% -1250%122 12% 17% 14% 3% 12% Europe sector size compared to US 24% 19% 4% 16% 117 Ecorys, 2012, Blue Growth Scenarios and drivers for Sustainable Growth from the Oceans, Seas and Coasts (Commission's Communication on Blue Growth COM(2012)494 final) http://ec.europa.eu/maritimeaffairs/policy/blue_growth/documents/com_2012_494_en.pdf ) 118 European Commission (2012) “Innovating for Sustainable Growth: A Bioeconomy for Europe” http://ec.europa.eu/research/bioeconomy/pdf/201202_innovating_sustainable_growth_en.pdf 119 Adapted from Ernst & Young; Biotechnology Industry report 2013 120 Ernst & Young; Biotechnology Industry report 2013 121 122 A public company is one that has issued securities through an initial public offering (IPO) and is traded on at least one stock exchange or in the over the counter market http://www.investopedia.com/terms/p/publiccompany.asp Mathematically if one tries to make a percentage with a negative denominator and a positive numerator the outcome will always be negative. Therefore the result of -1250% actually states that the loss has decreased by -1250%, i.e. there has been an increase. In practical terms what this means that from the point of view of the end of 2012 there has been a nominal increase of €189m compared to the same time in 2011. Study in support of Impact Assessment work on Blue Biotechnology 87

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