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Health: Should French nuggets go abroad to finance themselves?

The acquisition of the French radiopharmacy laboratory, Advanced Accelerator Applications (AAA), by the Swiss giant Novartis Monday is not a first: regularly, French nuggets in the health sector pass under foreign flag, failing to finance in the hexagon.

A week ago, Vexim, specialized in vertebral implants, was bought by the American Stryker, global giant of orthopedics.

A little over a year ago, it was the turn of the French manufacturer of surgical robots, Medtech. The buyer? The American Zimmer Biomet.

In both cases, the valuation was around 160 million.

"This shows that France produces very nice start-ups," said AFP Philippe Pouletty, managing director of Truffle Capital and honorary president of France Biotech.

According to him, France benefits from the "best ecosystem" of the continent to create innovative companies and could even be "the Sillicon Valley of Europe", if it was not a major obstacle: that of financing.

"The Euronext stock market is not deep enough," says Pouletty, for whom "the savings of the French and Europeans is not sufficiently invested" in the development of these "super-innovative start-ups", the preventing to reach an intermediate size.

If, initially, raise tens of millions of euros does not pose difficulties, when the company grows and the financing needs reach the hundreds of millions, it becomes necessary to call on foreign funds.

According to Mr. Pouletty, in the United States, 10 15% of financial assets are moving to newly created companies (venture capital) against less than 0,5% of life insurance in France.

"It's easier to buy treasury bills and government bonds," says Truffle Capital's CEO.

- No French giant in Medtech -

A finding that refutes Franck Sebag, partner of the firm EY. "There are beautiful biotechs that remain independent" and who "get to finance," he told AFP, citing the biopharmaceutical company Genfit. It raised about 150 million euros a few weeks ago.

According to Sebag, the amounts invested in venture capital jumped 145% between 2014 and 2016 with 2,2 billion raised, of which about 20% to 35% financed medtechs and biotechs (two-thirds went digital) ).

For Vexim, which hopes to commercialize its technology of vertebral implants in the United States from 2018, the beginnings have nevertheless been "difficult".

In 2012, during the IPO, "not many people trusted us," remembers to AFP Vincent Gardes, the CEO.

Only after observing that the medtech kept its promises did the institutional funds, initially wait-and-see, join the adventure.

In June, Actelion, a Swiss group founded by a French couple, went under the American flag (a buyout transaction for nearly 30 billion euros by Johnson and Johnson), with the nose and beard of Sanofi who hoped for to seize it.

In July, the tricolor giant of the drug has bought Protein Sciences, American laboratory specialized in the vaccines, for a price oscillating between 650 and 750 millions of dollars.

An exception for Philippe Pouletty: today, according to him, 95% of the groups in capacity to be buyers are American or Swiss. "And tomorrow they will be Asian," he predicts.

Vexim, before its acquisition by Stryker, was thus in discussion with three groups specialized in medtech, but no French, nor even European.

"There is none," said Gardes, blaming this state of affairs for the reluctance of business leaders to associate with other start-ups.

To be present in the United States and obtain financing without being bought back, certain biotech companies, such as DBV Technologies or Cellectis, have adopted an intermediate solution: dual listing on Euronext and Nasdaq.

This is one of the hypotheses that Vexim had envisaged, but it represented a cost, with the obligation to be physically present on both continents. Above all, it would have delayed their arrival on the American market of several years.

A risky strategy for companies whose main commercial advantage is to be the only one in a market ... until a competitor offers better.

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