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23 August, 2022

FDI in biotech in 2021: The state of play

Biotech FDI grew by 15% in 2021. However, new projects saw much greater growth at 32.5% following the focus Covid-19 placed on the sector.

By Lara Williams

While the Covid-19 crisis caused global greenfield foreign direct investment (FDI) project numbers to decline by 17.5% in 2020, global FDI project numbers in the biotech industry bucked this trend by increasing by 25.5%. Unlike most business sectors, the biotech sector was buoyed by the pandemic due to the increased focus on epidemiology, an area of biotech that had been hitherto been underinvested.

The growth seen within the sector during 2020 continued throughout 2021 as the world reopened. However, FDI in biotech rose by 15.1% in 2021 compared with overall global FDI levels increasing by 18.1%, according to according to the Global FDI Annual Report 2022. It should be noted that the overall figure was brought down by a drop in project expansions, with new FDI projects in biotech actually rising by 32%.

Biotech FDI rose in 2021

When it comes to greenfield biotech FDI, our FDI Projects Database shows that there were 136 projects in biotech in 2021, up from 118 the year before. This represents a steady rise in FDI projects since 2019 when 94 projects were recorded, demonstrating strong overall growth of 44.7% across the three-year period.

In 2021, more than one-third (32%) of biotech FDI projects were new investments, compared with a 17.1% drop in expansions of existing facilities, which brought the overall growth rate in 2021 down to 15.3%.

Where are the leading destinations for biotech FDI?

Asia-Pacific was the region which led the growth when it came to attracting FDI projects in biotech in 2021, with a rise of 190.9%. While most other regions returned to pre-Covid project numbers, Asia-Pacific saw significant growth on its 13 projects in 2019, to 32 projects in 2021.

Despite Asia-Pacific showing the greatest growth in FDI biotech projects in 2021, western Europe was the lead region in terms of numbers of projects, attracting 54 in 2021, up from 51 in 2020 and 42 in 2019.

Western Europe was followed by North America, which ranked second, and Asia Pacific, which ranked third, when it came to attracting FDI projects in biotech in 2021. All other region’s projects numbers were small in comparison. The three leading regions saw a marked improvement to pre-Covid levels rather than just regaining ground, as was the case with many business sectors in 2021.

The US attracted 36 FDI biotech projects in 2021 – the highest of any other country and three times more than the UK in second, which brought in 12. China ranked third with ten FDI projects, Germany and the Netherlands ranked a joint fourth with eight projects apiece and France, Canada, Ireland and Singapore were next with six projects each.

What are the top biotech FDI operations?

Manufacturing replaced research and development (R&D) as the lead FDI operation in biotech in 2021. A total of 45 projects were created with a manufacturing function, up from 42 in 2020 and 25 in 2019. This increase may be explained by the global effort to provide the world with Covid-19 testing equipment and vaccinations.

In fact, this is borne out when looking at FDI in biotech subsectors, which shows that projects in DNA/RNA increased by 100% between 2019 and 2021, and by 425% in diagnostics for the same period. mRNA vaccines by US companies Moderna, BioNTech and Pfizer were instrumental in addressing the Covid-19 crisis and saw strong levels of investment throughout 2021.

R&D and sales, administration and marketing ranked a respective second and third in 2021, with 41 and 37 projects.

What are the top subsectors for biotech FDI?

DNA/RNA remained the top subsector for biotech FDI from 2019 to 2021. Focus on this new technology was already under way in 2019 before the pandemic hit and continued throughout the following two years. Of all biotech FDI subsectors, diagnostics has seen the most significant growth in projects, rising from just four in 2019 to 21 in 2021.

In August 2021, Massachusetts-based Moderna, which specialises in the development of mRNA therapeutics and vaccines, announced it would open a new mRNA vaccine factory in Canada. In December the same year, Moderna announced an agreement in principle with the Australian government to establish an mRNA vaccine production facility in the state of Victoria.

Where are the leading biotech investors located?

Our analysis shows that the US remained the leading source market for outbound biotech FDI projects in 2021. US investment in 2021 increased significantly from the year before with a percentage increase of 86.2%. Japan, the UK, Germany and Switzerland remained the next leading source markets, with little change in rankings.

What does the future hold for FDI in biotech?

Overall, FDI in biotech has not only remained steady while other sectors suffered the economic ravages of the pandemic, but the sector built on its past FDI success. As the world continues to focus on addressing global health issues, specifically pandemic related, biotech FDI is likely to continue to increase in a counter trend to most other sectors, which may see investment levels fall again in 2022. The global economy faces multiple challenges from Russia’s invasion of Ukraine, a global cost-of-living crisis, supply chain disruptions and slow economic growth which will have a knock-on effect on global FDI. Biotech FDI appears to be the exception.

Click to download the full Global FDI Annual Report 2022.

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