Presentation (CTI)

OBJECTIVES: To analyze how European pharmaceutical ecosystems can resolve the "European Paradox" (science rich, finance poor) and withstand the liquidity shock of US "Most Favored Nation" (MFN) pricing policies. Specifically, this research investigates the capital bifurcation phenomenon—where EU capital flees to the US while US capital targets European assets—and proposes Data-Enabled Business Model Innovation (BMI) as a mechanism for domestic value retention
METHODS: Adopting a Pragmatic Critical Realist ontology and the Entrepreneurial Ecosystem framework, this study conducts a comparative structural analysis of pharmaceutical sectors of the geoeconomic triangle US, EU, and China. We analyzed 10 years of institutional venture capital deal flows (Eikon data) to map cross-border investment behaviors.
RESULTS: Data reveals a striking "capital bifurcation". Of the 6.6 Bn USD total venture capital value (VCV) (n=144) invested over the past ten years, only 3.9% of the value was invested in the EU region. While China and the US invest respectively 96% and 71% of VCV in the domestic market, 62% of EU’s VCV flows to the US. Of the total VCV, 2.7 Bn USD (n=38) was provided by institutional investors, whom in China and the US dominantly invest in the domestic market, while in the EU region they invest less than 0.01% of VCV own market. This exacerbates the "Valley of Death," as European pension funds remain risk-averse (<0.1% allocation to VC). Meanwhile, US MFN policies threaten to compress the global revenue pools that sustain this cross-subsidized ecosystem.
CONCLUSIONS: The European ecosystem faces a dual threat: capital flight and value extraction by foreign investors. To survive, European firms must pivot to data-enabled BMI—specifically outcomes-based pricing enabled by federated learning. This shift is essential not only for clinical value but to anchor economic returns domestically, preventing the wholesale transfer of European scientific equity to US financial incumbents.