Sifted - DUDE, where's my drugs?

Good morning there,

The last time you went to the pharmacy to pick up prescription drugs, the chances are they weren't made in Europe.

The region only produces 25% of its own drugs — with the manufacture of chemicals for most medicine outsourced to countries like India and China. Berlin-based DUDE CHEM, a sustainable chemicals startup, is trying to change that. Scroll on for how. 

Elsewhere today, electric vehicle maker Arrival has filed for administration in the UK, there's a €40m raise for plant-based meat and the most cutting-edge AI systems developed in the UK may be subject to “binding” requirements over safety.

— Kai Nicol-Schwarz, reporter

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DUDE, where's my drugs?

Governments in Europe are starting to take tech seriously. Giving a leg up to European tech on European soil is part of an energised focus on tech sovereignty, as we’ve often lagged behind the likes of the US and China when it comes to creating and holding onto groundbreaking technologies.

Policymakers don’t want a repeat of that, and see carving out a foothold in areas like AI, quantum and semiconductors as key to the region achieving its wider strategic goals. 

One area that’s maybe received less focus is medicine production, though there’s recently been an EU-wide attempt to revive its pharmaceutical manufacturing industry. The use of prescription drugs might be prevalent on the continent, but we don’t make many of them ourselves; 75% of Europe’s generic drugs — those which have expired patents and can be copied, like paracetamol — are produced overseas. 

“In a world with increasing tensions and the enormous strategic importance of medicines, there has to be reshoring,” Diederik Stadig, economist at ING, tells Sifted.

“We need to make sure that we have a certain level of independence in critical areas,” adds Sonja Jost, founder of Berlin-based green chemicals startup DUDE CHEM, which is trying to bring production back to Europe. “We don’t currently have that in health.”

DUDE CHEM has just raised €6.5m from investors including Vorwerk Ventures and b2ventures to tackle that. The startup supplies sustainably-produced chemicals to the pharmaceutical industry, but doesn’t produce the chemicals itself. Instead it commissions manufacturers to make them using a patented process it has developed in-house; it’s able to work with European manufacturers to drive lower production prices, Jost says.

One of its patents is for an innovation that removes the need for using oil in part of the production process, replacing it with water, while another takes the use of a metal catalyst out of the equation. Jost says the startup's IP can be used to produce roughly 70-80% of the molecules used by pharmaceutical companies. 

It’s a good example of how advances in new tech could help solve decades long problems in old sectors like industrial manufacturing. Using a combination of machine learning, AI models and quantum chemical simulations, the startup has developed chemical manufacturing processes that cost around 30% less than traditional methods, according to Jost.

“At a time when the industrial base of Europe is under enormous cost pressure, science-based innovation has an outsized role to play in ensuring a competitive advantage, especially in traditional areas of production,” says Anna Bosch, principal at b2venture. 

So while we might be some way off local pharmacies being stocked with medicines manufactured down the road, the sort of science being worked on by startups like DUDE CHEM could one day make that a reality.

What do you think? Which other startups in Europe are focused on reshoring? Who are the scientist founders we need to know about? Let me know.

— Tom Nugent, newsletter editor

🍔 Heura Foods raises €40m Series B for its additive-free plant-based meat. The Spanish startup offers a range of plant-based meat alternatives that are sold in 20 countries, including Portugal, Spain and the UK. It says it has developed a patent-pending way of texturising plant-based matter so it looks and feels more like meat without using artificial additives. 

• The round was led by Upfield, one of the world’s largest plant-based food manufacturers and the brand behind dairy-free margarine product Flora. Heura Foods will use the partnership to develop its next product: plant-based cheese. 
• Other investors included Unovis Asset Management, European Circular Bioeconomy Fund and Newtree Impact. 

🇬🇧 The most cutting-edge AI systems could be subject to “binding requirements” to ensure they’re “accountable for making these technologies sufficiently safe,” the UK government said on Tuesday. But it’s still postponing any plans to legislate on the issue.

• The UK wants to plough ahead with its approach of tasking existing regulators in various sectors — from telecoms to healthcare and finance — with overseeing the rollout of AI in their own areas. It will spend £10m to upskill regulators on the risks of AI, and £90m on nine new AI safety research hubs. 
• Emad Mostaque, CEO of British AI unicorn Stability AI, one of a handful of UK companies that could be subject to the binding requirements, didn’t specifically comment on their potential imposition, but welcomed the government’s funding for upskilling regulators. Marc Warner, CEO and cofounder of Faculty, said it was “reassuring to see the government strike a careful balance between promoting innovation and managing risks.”

🚙 Electric vehicle maker Arrival has filed for administration in the UK. The embattled company once held a $13bn valuation, but had reported financial difficulties at the end of 2022. Its collapse comes months after Swedish e-van maker Volta Trucks also filed for bankruptcy.

👩‍⚖️ Back in 2020, Sifted reported on how Klarna was being taken to court in the US by the brother of deceased Colombian drug lord Pablo Escobar and Kalashnikov-wielding Swedish executive Olof Gustafsson. Escobar Inc — set up by Roberto Escobar to oversee the rights to the family name and run by Gustafsson — claimed that Klarna was unfairly withholding €400k in cash owed to them for a thousand flashy Escobar branded mobiles phones sold via the fintech’s platform.

• Four years later, Gustafsson is facing legal troubles of his own. The CEO of Escobar Inc is now in custody for fraud, having failed to deliver 500–600 of those gold-plated mobile phones it sold, some of them through Klarna.

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🇸🇪 Sifted's Nordics correspondent Mimi Billing will be at GoWest in Gothenburg today and tomorrow. Drop her a note if you're going to be there and want to grab a coffee.

💰 On February 13, we’ll be hosting our first Intelligence conference call, digging into exit horizons for 2024 — exclusively for Pro subscribers. We’ll share our analysis of the M&A climate and then open the floor, so you can debate the current state of M&A and share your insights. RSVP.

🔥 On February 27, we’ll be showcasing five of the leading European early-stage fintech startups currently fundraising at our Pitch event, exclusively for Pro subscribers. RSVP.

💸 On March 13, Amy Lewin will bring together a panel of experts to discuss what's in store for M&A activity and how startups can prepare. RSVP.

Zagreb-based Project 3 Mobility, which is developing its own autonomous vehicle, infrastructure and mobility service, raised €100m in Series A funding from investors including TASARU Mobility Investments, Kia and Rimac Group.

Tallinn-based Tuum, a core banking platform, raised €25m in Series B funding. CommerzVentures led the round and was joined by Speedinvest.

London-based Colossyan, which is an AI-text-to-video startup for workplace training, raised $22m in funding. Lakestar led the round and was joined by investors including Launchub, Day One Capital and Emerge Education.

Wrocław, Poland-based SALEOR, which is an open-source e-commerce platform, raised $8m in seed extension funding. Target Global and Zalando led the round and were joined by investors including Cherry Ventures and TQ Ventures.

Glasgow, Scotland-based Synaptec, which has developed instruments to monitor and protect electrical power networks, reducing downtime and operating costs, raised £6.5m in funding from investors including Megger Group, Proserv and Equity Gap.

London-based AudioStack, an end-to-end platform for automated and scalable AI audio production, raised €2.9m in funding. Quadri Ventures led the round.

Copenhagen-based Pluto.markets, which is an investment app for consumers, raised $2.6m in funding. Magnetic led the round and was joined by investors including Y Combinator and Nordic Makers.

Milan-based Voidless, an AI-driven on demand packaging startup, raised €2.2m in seed funding. CDP Venture Capital and 360 Capital led the round.

London-based Unfabled, a women’s health platform that matches users to products based on their hormonal and health priorities, raised $1.6m in seed funding from investors including Morgan Stanley, Exceptional Ventures, Atomico Angels, Founders Factory, Chai Ventures, SyndicateRoom and 3 Sisters Ventures.

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