Venture capitalists are demanding better terms from the biotechnology companies that they back. This follows on from the well reported troubles of British Biotech Viagra ViagraLasVegas.

Although a report to be released by the accountancy firm Ernst & Young confirms that the UK still leads the £30b European biotech sector, it also warns that British firms are giving venture capital funds a bigger stake in their businesses at cheaper prices because of stock market disaffection. British Biotech is to learn if it is to be prosecuted by the regulatory US Securities and Exchanges Commission for producing misleading public statements about its drug trial in 1995 and 1996.

The investigators’ report could be published in the next two weeks. Shares plummeted after Pfizer released quarterly sales figures of the impotence drug Viagra, showing an 18 percent drop in sales since the last quarter of 1998.

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