The FSAP includes a new Transparency Directive that, if passed in 2004, would force companies listed on European exchanges to issue financial reports on a quarterly basis. By increasing transparency in financial reporting, the directive aims to boost a company's visibility to cross-border investors and thus increase the liquidity of a company's shares. But “it is to be questioned if quality of accounting and increase of transparency is sufficient to enhance cross- border investments,” says Peter Heinrich, CEO of oncology company Medigen (Martinsried, Germany) and president of the industry group European Emerging Biopharmaceutical Enterprises (Brussels).
Indeed, in spite of the EC's harmonization efforts, investors could still remain focused on home markets. “Homogeneous rules [across Europe] can only help but I doubt it is going to be enough. All markets are very 'local,'” says Philippe Archinard, CEO of therapeutics and diagnostics company Innogenetics (Ghent, Belgium). Archinard says he experienced the homebound nature of investors in Europe when Innogenetics listed on Euronext (Brussels), which is a joint exchange among Brussels, Amsterdam and Paris; the company's shares have attracted little interest from investors outside Belgium because of low trading volume and inherent low visibility, says Archinard.
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