Index Ventures, an early investor in technology hits like Skype and Dropbox, is spinning off its biotech portfolio into a new $1 billion business, with backing from drug giants GlaxoSmith-Kline and Johnson & Johnson.

The new Medicxi Ventures business will be led by the existing life sciences team from Index Ventures and includes all the current biotech portfolio companies.

Medicxi said yesterday it had raised $229 million for a new fund focused on early-stage life sciences investments in Europe, with GSK and J&J each contributing 25 per cent.

That takes funds under management at Medicxi to around $1 billion, making it one of the largest independent European life sciences-focused investment firms.

“We are doubling down on life sciences and early-stage investments across Europe,” said general partner Francesco De Rubertis, who expects 80 to 90 per cent of Medicxi investments to be in Europe.

Although Europe plays second fiddle to the US when it comes to developing successful biotech companies, the continent’s universities carry out much of the cutting-edge science behind new medicines.

“Every year, around 30 to 40 per cent of the drugs approved by the US Food and Drug Administration were actually discovered in European academic labs,” De Rubertis said.

The new financing marks a further vote of confidence by GSK and J&J in Index’s so-called asset-centric approach to biotech investing. Both pharmaceutical companies first linked with Index in a European biotech fund round in 2012.

In contrast to the traditional idea of building fully integrated new businesses, Index invests in “virtual” companies with a single experimental medicine and minimal infrastructure.

Last year, for example, it sold XO1, a British firm working on an early-stage anti-blood clotting drug with just two employees.

That approach is increasingly at odds with the conventional tech approach to building a company.