Europe’s Top 5 Biotech Hotspots
By John Carroll
For decades European countries have been among the most innovative on the planet when it comes to drug development. Scientists at stellar academic centers like the Karolinska Institute in Sweden and the Oxford/Cambridge university axis in the UK have produced some of the best thinking on new drugs the industry has seen. And clusters of developers in Switzerland, the UK and places like the Medicon Valley in northern Denmark and southern Sweden have spawned their share of start-ups. Germany has seen a whole generation of biotech companies launched with public assistance from the BioRegions it began to establish more than a decade ago.United Kingdom • Norway • Sweden • Germany • Czech Republic
Major pharma companies like GlaxoSmithKline, Roche, Sanofi-Aventis and Novartis, meanwhile, have nurtured top talent in their ranks, creating an intelligentsia of experienced managers and scientists skilled at recognizing the market value of new therapies.
But the financial tsunami that hit the global biotech industry at the end of last year has been particularly brutal in Europe. With fewer private VC groups lending money, the industry has been forced to fall back on either its own resources or new government programs designed to bolster their biopharma industries. And several European countries have been pushing new public-private ventures aimed at leveraging larger funds for developers.
“The UK, Denmark, Sweden, Germany, France and Spain have all been putting more effort into biotech,” says Jürg Zürcher, Ernst & Young’s biotechnology leader Europe. And for most, it’s still too early to tell exactly how effective they’ll be.
After years of discussion, the €2 billion Innovative Medicines Initiative has become a reality with a well-defined plan to help burnish the continent’s image as a center of drug discovery work. Members of the European Federation of Pharmaceutical Industries and Associations are committing €1 billion in resources to match the €1 billion in cash coming from the European Commission. Just last month the IMI entered a new stage of development with a €156 million call for research proposals.
This year, for the first time, FierceBiotech looked into the development scene solely in Europe to see which countries have hatched the best programs to support drug discovery and innovation. That doesn’t mean simply listing the largest clusters. Switzerland has had one of the best track records in Europe for developing a homegrown drug development industry, but it’s done it all with private capital and virtually no public support. Eastern European countries which have been late to the biotech party have the furthest to go to catch up. But in places like the Czech Republic and Hungary they’re pushing ahead quickly, anxious to leapfrog into the global mainstream. All of these project initiatives bear close observation in the U.S., where public support for biotech has been a prominent feature in a slate of key states.
Take a look at this year’s winners:
• United Kingdom
By the early part of this year, the UK’s bioentrepreneurial class was putting the country’s biotech industry on a virtual death watch. And the government responded to the dire pronouncements with a commitment to provide £150 million pounds to back technology-based businesses, with the life sciences designated as a prime field for investment. The leaders of the UK Innovation Investment Fund expect private venture groups to jump in, leveraging the public seed capital into a billion pound operation over the next 10 years.
Lawmakers in the UK have inspired the envy of a number of other countries in Europe with an R&D tax credit made available to biotech companies. But the country isn’t content with its already formidable research capacity. Four British hospitals and University College London have forged a £2 billion partnership that will create what’s being billed as the largest biomedical research group in Europe. And the British government has been encouraging other centers to join forces into new, high-powered discovery centers. These research centers will likely be fertile ground for a new generation of biotech start-ups.
For all the hype about government actions, it’s important to note that the UK is still providing only a fraction of the kind of financial support some of the most active states are offering in the U.S. Government efforts in the UK are designed to encourage private groups to stay in the game. It remains to be seen if that kind of support–especially when shared with a broad swathe of tech companies–can revive a suffering industry as large as the UK’s.
• Norway
At the beginning of this year, the Norwegian government decided it couldn’t sit back while the country’s biotech industry was slammed by the global recession.
In a $2.9 billion stimulus package prepared by the country’s lawmakers, $418 million was set aside for biotechnology companies. Innovation Norway tripled the amount of money that can be loaned to research-heavy companies, offering a £95 million lifeline to drug developers. And Argentum, a government fund, picked up $279 million to invest in biotech and IT companies.
“This is the most active political move in Europe regarding support to the biotech industry,” Bjarte Reve, chief executive of the Oslo Cancer Cluster, told reporters at the time.
“The funding comes through two main public facilitators,” says Ole Jørgen Marvik, PhD, sector head for health and life sciences for Innovation Norway in London. “The Research Council of Norway has funding for company-driven research. They can sponsor up to 50 percent of the cost for research. The other entity is Innovation Norway. We can hand out loans as well as grants for research and grants for some elements of business development. In addition, we have an equity fund, an early-stage life science fund Norway. There are also a number of smaller seed funds which are regional. These funds are all 50-50 public-private partnerships.”
Norway’s small but thriving development industry is largely focused on new cancer drugs, and has about 50 oncology programs in the clinic. The government money is expected to make a big difference in keeping those programs alive and well.
• Sweden
Sweden’s best biotech asset is its university brainpower. While the Medicon Valley to the south often gets the most attention as a high-profile biotech cluster, the Karolinska Institute and Uppsala University are home to some of the world’s top scientists. Great ideas, though, don’t easily translate into new companies. That takes money, and people with money typically like to avoid serious risk.
With that in mind, Uppsala BIO helped create the BIO-X program. Last summer, the group received 35 proposals that will be reviewed by their scientific advisory board. Selected proposals qualify for 1.5 million SEK for each of two years to help jump the gap that separates great thinking from a successful enterprise. Winning proposals will also get help with project management, IP support and help with industry contacts and expert advice.
“This is the first bridge over the first valley of death,” says Uppsala Bio’s Madeleine Neil. That X, she adds, stands for either the unknown or a crossroads, indicative of the cross-disciplinary approach they promote.
Uppsala BIO itself was a winner of the country’s initial competition five years ago to select regional initiatives aimed at spurring the growth of their life sciences industries. It combines representatives of Uppsala’s two universities, its biotech companies and the city of Uppsala.
The Swedish government has also been boosting the amount of resources available to its research scientists. And that money will help fuel more ideas for the country’s entrepreneurs to commercialize.
• Germany
Earlier this year, Sanofi-Aventis outlined some ambitious new plans for its operations in Germany. The pharma giant announced plans to invest €40 million in new facilities that could produce antibodies as well as substances with low molecular weight. At the same time, the country’s biotech industry boasted of its generally stable biotech employment–despite a rapid drop in the amount of investment capital available to the country’s developers.
Germany has been better positioned to take on the recession because of a decision more than a decade ago to offer substantial sums to support the development of its BioRegions. A high-tech founders’ fund was developed, which provides companies an initial seed venture capital investment of €500,000, says Kai Uwe Bindseil, director of the biotechnology initiative of the federal states of Berlin and Brandenburg, BioTOP. And four years ago Germany established a special initiative that offers 10 to 12 projects a year up to €5 million to get to the proof-of-concept stage.
But Binseil and other leaders of the country’s biotech industry are pushing for more.
“Further activity is necessary to support venture capital businesses,” says Bindseil, “which is quite difficult on the political level,” where the country’s financial leaders have been held to task for the downturn. “Further activities are also need in the interface of science and industry. We need to give scientists more money” to nurture new programs to proof of concept. The IMI, he adds, isn’t going to be enough.
The IMI “is a very, very important initiative in the long-term,” says Bindseil. “Short-term, it’s little money to develop an industry: One billion euros over an entire continent.”
• Czech Republic
A little more than a decade ago you would have been hard pressed to find any biotech companies in Eastern Europe. The economic and intellectual isolation that had come with decades of Soviet rule were anathema to biotechnology, which thrives in a hot house environment that includes science, venture investors and wide-ranging global commercial enterprises under one roof.
But a lot can happen in 10 years. Hungary, Poland and the Czech Republic have all helped foster fledgling life sciences industries. And the Czech Republic has proved a standout with its industry support and a talented group of English-speaking researchers who typically work for far less than their colleagues in Boston, London or L.A.
It takes more than a lot of low-cost talent to make a biotech industry, though, and Czech officials have been ambitious in coming up with new measures aimed at sparking a biotech revolution. There are tax breaks for investors, research subsidies and help with training.
Brno, which is home to a large number of the country’s 60 or so developers, has mapped out a half billion dollar plan to create a new biotech park at Masaryk University and is building a clinical research center to lure international projects its way. Three years ago Brno partnered with the Mayo Clinic in an effort to help the country earn an international reputation as a world-class research hub. And the International Clinical Research Centre is being built to compete with the top research hubs anywhere on planet earth.
“There aren’t many centers in the world that offer the combination of basic science to preclinical research to development of drugs, devices and technologies,” Dr. Tomas Kara, the center’s chief, recently told Reuters.
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