Biotechnology in EuropeAn Overview and Examples, focusing on Germany
Stock Market
Policies
Technology Transfer
Incubation and Seed Finance
Society for Management of Intellectual Property
Tokyo University RCAST
Jan. 26, 2002
Armin Rump
http://www.biojapan.de
Time LinePre- and post-war:
Strong chemical industry and scientific research: IG Farben, Bayer1970s, 80s:
Development of recombinant DNA technology and emergence of biotechnology enterprises in the USA (Key: Stanford University)Genentech (1978) – Amgen – HGS – etc.
1980s: first European Biotech Firms:Celltech-Chiroscience – GB Serono – SwitzerlandQuiagen – Germany Pharmacia – Sweden
1995: BioRegio competition, GermanyEU Integraton:
Common Market (Maastricht Treaty): 1991Common Currency: 1.1.2000/1.1.2002European Patent: 1970Community Patent: July 2002?
Biotech companies in Europe
Source: Ernst & Young 2000
050 100 150 200 250
Italy
Denmark
Finland
Netherlands
Switzerland
Sweden
France
UK
Germany
Ireland
Norway
Spain
other
Belgium
300 350
small (1- 49 employees)medium-sized (50 bis 149 emloyees)large (>150 employees)
Start up (younger than 2 years)
Size of European Biotech Companies (number of employees)
EU: Companies per country
ELISCOSEntrepreneurial LIfe Science COmpnanieS
10
10
7
3
22 1
UKGermanyScand i n av i aIsraelItalySwitzerlan dIceland
European IPOs in 2000
Sources:Ernst & YoungBioCenturyGoing Public
Average capital raised per IPOGermany 66 mio. EuroUSA 106 mio. EuroAustralia 6 mio. Euro
Compare:USA, 2000 64Japan, 2000 0France, 2000 0Germany, 2001 1
Company Examples: German “Top 5”
Company Started in at Business Field Sale s 20 0 0Quiagen 1984 Hild e nDNA isolation, genomics 226.7Rhein Biotech 1985 Duesseldorf Protein synthesis, process eng., vaccines (Green Cross) 60.4Evotech OAI 1993 Hamburg High- throughput screening and synthesis 28.3Medigene 1994 Munich (MPI Biochemistry)Cardiac/ cancer drugs, gene therapy 6LION Bioscience 1997 Heidelberg (EBI, DKFZ) Bioinformatics, target identification, drug development 23.3Sales: 2000, mio. EuroSource: Going Public Magazine, 9/ 2001
Biotech clusterMediaMedia
Local federalauthorities
Local federalauthorities
Information broker
Information broker
Marketing companiesMarketing companies
Universities,ResearchInstitutes
Universities,ResearchInstitutes
LawyersLawyers
Big pharmaBig pharma
Patent lawyersPatent lawyers
biotech agencies
(technology transfer)
biotech agencies
(technology transfer)
Venture capital
Venture capital
Start-ups,developing and established
companies
Start-ups,developing and established
companies
The Case for Bio-Clusters
The BioRegio Competition
• 1995Regions are to develop a strategy how to network researc
h institutes, industry and services in order to create biotech companies
• 19964 Winning regions (out of 17 applicants) are awarded 25
mio. Euros each over 5 years so that the proposed network infrastructure be implemented
• Focus on business incubation, consulting, management advice, sharing of information and recources
Winning Regions• Heidelberg
– DKFZ, MPI, University, Clinic, Bioinformatics– Leica
• Muenchen– MPI, University– Boehringer Ingelheim, Bio venture cluster
• Duesseldorf/Koeln– University, Clinic– Bayer
• Jena– University, Zeiss Optics
Academia
Chemicals
HiTech/IT
Precisionengineering
D: company count 1995-2000
0
50
100
150
200
250
300
350
19951996
19971998
19992000
Number of biotech companies (1995-2000)
Source: Ernst & Young
Germany`s Bio-boom - emerging start-ups as a result
German Biotech-Map
Distribution of biotech company sites in Germany
one dot could represent one or more companies
result: emergence of several clusters of biotech company sites
efficient?
D: Biotech-Map
Ernst & Young, 2000
Follow-Up Initiatives• Local Programs
– States and Cities start their own support schemes, install tax insentives and build incubators next to research facilities
• BioFuture– Grants to independent young scientists.
(32 grants, 40mio. Euros, over 5 years from 1998)
• BioChance– Funds pre-competitive research to help biotech companies establish themselves in the market. (100mio.
Euro over 5 years)
• BioProfile– Local profile: Regions propose a field of competence– Winners (16mio. Euros each over 5 years from 2001)
• Stuttgart: Regenerative Biology• Berlin: Nutrition-related diseases• Braunschweig/Hannover: Diagnostics
Technology Transfer
Patent Rules
Example: Institut Pasteur- Private Research Institute near Paris
- By contract, all inventions belong to institute
- “Business Development” department is second largest private technology transfer orgnaization in the world
- Under review (EU community patent July 2002)
- In principle, invention belongs to the investigator
Example: Research Institutes
National Research Institutes (in Germany, for example, Max-Planck, Fraunhofer, DKFZ, EMBL) have an associated technology licensing organization in the form of a limited libability company. By working contract, any research results must be shown to this TLO prior to publication. Patents will be filed at this point. The compensation of the inventor is regulated in federal law in Germany (“Arbeitnehmererfindergesetz”).
In some cases (EMBL), the TLOs of research institutes also operate “pre-seed funds” which help inventors start up companies, as well as incubation centers and advisory services.
Universities do not engage in technology transfer (University of Goettingen is taking first steps)
Example: Steinbeis
Foundation to supply university know-how to enterprises set up in Stuttgart/Germany, 1979. Today an independent and profitable company
• Network of “project leaders” (university professors)• only negligible staff• over 400 “transfer centers” worldwide
“Reverse” technology transfer: Projects from industry from simple information/consultancy to actual product development.
Note: 10% of research budget of German universities comes from industry (Japan: <2%)
LargePharma
Incubation and Seed Finance
City
State
build invest
LocalBank
credit
Startup
Company
$0.1mio. & $0.1mio.
NewOffice
Partnerships
2nd round$ 0.5mio.
3rd round $3mio.
IPO
Recovery
of investment
$50mio.
Incubation
Center
Angel Investor Venture Fund
Startup Example: Apalexo
Peter FreierM.Sc. Biotechnology, U. Stuttgart/MITPh.D. Establishment of biotech ventures, TU Munich INNOTEC
Munich Business Plan competition 1997/1998
Scientist team A Scientist team B
- Winning teams are not ready to start company- Several technologies complement each-other
- Combine Technologies, Reshuffle the team- Rewrite business plan, Start company (June 1999)
Leadership in company size of US biotech clusters
Source: BCG-Analysis
20
40
60
80
100
120
140
Siz
e o
f th
e co
mp
any
(nu
mb
er o
f em
plo
yees
)
0 50 100 150 200 250
Bay Area
Boston
Cambridge UK
Berlin / Brandenburg
MunichRhein-Neckar
Rheinland
North Carolina
SummaryStep 6 Migration of companies to cheap-labor countries
Step 5 Maturation: Increase in company size, consolidation
Step 4 Increase in company number
Step 3 Implement infrastructure: Incubation, VC, expert advice
Step 2 Develop national and regional strategy
Step 1 know-how: Education, academic research
J
D
F
UK
US
Sources / Material credits
• Frank Muehlenbeck, Steinbeis Biotech-Consult
• C. Herstatt/C. Mueller, Techn. Univ. Hamburg-Harburg, AB Technology Innovation Management
• Ernst & Young Life Science Report Europe, 2001