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

xarmin@BioJapan.de

http://www.biojapan.de

Introduction

• Geography

• Time Line

• US vs. Europe

• Europe: Country Overview

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?

Source: Ernst & Young 200 １

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

Policies: Germany

• Biotech Clustering

• BioRegio Competition

• Follow-Up Initiatives

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

http://www.biojapan.de

• Missing Link: Japan – Europe

• English information on Japanese Biotech: New Abstract Database

•Target: European Biotech executives

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