It is happening all over Europe. While it was
UK start-ups which led the field until the mid-1990s – with one-quarter of the
firms and one-third of the capitalisation – today's European biotech landscape
is multipolar. Germany, the United Kingdom, France, Scandinavia, the Netherlands
and Belgium each have more than 150 biotechnology companies.
Biotech and high tech
This 'biotech boom' has brought with it some major qualitative changes. Until
the mid-1990s, the term biotechnology was applied to all companies working on
living organisms, as distinct from the traditional pharmaceutical and chemical
sector. Progress in research and technological transfer have now blurred that
distinction. In addition to the 'traditional' specialities (such as enzyme production
through bacterial fermentation) there are now new activities requiring advanced
research and high-tech tools, such as genome research for therapeutic purposes.
Mirroring the trend in the information and communication technologies, this changed
life science landscape, characterised by a wealth of high-tech start-ups, has
radically altered the relationship between SMEs and major companies, in this case
pharmaceutical, agricultural and chemical. The latter were the pioneers until
the 1980s, developing biotechnologies within their own research departments. But
the dynamism of the biotechnology SMEs – often provided by the cream of academic
researchers – has convinced the 'giants' to pursue another strategy and to set
up partnerships and networks with the most creative SMEs.
These partnerships are clearly mutually beneficial: the start-up gains access
to research funds and the large company acquires new technologies which it does
not have the means to develop itself. Will this trend ultimately lead biotech
start-ups to opt for independence and to start competing with the large groups?
Or, once the genetic revolution is over, will we see the big groups buying out
the outsiders, the dynamics of the start-ups being a temporary though highly efficient
form of research?
The Union: new aid
Whichever proves to be the case, following the very strong growth over the past
five years in Europe, consolidation is now needed. In terms of start-up numbers,
the gap opened up by the United States may have closed, but the companies are
too new to create revenue which is in any way comparable with the sums being generated
across the Atlantic: €9.87 billion in Europe compared with €13.73 billion in the
United States. The sector is struggling to achieve economic stability due to the
scale of the initial investments in research. In 2001, total losses recorded for
the sector in Europe amounted to €1.52 billion. Meanwhile, new products developed
by US companies are now winning market shares which are earning them considerable
To support European genome research and its applications in the field of health,
under the Sixth Framework Programme 2002-2006, a budget of €1.1 billion will be
allocated mainly to aid integrated projects and to set up networks of excellence.
Of this, 15% – or €165 million – will be devoted to specific aid for SMEs.
Consolidation also involves strengthening links between the individual biotechnology
companies, in particular through partnerships or mergers between firms developing
complementary technologies. 'A working group is being set up which will bring
together the European Investment Bank and venture capitalists,' confirms Waldemar
Kütt of the Research Directorate-General. 'This will look at new financing models
to consolidate the growth of Europe's biotech industry in the longer term.'
The virtuous circle of the 'biovalleys'
Any moves to strengthen European biotechnologies must also study the circumstances
which gave rise to their creation in the first place. 'Clearly the vast majority
of European start-ups originated in a local context in the immediate vicinity
of research centres. In many regions this was encouraged by a committed policy
to create biovalleys,' explains Phlippe de Taxis du Poët. Biovalleys are a geographical
concentration of high-tech companies around a local project for economic development,
such as the BioM AG Munich Biotech development in Germany, the Manchester Bioscience
Incubator in the United Kingdom, the Evry genopole in France, or the Biovalley
– which has registered its name as a trademark – straddling the three countries
of the Rhine Valley (Germany, France, Switzerland).
Why have companies concentrated in these areas? 'Because they not only find scientific
excellence but also a stimulating environment offering them the means to evaluate
the commercial potential of an idea or a technology, to conduct a market analysis,
to create a managerial team and to seek finance, in particular start-up capital.
These are all necessary to launch a business,' continues Philippe de Taxis du
Poët. 'The biovalleys are therefore attracting innovative companies which in turn
make the environment even more attractive, creating a virtuous circle which strengthens
the link between the ability to discover and the ability to find commercial applications.'
It is a model which has proved its worth. It must now be disseminated and improved
by networking and more generally facilitating exchanges of experience between
biovalleys. 'The instruments of the new Framework Programme are open to any proposal
to this effect,' confirms Waldemar Kütt.
It was in Ghent, Belgium, that in the early 1980s Marc Van Montagu's pioneering team developed their first transgenic plants. The city has retained its agri-biotech tradition and is now home to Crop Design, one of the most important European start-ups in this sector. With its roots in the Flemish Inter-University Institute for Biotechnology, and founded in 1998, the company now employs more than 70 persons in its 1 400 m2 of laboratory space. It has also managed to raise €30 million in a two-stage capital increase.
So how did Crop Design manage to convince the venture capitalists? By pressing home the environmental benefits of the new generation of GMOs on which it is currently working, obtained by modifying the gene expression within the plant rather than by adding new genes. Under the Nonema European programme – on which nine academic laboratories are cooperating – Crop Design is also carrying out research on the auto-stimulation of plant defence systems against nematodes.
These worms attack the plant roots causing damage to crops estimated at €80 billion a year worldwide. The only available means of combating them at present is with chemicals which are not biodegradable and thus build up in the environment. An interesting alternative would be to stimulate the expression of certain nematode-resistant genes in the roots only, and then only in the event of attack by this parasite.
The Traitmill technology developed by Crop Design, which makes it possible to predict the effect of various genetic modifications on the development and agronomic qualities of the plant, is the design tool of the 'greener' generation of GMOs of tomorrow.
Enzymes – proteins which act as a catalyst for chemical reactions by binding specifically to one or more molecules – are very much the 'all-purpose' tool. They are found in pathogen detection kits, the paper industry and biosensors, for example. The difficulty lies in purifying them while at the same time preserving their biological activity. This is the principal activity of the British company Applied Enzyme Technology (AET) based in Pontypool in South Wales. Its chemists, biologists and physicists are all dedicated to the same goal: to control the enzyme's molecular environment so as to stabilise it while retaining its catalytic properties. The approach has already been applied successfully to more than 50 proteins, in particular as part of the European Diamonds (Directly Interfaced And Micro Or Nanostructured Detection Systems) project which the AET coordinated between 1997 and 2000. As this established the feasibility of the nano-technological approach, the next step is to develop applications. AET has thus joined the Safeguard (Sensor Arrays For Environmental, Generic And Routine Detection of Pesticides), project which is seeking to use immobilised enzymes as ultrasensitive sensors to detect pollutants.
The densest concentration of biotechnology companies
is found in the northern EU countries, between the Copenhagen (DK) area and Skania
in Sweden. This Medicon Valley has 26 hospitals and 12 universities with 4 000
researchers and 135 000 students. It combines academic excellence with economic
success, providing 30 000 jobs in more than 160 biotechnology companies, some
of which, such as Denmark's Neurosearch – devoted to the quest for medicines to
treat complaints of the central nervous system – have become genuine pharmaceutical
'strongholds'. The secret of such success clearly lies in the concentration in
the same area of scientific excellence, a high-tech industrial fabric, a highly
skilled workforce and a coherent strategy of government aid. But most important
of all is the commitment to cross-border co-operation.
It all started at the end of the 1980s at a time when southern Sweden was being
hit hard by the closure of its shipyards and textile mills. The Ideon Science
Park opened alongside the University of Lund campus, its founders taking their
inspiration from the US model of research centres and companies in close proximity,
as in Silicon valley. At the same time, across the Øresund Straits, Danish
researchers returned from a trip to the United States and founded the Medicon
Valley Academy, a binational non-profit-making institution charged with the coordinated
development of the dual site. Today the Medicon valley is attracting US companies,
and Biogen of Cambridge, Massachusetts plans to set up its first European plant
there – with the prospect of €350 million in investments and the hire of
400 employees by 2005.