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image European Research News Centre > Pure Science > A wealth of start-ups
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image image image Date published: 07/11/02
  image A wealth of start-ups
RTD info 35
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  The number of biotechnology companies in the EU more than doubled between 1997 and 2001. Today, 1 879 companies employ 87 182 workers. This record growth – the highest in the world during this period – reflects Europe's new biotech dynamic having been left standing by the Americans for a long time.
   
     
   

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 revenue.

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 Ktt 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 Pot. 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 Pot. '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 Ktt.

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Cereals of the future

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.

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All purpose enzymes

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.

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Medicon Valley

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.

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To find out more:

BioM AG

Genopoles network

Manchester Bioscience Incubator

The Rhine Biovalley

One of the Cellectis laboratories. This newly created biotechnology company is part of the Pasteur Bio Tope business incubator, set up in December 2000. (c) Institut Pasteur

One of the Cellectis laboratories. This newly created biotechnology company is part of the Pasteur Bio Tope business incubator, set up in December 2000.
(c) Institut Pasteur

 


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