Biotech industry continues to grow

Biotech firms seem to have found the recipe to attract investors Keystone

The Swiss biotechnology sector is becoming more and more important, as research spending and sales continue to grow, according to a new report.

The attraction of Switzerland as biotech centre is also reflected by stock values in the sector, which outperformed the market average.

The third edition of the “Swiss Biotech Report”, published by audit firm Ernst & Young, highlights that the sector has now gained a firm footing in Switzerland.

“The biotech industry in Switzerland today has become established and is launching key initiatives aimed at the coordination of research and training,” said the head of the Swiss Biotech Association, Domenico Alexakis.

The report claims that Switzerland has the highest “biotech density” per capita in the world, with 229 companies – including 12 new ones – working in the sector and 14,000 employees. Around 200 of those firms have fewer than 50 employees.

The workforce increased by 6.4 per cent in 2005, while sales jumped from SFr5.47 billion ($4.19 billion) to SFr5.96 billion. Investment in research and development was also on the rise, up 10.4 per cent over 2004 and reaching SFr1.53 billion.

The year ended however in a loss for the biotech sector, due to the $725 million (SFr946 million) fine imposed on Geneva-based Serono by a United States court. Without the fine, profits would have been similar to those recorded in 2004, around SFr679 million.

Shares

Stock market performance has been good for biotech companies recently. Their combined capitalisation at the SWX Swiss Exchange totalled €5.9 billion (SFr9.33 billion) at mid-March.

According to the report, biotech share value gained 38 per cent on the market in 2005, exceeding the bourse’s Swiss Performance Index.

It adds that market sentiment towards the sector is extremely friendly, as reflected by the numerous initial public offerings and increases in equity capital. The attention given to listed biotech firms by investors is also mirrored by the interest shown by analysts and the media.

For the report’s authors, it is not surprising then that investments in biotechnology companies are attractive to stock market players and private equity companies.

Government support has also played a role in building up the sector. The Swiss Innovation Promotion Agency spent SFr7.1 million on biotech last year, with industry handing over another SFr10.8 million for various projects.

swissinfo

In brief

Switzerland is ranked sixth in Europe and tenth worldwide since 1998 in terms of the number of biotech companies on its soil.

Almost half of all Swiss biotech companies were founded before 1995.

Geographically the majority of these companies are located on Lake Geneva or around Basel and Zurich.

All three areas benefit from the proximity of universities and biotech incubators.

Key facts

Switzerland now has 229 biotech companies.
Nine companies rank amongst the globally active “players.”
Around 200 other companies have fewer than 50 employees.
88% of the companies are engaged in “red” biotechnology (human and animal medicine).
8% in the area of environmental protection and industry.
6% in the agricultural and feedstuffs sector.