Swiss biotech firms are steadily outperforming their European neighbours in the rapidly growing sector, according to a new report.This content was published on April 1, 2005 - 15:30
Publication of the Swiss Biotech Report 2005 comes as a major biotech multinational, Amgen, considers building a new production centre at Galmiz in western Switzerland.
Amgen’s plans have sparked outrage among environmentalists who are incensed that former farming land might be used for such a centre. But local government is keen to attract the firm, and the estimated 1,200 jobs that would come with it.
The 2005 biotech report would seem to support the view that Switzerland is the place for companies like Amgen, which already has its European headquarters in Lucerne. Ireland and Singapore are also thought be in the running to host the new centre.
The report shows that, as well as being an increasingly attractive location for foreign companies, Switzerland boasts the highest density of biotech firms in the world.
And it concludes that the rapidly growing Swiss industry will continue to expand its leading position in Europe.
"The biotech industry is no longer an exotic by-product of the Swiss economy; it is an industrial sector that should be taken seriously," said the report’s co-author Jürg Zürcher, industry leader for health sciences at Ernst & Young, at a news conference this week.
The authors say there are many reasons why a company such as Amgen might opt for Switzerland, not least because it lies at the heart of one of the world’s leading biotechnology regions, which also embraces neighbouring areas of France, Germany and Italy.
Aymo Brunetti, head of the economic policy directorate of the State Secretariat for Economic Affairs (Seco), said tax rates – or tax breaks – might be a consideration when all other factors were equal.
However, he told swissinfo: "Companies do not locate in Switzerland or elsewhere for tax reasons alone.
"The general framework conditions are what count, although it is difficult to put them in a precise order."
Speaking at the news conference, Brunetti said: "As an industry that creates a high degree of added value, the biotech sector is an engine of growth and a boost to the stagnating Swiss economy.
"Switzerland offers an ideal environment for biotech companies on account of excellent university research, highly qualified staff, a flexible employment market, strong networking between research and industry, and favourable tax conditions."
As of the end of last year, Switzerland had 133 "pure" biotech firms and a further 90 supply companies. Roughly one third of the "core" companies were founded since 1995.
The country ranks sixth in Europe and ninth worldwide, giving it the highest density of biotech firms in the world per head of population.
Swiss biotech also ranks second in Europe in terms of revenue – an estimated total of almost SFr5.5 billion in 2004 – and market capitalisation.
On the employment front, the Swiss industry employed more than 13,500 people at the end of 2004 – a year-on-year increase of 5.3 per cent.
And the figures above do not take into account the biotech departments of large pharma groups or agribusinesses such as Novartis, Roche and Syngenta.
In addition to Amgen, several other international biotech and chemical companies – for instance Biotech Idec – have moved their European biotech head offices to Switzerland.
The Swiss stock exchange (SWX), which boasts the largest overall health care sector in Europe by market capitalisation, is also attracting more and more foreign companies.
One reason for that is the international renown of the major Swiss players, in particular Serono, Actelion, Berna Biotech and Basilea.
Switzerland also comes third in Europe in terms of venture capital investments in the sector – SFr194 million in 2004.
However, Zürcher said many Swiss start-up companies are "still waiting for their big breakthrough". Despite the overall growth trend, the sector is currently in the grip of a wave of consolidation, with investor "risk tolerance" showing a clear downward trend.
Zürcher said the trend was likely to continue through 2005, with start-ups in particular fighting to survive – especially those that "over-focus" on a single product, technology or service.
However, he added that the quality of the Swiss industry was still largely superior to that of neighbouring France and Germany, where large government subsidies had often resulted in a "sluggish and inflexible approach".
One area where Swiss companies have particular growth potential is in the so-called "green" and "grey" sub-sectors (agro/nutrition and environment/industry respectively).
Some 85 per cent of existing firms are active in the "red" sub-sector (human and animal health).
Another major Swiss asset is the professional approach to technology transfers between colleges, industry and associated networks, often involving alliances between biotech companies and firms such as Roche, Novartis and Syngenta.
Both sides benefit from such deals – large life sciences companies can strengthen their product pipelines, while biotech firms gain access to additional research know-how and global distribution networks.
swissinfo, Chris Lewis in Zurich
The second Swiss Biotech Report was jointly edited by Ernst & Young, the SWX Group, Seco, innovation promotion agency KTI/CTI and Swiss Biotech.
The majority of Swiss biotech companies are located in the Lake Geneva, Basel and Zurich areas.
In international terms, Switzerland lies at the heart of one of the world’s leading biotechnology regions.
Switzerland is leading Europe in biotech, which promises to become a major growth engine for the national economy.
As well as providing an attractive location for foreign firms, Switzerland boasts the highest density of biotech companies worldwide.
Despite industry consolidation, the authors are optimistic for the Swiss sector’s future.
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