Spanish Biotechnology: Economic Impact, Trend and Perspectives

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ECONOMICPERSPECTIVESIN SPAIN

BIOTECHNOLOGYCULTURE IN SPAIN

MECHANISMS TOENCOURAGE PRIVATEPARTICIPATION INBIOTECHNOLOGY RDI:INTERNATIONALANALYSESAND COMPARISONS

POLICIESTO ENCOURAGETHE CREATIONAND CONSOLIDATIONOF BIOTECHNOLOGYCOMPANIES:INTERNATIONALANALYSESAND COMPARISONS

SCIENCE PARKBENCHMARKING

VENTURE CAPITALANDBIOTECHNOLOGY

BENCHMARKINGOF INNOVATION ANDBIOTECHNOLOGYSUPPORT POLICIES

PROGRAMMESAND ORGANISATIONSIN CHARGEOF TECHNOLOGICALTRANSFER ANDBIOTECHNOLOGYKNOWLEDGE:INTERNATIONALANALYSESAND COMPARISONS

STUDY ONBIOTECHNOLOGYIN THE SPANISHPUBLIC R&D SYSTEM.TECHNOLOGYTRANSFERAND BASIC ACTIVITYINDICATORS

Spanish Biotechnology:

Economic Impact, Trend and Perspectives

The main aims of this document are: firstly, to disseminate

the important role to be played by biotechnology in the improvement

of both the competitiveness of Spanish economy and healthcare

in our society and, secondly, to strategically contribute

to the establishment of a future public initiative, which will make

an appropriate development of this new technology in Spain possible.

SPANISH BIOTECHNOLOGY: ECONOMIC IMPACT, TREND AND PERSPECTIVES

Coordination and Writing:

Fernando Garcés Toledano, Javier Montero Plata and Miguel Vega García (GENOMA ESPAÑA)

Collaborators:

Armando Albert and Luis Plaza (Centre for Scientific Information and Documentation, CINDOC) -

Higher Council of Scientific Research, CSIC)

• STUDY ON BIOTECHNOLOGY IN THE SPANISH PUBLIC R&D SYSTEM

TECHNOLOGY TRANSFER AND BASIC ACTIVITY INDICATORS

Antonio Pulido, Julián Pérez, Milagros Dones, Juan José Méndez (Economic Forecasting Centre, CEPREDE)

and Javier Montero (GENOMA ESPAÑA)

• ECONOMIC PERSPECTIVES IN SPAIN

Miguel Ángel Quintanilla, Modesto Escobar and Marcelo Sabbatini (SALAMANCA UNIVERSITY)

and Mercedes Escribano (GENOMA ESPAÑA)

• BIOTECHNOLOGY CULTURE IN SPAIN

Nieves Sala and Lucía Reinoso (GENOMA ESPAÑA)

• VENTURE CAPITAL AND BIOTECHNOLOGY

Background Documents:

In addition to all the literature reviewed, the following people were asked to make contributions to other

important issues:

(Navarra University Business School, IESE) Joan Roure and Pere Condom

(BARCELONA SCIENCE PARK) Màrius Rubiralta and Montserrat Vendrell

• SCIENCE PARK BENCHMARKING

(INNOVATEC) Erika Sela and Joaquín Guinea

• PROGRAMMES AND ORGANISATIONS IN CHARGE OF TECHNOLOGICAL TRANSFER AND

BIOTECHNOLOGY KNOWLEDGE: INTERNATIONAL ANALYSES AND COMPARISONS

(CONSULTRANS) José Ignacio Cases, Carlos Contreras, Jorge Ramos, María Izaguirre,

Begoña Blanco and Virginia Hernando

• MECHANISMS TO ENCOURAGE PRIVATE PARTICIPATION IN BIOTECHNOLOGY RDI:

INTERNATIONAL ANALYSES AND COMPARISONS

(EUROPAINNOVA) Rosa Mª Druguet, Teresa Puerta and Sergi Aulinas

• POLICIES TO ENCOURAGE THE CREATION AND CONSOLIDATION OF BIOTECHNOLOGY COMPANIES:

INTERNATIONAL ANALYSES AND COMPARISONS

(IESE) Joan Roure and Pere Condom

• BENCHMARKING OF INNOVATION AND BIOTECHNOLOGY SUPPORT POLICIES

© Fundación Española para el Desarrollo

de la Investigación en Genómica

y Proteómica (Spanish Foundation

for the Development of Genomic

and Proteomic Research, Genoma España)

Editing: Silvia Enríquez Encinas (Genoma España)

Referencia: GEN-ES05005

Fecha: June 2005

Legal Depository: M-43419-2005

ISBN: 84-609-6395-0

Design and Production: Spainfo, S.A.

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• The major assets of Spanish biotechnology are highly qualified scientists and agrowing amount of public and private R&D investments. These two resourcesconstitute a solid pillar to develop a productive biotechnology sector in Spain. Inaddition, it is worth noting that Spanish public investment in Biotechnology isreaching the levels of other European countries’ public investment in relation topopulation and GDP.

• As far as biotechnology knowledge production is concerned, Spain is internationally competitive (4% of the world’s publications). The production of applications and technologies, however, is clearly unsatisfactory(0.16% of European patents granted).

• Public subsidies to Spanish biotechnology for R&D projects and infrastructure grewsignificantly (22.6%) during 2000-2004. Business investment in biotechnology R&Dfor the same period increased at an average rate of 32.3%.

• Spanish biotechnology is growing four times faster than the EU-15 average.However, its current relative size is half that of the EU-15 average, and around aquarter of the United States’.

• Capital venture investment in Spanish productive biotechnology is almost non-existent. Investors argue that there are no mature projects for them to support.

• At the current growth rates, Spanish biotechnology will reach European levels in 20years’ time, and will need over 30 years to catch up with the that of the US. Inreality, this is unlikely to happen.

• From the economic point of view, Spanish biotechnology represents 0.4% of Spain’sGDP. Its effects, however, spread to other sectors representing over 20% of thecountry’s GDP.

• The direct and indirect turnover and employment induced by Spanish biotechnologyin 2004 are estimated at around 4,000 million euros and 36,000 people,respectively.

• Assuming current annual growth rates, around 25% for R&D investments and 20%for direct employment, are maintained, economic forecasts suggest that in 2010Spanish biotechnology could have a direct, indirect and induced economic relevanceof 1.6% of GDP, affecting 100,000 employees. However, attaining these goals willrequire an adequate private and public investment policy and strategy.

Key Issues within the Document

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The European Union has recently relaunched its commitment to innovation throughthe Lisbon Strategy, whose goals are the allocation of 3% of GDP to R&D investmentand a business funding figure of 66%. Spain is still considerably behind in this matter,with only 1.05% of GDP being invested in R&D (approximately half the EU-15average) and business funding at just over 48% of total R&D investment. This makesit necessary to give a definite response to close the technology gap between Spainand Europe.

On 23rd June 2005, the President of the Spanish Government presented the INGENIO2010 initiative in line with the Lisbon Declaration and its reformist aims. This hasbecome an international point of reference of RDI policy support. The new initiative isan opportunity to reinforce the growth of emerging technology sectors such asbiotechnology, which, together with communication and information technologies,represents one of the most important commitments to technology made by the mostadvanced economies around us.

Knowledge relating to biology and technologies developed in support of it, inparticular biotechnology, is enabling us to achieve new levels of social well-being andeconomic competitiveness. The discoveries in this field are undoubtedly responsiblefor the current conceptions relating to food and medicine, and warrant newapplications in other branches of science in which we must be at the forefront.

The present report presented by the Genoma Foundation plays an important role insummarising and giving a systematic approach to the current situation and evolutionof the Spanish biotechnology sector, comprising everything from the role andcontribution of researchers to that of companies, including the financial aspects.Thanks to the report, we know that Spain has an excellent starting position inresearch fields, which are essential for taking advantage of the opportunities madepossible by biotechnology. However, only a small portion of the knowledge generatedis being turned into economic wealth by the business network.

Part of the problem may reside in the lack of sufficient technology transfer andpublic-private cooperation. This is one of the main concerns of INGENIO 2010, andspecifically of its CENIT programme, which will undoubtedly lead to a better use ofthe knowledge generated by us and to developing the biotechnology business sector.To help us achieve our goal, we have the Genoma Foundation's valuable contribution,of which this report is only a small (yet very significant) sample.

Mr. Miguel SebastiánDirector of the Presidential Economic Office

1. THE CONTEXT AND GLOBAL IMPACT OF BIOTECHNOLOGY 10

2. THE SITUATION OF BIOTECHNOLOGY IN SPAIN 16

3. INTERNATIONAL BIOTECHNOLOGY COMPARISONS 28

4. MACROECONOMIC RELEVANCE AND FORECASTS FOR THE FUTURE OF BIOTECHNOLOGY IN SPAIN 35

5. INTERNATIONAL MEASURES TO ENCOURAGE PRODUCTIVEBIOTECHNOLOGY 39

6. THE CHALLENGES OF BIOTECHNOLOGY IN SPAIN 49

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Throughout the history of mankind, society has gradually acquired significantknowledge and has tackled amazing challenges. All this has enabled considerableimprovement in the quality of life. Suffice it to say that we have doubled our lifeexpectancy in the last 100 years.

Some of the challenges overcome by civilisations, some of which were seriously traumatic experiences at the time, include, among others, poverty andepidemics, both of which still mercilessly affect what we commonly refer to as thedeveloping world (for more information, see The State of Food Security in the World2004-FAO1).

Humans in the biological processes of animal and plant life as we know haveundoubtedly helped overcome many challenges of the past. Thus, the domestication ofplant and animal species (genetic level alterations) as a result of the selection processstarted by man thousands of years ago was fundamental to the setting up of the firstsocieties, through the generation of a continuous supply of food, which is undoubtedlythe first pillar for the establishment of any society.

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1. The Context and GlobalImpact of Biotechnology

1 http://www.fao.org/documents/show cdr.asp?url file=/docrep/007/y5650s/y5650s00.htm2 Considerations regarding plant genetic engineering. Dr Pilar Carbonero Zaduegui.

Conference at the Spanish Academy of Engineering (Academia de Ingeniería de España).

“Our civilisation was born almost ten thousand years ago at the foothills of the Karacadag mountains in southeast Turkey,

between the Tigris and the Euphrates rivers, as a result of the guidedmodification of the DNA of wheat… domestication consisted of extensive

DNA alterations, which pushed their information contents [genes]against nature, from wild to domestic, from toxic to harmless,

from independent life to fully man-dependent life.”2

— —

Year 10000 BC

Near East: domestication of the first cultivatedplants (cereals, peas, lentils) and animals(sheep, goats).

1000 BC - 1000 AD

Farming of irrigated rice in the valleys anddeltas of China, India and Southeast Asia.

Year 1800

First creation of wheat variants, ovine cattle selection in Europe, and new fruitvarieties.

Year 1987

Farming of first transgenic plants:insect-resistant tomatoes in the USA.

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It’s not just the genetic contents of crops and animals that we have modified for husbandry purposesthroughout our history but we have also genetically manipulated other microorganisms, specifically thosethat pose a threat to humans. Thus, for example, the ancestral knowledge of immunisation against theterrible infectious-contagious disease Poliomyelitis in Imperial China, where they took dead blood cells andfluids from an infected person’s pustule and injected it into the person to be immunised, inspired thedevelopment of Polio vaccines for decades. In 1953, just over 50 years ago, Dr. Salk eventually developedthe first antipolio vaccine having isolated the three serotypes of the virus responsible for this “oldpandemic.”

11

The poliomyelitis virus enters theorganism through the respiratorytrack and destroys the nerve cells,rapidly reproducing itself inside. The infection can result inpermanent paralysis.

With their knowledge, effort and experience past generations have shown and paved the way for us to managenature when it challenges society in general and each of us in particular. Just as intervening in the biologicalprocesses of life allowed us to successfully handle some of these challenges in the past, we will use the sametools, now and in the future, but with a much more advanced and precise knowledge.

Modern societies in developed countries such as Spain are facing new very important challenges such asfighting cancer and other degenerative or autoimmune diseases, sustainable development, economicproductivity, health care quality, the search for renewable energies and the protection of nature. Many ofthese issues can and must be fully or partly resolved, just like we solved poliomyelitis and the feeding ofsociety (for example), i.e. by intervening in the processes of life using what is known as modernbiotechnology.

Some of the first and most important applications of modern biotechnology, which began in the 1950s and1960s following the double helix structure of DNA and the links between genetic inheritance and cellsfunctions, will be very important for the treatment of diseases. Thus, for example, human insulin was thefirst drug produced by genetic recombination to be approved by the FDA. It considerably increased thequality of life and life expectancy of millions of diabetics worldwide.3

3 Food and Drug Administration (FDA): the United States agency that assesses and approves food and drugs.

12

CONTEXT

Recombinant insulin is the most advanced example of modern biotechnology. A long list of biotech productsand services have been developed and marketed in the last two decades with the aim of improving healthassistance and the financial competitiveness of certain production sectors. Some of the main applications ofbiotechnology and, by extension its main markets, are already transforming medicine, agriculture andindustrial processes, among other things.

� Regenerative Therapy: stem cells—whether embryonic or from the patient—enable damaged organsand tissues to be regenerated.

• Current market value: over 3,000 million dollars.

• There are 180 firms working in this field of therapy in the United States alone.

• In 2004, the American Food and Drug Administration (FDA) approved the firstclinical test using cells taken from the patient’s bone marrow for heartregeneration.

• The National Ethics Committee is key to ensuring the responsible progress ofstem cell research.

� Genetic Improvement of Plants and Animals: traditional programmes for genetic selection andimprovement of crops and cattle species are already benefiting from all the knowledge and tools createdby biotechnology.

• The vast majority of new crop and cattle species varieties are developed withbiotechnological techniques, specifically genetic and molecular marker-assistedselection.

• In 2001,4 the use of plants and crops to produce drugs will be worth 2,200million dollars in the United States alone.

• Genetic sequencing programmes and consortiums enable the design of geneticmaps, which help increase the quality and resistance of agricultural productionand products.

• The first transgenic plants, developed to be resistant to chemical herbicides,have in no way contributed to spread the standpoint that biotechnologymakes it possible to advance the sustainability of development of society.

• Genetically modified crops generate a turnover of 44,000 million dollars.

Recombinant human insulin was the first product obtainedwith modern biotechnology. It has a market value of 3,000million euros per year, and increases the quality of life and

life expectancy of 5.3 Type I Diabetes sufferers.

4 Frost & Sullivan. Strategic Analysis of the World Plant Molecular Farming Market.


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� Custom-made Medicine: studying and exploiting the genetic differences between patients makes it possible to adapt the type of therapeutic treatment to increase its effectiveness and reduce its side effects.

• Pharmacogenomics makes it possible to save costs in the development of newdrugs and to adapt the therapy to each patient.5

• Genetic and molecular tests generated 1,000 million dollars in sales in 2001,with an annual growth of 30% to 50%.6

• The American Food and Drug Administration (FDA) has issuedrecommendations for the conducting of pharmacogenomic studies bypharmaceutical companies.7

• The genetic data must be collected and used under strict confidentialityprotocols.

� Food, Industry and Energy Bioprocesses: molecular biotech knowledge enables us to develop toolsand applications to obtain high added value food ingredients, chemical compounds, materials and fuel.

• According to OECD estimates, by 2010, one fifth of chemicalproduction could be transferred to industrial biotechnology, and 60%of its fine chemical products could be manufactured withbiotechnology tools.8

• The need to diversify energy sources and the search for cleanerfuels make biofuels a clear possibility for the future. Bioethanol isalready being integrated into petrol and demanded for its growth ata rate of 18% per year.

• Microorganisms and their enzymes control important chemicaland food transformation processes. Knowledge of these genomeswill enable more efficient processes at lower costs. There arealready significant public and private consortiums to exploitmicrobial genomes.

5 Technological Prospective Report on the Impact of Biotechnology on the Public Health System. OPTI-Genoma España2003 (http://www.gen-es.org/02 cono/02 cono.cfm?pag=0309)

6 Jeffrey S. Ross and Geoffrey G. Ginsburg. Integrating diagnostics and therapeutics revolutionizing drug discovery andpatient care. Therapeutic focus-Reviews. DDT Vol. 7, No. 16, August 2002.

7 Draft Guidance for Industry: Pharmacogenomic Data Submissions (http://www.fda.org/cder/guidance/5900dft.pdf).8 Biotechnology for Clean Industrial Products. Towards Industrial Sustainability. OECD, 1998.

— —

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CONTEXT

� New Drugs and Vaccines: biotechnology enables us to advance in the knowledge of molecular andgenetic processes, which are ultimately responsible for the appearance of diseases and the proliferationof infections.

• There are over 155 biotechnological drugs and vaccines that increase theexpectancy and quality of life of 325 million people. In addition, 370biotechnological drugs against diseases such as cancer, Alzheimer’s, multiplesclerosis, arthritis, AIDS and heart disease are currently being developed.9

• In 2004, the biopharmaceutical market generated profits of 45,000 milliondollars, a figure which is expected to rise to 98,000 million dollars in 2011.10

• Therapeutic monoclonal antibodies are a new therapeutic road for diseasessuch as cancer. Around a dozen such antibodies have been approved and 100are being developed for a current 300-million-dollar market, which is growingby 50% every year.11

It is beyond a doubt that biotechnology developments will be possible thanks to the wealth of knowledgeregarding the processes of life, in particular genetic and molecular processes, which are ultimatelyresponsible for the development of living beings. In the next few years, genomics, proteomics andmetabolomics technologies, which enable the full and integrated study of genes, of their “proteins andother molecules” expression and of their roles, will be the main drivers for this development.

Finally, it is worth noting that biotechnology is, by definition, global in its impact:

• Due to its very nature: since it is technology it can be applied horizontally to multiple areas or sectorsincluding medicine, pharmacy, agriculture, food, energy, industrial production and the environment.

• Due to its scope: each and every one of the more than 6,000 million people comprising the world’spopulation do or will require high quality health assistance, healthy and harmless food and affordableconsumer products at some point in his or her life.

• Due to global economy: biotechnology is establishing itself as one of the main drivers for world economicgrowth in both emerging (Asia) and developed economies (USA).

9 http://www.bio.com/10 Frost & Sullivan. Strategic Analysis of the World Plant Molecular Farming Market.11 European Therapeutic Monoclonal Antibodies Market. Frost & Sullivan Report.


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Global USA Europe Canada Asia

Profits (€M)

R&D Expenses (€M)

Number of Employees

R&D/Employee Expenses (€)

Companies

40,967

16,400

195,820

83,748

4,471

31,552

11,939

146,100

81,717

1,473

6,569

3,725

32,470

114,720

1,861

1,522

545

7,440

73,334

470

1,324

191

9,810

19,465

667

THE BUSINESS RELEVANCE OF BIOTECHNOLOGY IN 2003(LISTED COMPANIES)12

USA Europe Canada

Profits

R&D Expenses

Number of employees

Companies

115%

101%

38%

12%

754%

556%

184%

58%

246%

224%

176%

190%

GROWTH OF BIOTECHNOLOGY IN 1998-2003 (%)13

All over the world, employment, number of companies and economic benefits from the biotech sector soarstremendously. It is not in vain that this growing sector is considered one of the new sources of wealth andemployment for both developed and under developed countries. The sensible and strategic application ofbiotechnology both from the scientific and productive perspectives could also constitute a prosperousstance for the Spanish society.

12 Source: Resurgence. The Americas Perspective Global Biotechnology Report 2004. Ernst & Young.13 Source: Resurgence. The Americas Perspective Global Biotechnology Report 2004. Ernst & Young.

16

The current situation and trend of biotechnology in Spain has been classified witha series of indicators covering its full life cycle starting from market research.Otherwise, we would only have a partial picture of this “sector.” The classification isbased on the OECD’s definition of biotechnology.14

SIT

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N 2. The Situation of Biotechnology in Spain

2000 2001 2002 2003

Scientific Production(number of biotechnologyand molecular biologyarticles)

Contribution to the world’sscientific production (%):molecular biology

Contribution to the world’sscientific production (%):biotechnology

748

1.52%

4.04%

845

1.58%

4.01%

827

1.67%

4.05%

959

1.69%

4.10%

BIOTECHNOLOGY IN SPAIN: SCIENTIFIC INDICATORS

* Estimated.Source: CINDOC-CSIC.

2004*

1.029

1.75%

4.12%

Spanish research in the molecular biology and biotechnology fields is hearty, asshown by the fact that there is a significant contribution to the world’s scientificproduction, i.e. the number of scientific articles published, and that this contributionhas been increasing over the last few years. Spain is currently the fourth Europeancountry in scientific production relating to biotechnology, and the seventh in relationto molecular biology. Spanish research in these disciplines is targeted to knowledgeproduction, i.e. basic research, although the applied component of Spanish researchin these scientific disciplines is larger than the world’s average. The quality of Spanishscientific publications, as measured by the impact of the magazines in which thesearticles are published, places us in sixth place for biotechnology15 and seventh formolecular biology16 in the European ranking.

14 ”The application of science and technology to living organisms as well as parts, products andmodels thereof and to alter living or non-living materials for the production of knowledge,goods and services.”

15 Scientific biotechnology articles published in scientific magazines with an impact of more than 2.7.

16 Scientific molecular biology articles published in scientific magazines with an impact of more than 4.3.


17

According to the prestigious institution ISITHOMSON,17 quality—as measured by the relativeimpact of Spanish publications relating tomicrobiology, biochemistry, immunology andmolecular biology—increased significantly between1993 and 2003. However, this is still a muchlower impact than we would hope for, whichmeans we still need to invest in improving thequality of research.

According to the Spanish National StatisticsInstitute (Instituto Nacional de Estadística, INE),there are 6,800 biotechnology researchers, out ofa total of 9,000 people carrying out biotechnologyR&D activities at universities, hospitals and publicresearch centres. The scientific areas in which weare most productive include research genetics,proteins and other molecules to generateknowledge, as well as biotechnology of processesto generate industrial, food and chemicalapplications, among others.

Basic vs Applied Research

Biotechnologyand microbiology

Biochemistryand mol biol

% 0 10 20 30 40 50 60 70 80 90 100

Worldwide

Spain 1,421

35,084 120,856

1,958

Spanish Scientific Production Relatingto Biotechnology: Distribution by Sector

Basic44%

HumanHealth14%

IndustrialProducts

13%

Foodand

Agriculture10%

Environment7%

PlantHealth

5%

AnimalHealth4%

Agroindustrial2%

FoodTechnology

1%

Contribution to World ScientificProduction Relating to Molecular Biology (%)

2000-2003 Period

0 1 2 3 4 5 6 7 8

GermanyUnited Kingdom

FranceItaly

NetherlandsSweden

SpainBelgium

DenmarkAustriaFinland

PortugalIrelandGreece

Luxembourg

Contribution to World ScientificProduction Relating to Biotechnology (%)

2000-2003 Period

0 1 2 3 4 5 6 7 8 9

United KingdomGermany

FranceSpain

NetherlandsItaly

SwedenBelgium

DenmarkFinlandAustria

PortugalIrelandGreece

Luxembourg

The scientific component of Spanishmolecular biology and biotechnology is

internationally competitive. Spanishscientists working in these disciplines form

the basis for the development ofbiotechnology in Spain.

17 Science in Spain. The Monthly Newsletter by Juan E. Iglesias. ISI.

Source: CINDOC-CSIC.




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SITUATION

Spanish biotech researchers contribute approximately 0.47%20 to European patents applications, which islower than their contribution to the world’s scientific production. There is therefore an important gapbetween the generation of knowledge and the production of patentable applications in Spanishbiotechnology. Interestingly, we know from a study conducted by CINDOC-CSIC that the scientificpublications of 40% of Spanish biotech research groups are a basic reference for American patents appliedfor by US companies and researchers, in particular for biotechnology applications in the fields of humanhealth, industry and food and agriculture.

2000 2001 2002 2003

Spanish patents granted by the European Patents Office18

Spanish patents granted by the US Patents Office19

Income from patent exploitation

Economic volume of contracts betweenuniversities and companies

Number of contracts between universitiesand companies

1

11

€0.6 M

€21 M

680

4

15

€0.73 M

€26 M

794

6

18

€1.72 M

€42 M

827

7

14

€2.3 M*

€53 M*

901*

BIOTECHNOLOGY IN SPAIN: TECHNOLOGY INDICATORS

* Estimated.Source: Prepared by Genoma España on the basis of data provided by the SPTO, EPO, USPTO and the Research ResultTransfer Office’s Network.

* Patents held by more than one country.Source: Prepared by Genoma España on the basis of data provided by the EPO.

18 The absolute values are obtained according to the OECD’s definition of biotecnhnology (A01H 1/+, A01H 4/00, A61K38/+, A61K 39/+, A61K 48/00, C02F 3/34, C07G 11/00, C07G 13/00, C07G 15/00, C07K 4/+, C07K 14/+, C07K 16/+,C07K 17/+, C07K 19/00, C12M +, C12N +, C12P +, C12Q +, C12S +, G01N 27/327, G01N 33/53+, G01N 33/54+,G01N 33/55+, G01N 33/57+, G01N 33/68, G01N 33/74, G01N 33/76, G01N 33/78, G01N 33/88 and G01N 33/92).

19 Technology Profile Report. Patent Examining Technology Centrer, groups 1630-1660, Biotechnology. USPTO.20 According to the Spanish Patents Office, a total of 24,021 patent applications were published between 2000 and 2003. 112 of

these were Spanish. This study was conducted according to the international patent classification (C12N).

Applications to the European PatentsOffice: Biotechnology

5.62%

5.35%

4.85%

2.27%

1.35%

0.53%

0.47%

0.38%

0.21%

0.17%

0.15%

0.04%

0.02%

0.02%

0.01%

0.00%Luxembourg

Greece

Belgium

Portugal

Ireland

Austria

Netherlands

Finland

Italy

Spain

Sweden

Denmark

France

Various countries*

Germany

United kingdom

Granted by the European PatentsOffice: Biotechnology

8.59%

8.39%

7.04%

5.34%

2.53%

1.15%

0.99%

0.75%

0.44%

0.24%

0.16%

0.08%

0.04%

0.04%

0.00%

0.00%Greece

Luxembourg

Ireland

Portugal

Belgium

Spain

Finland

Austria

Netherlands

Sweden

Italy

Denmark

France

Various countries

Germany

United Kingdom


19

Although royalties and other payments forexploiting patents represent token amounts(Spanish public research centres and universitiesreceive little more than two million euros in thebiotechnology field), the economic volume ofpublic contracts between universities and publiccentres on the one hand and companies on theother is growing considerably. The number of jointprojects and their economic volume has doubledsince 2000, reaching over 50 million euros in2003.

Contracts between Universitiesand Companies

21 M€

26 M€

42 M€680

Millio

ns

of

€

Pro

yect

os

794827

901

0

10

20

30

40

50

60

20032002200120000

100

200

300

400

500

600

700

800

900

1.000

53 M€

In the hypothetical technology transfer coin of Spanish biotechnology,contracts between public researchers and companies are “heads,” whereas patents

are undoubtedly “tails.” There is more focus on the provision of services than on the development of products.

2000 2001 2002 2003 2004*

Public subsidies for R&D: universities and public research centres21

Public subsidies for R&D: companies22

Average cost per project subsidised by theNational R&D Plan (Plan Nacional de I+D)

European R&D funding

RDI investment by companies23

Venture capital investment

% of venture capital invested inbiotechnology as compared with the totalamount

€87 M

€4.7 M

€71,387

€27 M

€94 M

€5 M

0.381%

€104 M

€7 M

€79,195

€19 M

€129 M

€6.2 M

0.498%

€177 M

€8.8 M

€86,618

€16 M

€181 M

€6.8 M

0.700%

€187 M

€12 M

€102,930

€30 M

€238 M

€3.6 M

0.267%

€220.3 M

€14.4 M

€113,444

€22 M

€286 M

€3.5 M

0.18%

BIOTECHNOLOGY IN SPAIN: ECONOMIC AND FINANCIAL INDICATORS

* Estimated.Source: Developed by Genoma España from data sources of MEC, MSC, INE, CDTF y CC.AA.

21 Biotechnology Projects in accordance with the OECD’s definition of the National RDI Plan (Biotechnology National Plan,Biomedicine National Plan, Agricultural Technologies and Resources National Plan, National Plan for the GeneralPromotion of Knowledge and Health Research Fund), of the Spanish Autonomous Regions’ RDI Programmes and theinfrastructure co-funded by FEDER, MEC and the Autonomous Regions.

22 Biotechnology Projects from the PROFIT Programme and the Autonomous Regions.23 Business RDI investment includes the intangible fixed assets of companies fully and partly devoted to biotechnology.

Such fixed assets have been multiplied by a coefficient representing the amount of investment in biotechnology ascompared with total investment by sector. These coefficients were provided by the Spanish National Statistics Institute.

20

SITUATION

Public Funds and Private Investmentin Biotechnology

119

94

5 6

202

181

7

229238

257

286

44

130 129

0

50

100

150

200

250

300

350

20042003200220012000

Mil

lio

ns

of

€

Total public subsidies for R&D Business R&D investment


The large increase in public investment in biotechnology has been accompaniedby an even larger increase in the business sector. Public R&D subsidies

act as catalysts for private investment in Spanish biotechnology.

24 Economic Implications of Biotechnology in Spain. Miguel Vega García.http://www.madrimasd.org/informacionidi/analisis/default.asp.

Estimated Distributionof R&D Expenditure

44% 56%

50%

53%

49%

47%

45%

43%

41%

39%

37%

34%

50%

47%

51%

53%

55%

57%

59%

61%

63%

66%

% Public investment scale

% Private investment scale

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

If the current growth rates for both public subsidies and private investment in biotechnology R&D aremaintained, an ideal trend of R&D expenditure in Spanish biotechnology—2/3 private and 1/3 public—canbe expected for the year 2010.

It is worth highlighting that only two Autonomous Regions—Galicia and the Basque country—are investingmore than they are receiving from the National Government. Specifically, Galicia invests over 10 timesmore than it receives for business R&D, and the Basque country invests almost 4.5 times more than itreceives for R&D for its universities and public research centres.

National subsidies for business biotechnology to carry out innovation and technological developmentprojects represent only 6% of the total. However, we must also note that many of these projects arefunded by soft and/or participating credit, of the type granted by the Ministry of Education and Science, theSpanish National Innovation Company (Empresa Nacional de Innovación, ENISA) and the Centre forIndustrial Technological Development (Centro para el Desarrollo Tecnológico Industrial, CDTI), amongothers. Between 2000 and 2003, 75% of funds for innovation and technological development came fromnational funds. The remainder was provided by Autonomous Communities.

Public biotechnology subsidies focus on the production of scientific knowledge; changing thisfocus could damage our most competitive element: basic research. On the contrary, “it would

be more sensible to complement it with new programmes, funds or tools to cover the innovationand technological development aspects …”24

Public subsidies for biotechnology, whether from the Ministry of Education and Science, the Ministry ofHealth and Consumer Goods, the Autonomous Regions or the European Commission, have grownconsiderably in the last five years, specifically at an annual average rate of 22.6%. Furthermore, total RDIinvestment in biotechnology by companies increased at an even greater rate than public subsidies in thesame period. This growth is an average annual rate of 32.3%.

Source: Prepared by Genoma España. Source: Prepared by Genoma España.


21

Distribution of Public BiotechnologySubsidies by Autonomous Community

Madrid24%

Catalonia19%

Valencia9%

Castile Leon7%

Galicia7%

Basque Country6%

Murcia3%

Aragon2%

Navarre2%

Asturias2%

Canary I.2%

Castile-La Mancha2%

Extremadura1%

Cantabria1%

Balearic I.1%

La Rioja0%

Andalusia14%

Distribution of Business Investmentin Biotechnology R&D

Madrid76.88%

Catalonia6.04%

Valencia5.62%

Castile Leon0.84%

Galicia0.87%

Murcia1.00%

Aragon0.09%

Asturias0.01%

BasqueCountry2.45% Canary I.

0.02%Castile-

La Mancha0.17%

La Rioja0.03%

Andalusia5.98%

The distribution of public subsidies25 and private investments26 in biotechnology R&D per autonomousregion shows that the vast majority of funds and investments go to Madrid, Andalusia and Catalonia. Over75% of private investment is in Madrid, specifically in the company PharmaMar, which in turn represents75% of total business investment in biotechnology R&D.

There are parallelisms in the distribution of public subsidies and private investments in biotechnology R&Dby economic or industrial sector. The leading sector is Human Health-BioPharma. Some sector-specificapplications such as agriculture and cattle raising receive more support from the Government; whereasothers such as bioprocesses receive more support from private business investments.

If we remove the company Pharmamar from the business investment in order to study its effect ondistribution by sector and by region, the similarity in the distribution of business investment and publicdistribution by autonomous community becomes obvious. However, there is a clear difference in per sectordistribution: the biopharmaceutical sector is no longer the largest in terms of investments and that positionis instead taken over by food and industrial bioprocesses and molecular diagnostics and vaccines.

25 Public subsidies include subsidies for national, regional and European R&D projects and for biotechnology infrastructure,both for universities and research centres and for companies, for the period between 2000 and 2003.

26 Private biotechnology R&D investment is calculated as the intangible fixed assets of companies fully and partly devotedto biotechnology in the period between 2001 and 2002.

Distribution of Public R&DSubsidies by Sector

HumanHealth

69.03%

Agriculture,Cattle raisingand Fishing

16.28%

Food5.24%

Other4.75%

TechnologicalDevelopments

2.33%

AnimalHealth1.04%

Environment0.73%

Bioprocesses0.6%

Distribution of Business R&D Investmentby Autonomous Community

Bio-pharma72.44%

Agrobiotechnologyand Biofactories

10.67%

Food and foodBioprocesses

6.06%

Diagnosisand Vaccines

5.43%

IndustrialBioprocesses

and Biochemistry3.55%

Sales andDistribution

0.45%

TechnologicalDevelopmentsand Services

1.40%

With respect to venture capital, the huge gap between biotechnology venture capital in Europe and in theUnited States becomes evident. In the year 2000, venture capital investments in biotechnology as apercentage of the total were about the same on both sides of the Atlantic. Five years on, they are an orderof magnitude apart. American biotechnology companies have been able to attract the available venturecapital funds including European ones. The significant public effort made in Europe in 2000 and 2001 toencourage venture capital investment in biotechnology has not yielded the expected results.

In Spain, the figures are under €4 million in 2004. We lack a financial sector with an interest in Spanishbiotechnology, or not enough reputation to attract international finance. In spite of this, there areseveral initiatives from universities or autonomous communities to build up the capital of small spin-offcompanies, which are emerging from the academic environment. Companies such as ENISA, CDTI andGenoma España are also working in that direction. It is also worth mentioning that two importantextensions of privately subscribed capital in biotechnology companies—specifically €16 million forNeuropharma and €6 million for Genetrix were made during 2004.

22

SITUATION

Venture capital investment in Spanish productive biotechnology is almost non-existent.Investors argue that there are no solid projects for them to put their money in.

Venture Capital Biotechnology Investment(Millions of €)

Spain USAEurope

1

10

100

1,000

10,000

20042003200220012000

5 M€6 M€ 7 M€

4 M€ 4 M€

1,132 M€ 1,318 M€980 M€ 736 M€ 828 M€

3,551 M€ 3,099 M€ 2,838 M€ 2,600 M€3,186 M€

0.4%3.3%

5.4%

12.6%

20.4%

3.2% 3.5%2.5% 2.2%

0.5% 0.7%0.3% 0.2%

Venture Capital Investments in Biotechnologyas Percentage of the Total

0%

5%

10%

15%

20%

25%

20042003200220012000

Spain Europe USA

7.3%

16.1%

Source: Prepared by Genoma España from data provided by Biocentury, Capital & Corporate, Ernst & Young and Ascri.


23

Biotechnology in Spain: Business Indicators

In order to describe the sector we classify the companies, which operate in this environment, as follows:

Companies fully devoted to biotechnology (CFDB)

Companies partly devoted to biotechnology (CPDB)

Companies that use biotechnology (CUB)

Biotechnology industry service companies (BISC)

Number

Number

Number

Number

– Biotechnology accounts for over 80% of their activities

– Biotechnology accounts for over 50% of their turnover

– Investment: a clear commitment to conducting biotechnology RDI in Spain (research facilities)

– They submit calls for public biotechnology research proposals in Spain

– Although some of their main business lines are biotechnology-related, biotechnologyaccounts for less than 80% of these companies’ activities

– Biotechnology accounts for part of their turnover

– Investment: a clear commitment to conducting biotechnology RDI in Spain (research facilities)

– They apply to take part in biotechnology research projects in Spain

– Some of their main business lines are biotechnology-based

– Part of their turnover is biotechnology-related

– Consultancies, advisers, etc

– Bioinformatics

– Companies that market biotechnology products (and do not conduct RDI in Spain)

– Other auxiliary services

102

114

100

51

Classification of Biotechnology Companies: 2004

24

SITUATION

MADRID

CATALONIA

ANDALUSIA

BASQUE COUNTRY

VALENCIA

CASTILE LEON

MURCIA

GALICIA

ARAGON

ASTURIAS

CANARY ISLANDS

NAVARRE

EXTREMADURA

LA RIOJA

CANTABRIA

CASTILE LA MANCHA

BALEARIC ISLANDS

TOTAL

118

96

31

25

23

20

17

12

8

5

3

3

2

2

1

1

0

367

Distribution by Autonomous CommunityThanks to this classification, we know in whichcontext we can implement policies to promote andstimulate biotechnology growth. In total, there are367 companies with an interest in biotechnology.102 of these are fully devoted to this newtechnology sector; 114 are partly devoted to it—i.e. some of their business lines includebiotechnology—and the remainder are servicesand/or marketing companies.

As far as regional distribution is concerned, thereare 3 large groups. The first one includes almost60% of the country’s biotechnology activities, whichis made up of technology-based companies in thecase of Madrid and pharmaceutical companies inCatalonia. The second group represents 27% ofthe industry with a homogeneous distribution ofcompanies by sub-sector. The third group,comprising Galicia and Murcia, represents 8%.

Comparing regional distribution figures for public R&D and existing companies show a direct relationship,which confirms the stimulating effect of R&D investment on the development of the sector.

A huge significant fact is the interest that the use of biotechnology applications is arousing in the businessworld: the number of fully devoted companies doubled between 2000 and 2004.

2000 2001 2002 2003

Number of companies fully devoted to biotechnology (CFDB)

Number of employees in CFDB

CFDB turnover

55

905

€151.3 M

66

1,205

€173.5 M

80

1,654

€200.4 M

90

1,571

€296 M

2004

102

1,793

€391 M

Source: Prepared by Genoma España from data provided by the Commercial Register, the National Statistics Institute andown databases.


25

A small analysis of the companies fully devoted to biotechnology shows that the main R&D27 investmentarea encompasses the development of pharmaceutical products. Where as far as turnover28 is concerned,the health sectors are also the most significant. In addition, it is worth noting that, although R&Dinvestment in technological services and developments accounts for only 1.51%, these services anddevelopments account for almost 10% of this emerging business sector’s turnover.

R&D Investment in FullyDevoted Companies:

Distribution by Sector

Biopharmaceutics79.42%

Food andfood

bioprocesses7.8%

Industrialbioprocesses

and biochemistry5.16%

Diagnosisand vaccines

4.99%

Technologicaldevelopmentsand services

1.51%

Agrobiotechnologyand factories

0.88%

Sales anddistribution

0.17%

Turnover of FullyDevoted Companies:

Distribution by Sector



14.89%

Foodand food

bioprocesses2.53%


14.36%



Technologicaldevelopmentsand services

9.98%

Agrobiotechnologyand biofactories

1.14%

Another factor pointing to the boom of biotechnology companies is the high number of employees.Expenditure doubled during the cited period. The decrease in the number of employees in the last yearwas due to a single company: PharmaMar. This company, which alone represents over half the sector,had to deal with a restructuring process when the regulating agency (EMEA) delayed the marketing ofits first drug.

Personnel Expenditure vsNumber of Employees

Millions

0

20

40

60

80

100

2003200220012000500

1,000

1,500

2,000

Personnel expenditure Number of employees

44 M€

905

1,205

1,654

1,571

52 M€ 64 M€ 89 M€

27 Private biotechnology R&D investment is calculated as the intangible fixed assets of companies fully devoted tobiotechnology in the period between 2001 and 2002.

28 Business turnover in biotechnology is calculated as the net sales of companies fully devoted to biotechnology in theperiod between 2001 and 2002.

Spanish Biotech firms (fully devoted)

296 M€

200 M€173 M€151 M€

391 M€

55 66 80 90 102

179315711654

1205

905

050

100150200

250300350

400450

2000 2001 2002 2003 2004*

0200400600800100012001400160018002000

Turn over Firms Employees

The distribution by sector charts show a direct relationship between investment percentage and turnover. Thepharmaceutical sector has the best results, followed by companies that focus on diagnosis and thedevelopment of vaccines. It is worth noting that the turnover of agricultural companies is over three times ashigh as the amount invested in research by them.

26

SITUATION

It is very difficult to tell what percentage of the turnover and investment of partly devoted companiescorresponds to biotechnology activities. We have therefore decided to reflect this business group’s net figuresin this section, although we have used estimated correction factors for the economic impact of biotechnology(see the next section).

Turnover of Partly DevotedCompanies: Distribution by Sector



19.15%

Foodand food

bioprocesses1.43%

Salesand distribution

8.01%



Technologicalservices

and developments4.40%


4.03%

R&D Investment in Partly DevotedCompanies: Distribution by Sector



25.63%

Foodand food

bioprocesses0.86%


8.23%



Technologicalservices and

developments4.23%


15.05%

Personnel Expenditure vs Numberof Employees in CPDB

Millions

0

200

400

600

800

1,000

1,200

1,400

2003200220012000

15,000

15,500

16,000

16,500

17,000

17,500

18,000

18,500

19,000

19,500

Personnel expenditure Number of employees

691 M€

16,62717,330

18,099

19,056

775 M€ 923 M€ 1.189 M€

Similarly as in the case of fully devoted companies,personnel expenditure has doubled. The totalnumber of employees rose to 19,000 in 2003 withan average growth of around 4.5% during thecited period.


27

Biotechnology in Spain: Perception Indicators

Spanish society’s attitude towards biotechnology ismore optimistic and favourable than the Europeanaverage. Spaniards’ degree of knowledge andinvolvement in science and technology debates hastraditionally been low. However, there was aninflection point in 1999 with increased interest inbiotechnology issues and their consequences.

The number of news items has multiplied by five inthe last 10 years showing that many of the mostrelevant biotechnology applications have not goneunnoticed by the mass media. The biotechnologyculture is undergoing a deep maturing process,which will lead to a greater polarisation of opinionsand more positive attitudes towards biotech issues.

The applications with the greatest social impactrelate to cloning, transgenic food, the medicalimplications of biotechnology, the discovery of newgenes and genome sequencing.

Public opinion can shape the future development of biotechnology. This has already happened elsewhere, forexample, in the energy sector. Biotechnology has ethical, moral, political and social implications. The mainsources of information have fortunately been universities and research centres, which ultimately means theresearchers. However, the Government started to appreciate its significant importance in 1994.

Evolution of the Optimism Indexin Spain and Europe

Ind

ex

SPAIN

EUROPE

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

20021999199619931991

Presence and Trendof Biotechnology in the Media

No

. o

f B

iote

ch T

exts

EFE

NEWSPAPERS

0

200

400

600

800

1,000

1,200

1,400

1,600

2003200220012000199919981997199619951994

Nu

mb

er

of

Art

icle

s

1311 10

20

Dolly 14P.E.12

ProtocoloBioseguridad Moratoria

alimentostransgénicos

4

Célulasembrionarias

GenomaHumano

15

Clonaciónembriones

20

BernatSoria12

Andalucía. Leyinvestigación

con embriones 4

Genoma ántrax 7Clonación mulo 4

Clonan ratas 3Ley ReproducciónAsistida 5

Ley Célulasmadre 4

DirectivaOMG 4

Borrador genomahumano 5

PreñezDolly 5

141718

24

15

21

25

1817

21

36

2527

19

0

5

10

15

20

25

30

35

40

2003200220012000199919981997199619951994

Trend of Current Biotechnology Relevance

Source: Prepared by Genoma España from Eurobarometer 58.0.

Source: Prepared by Genoma España from data provided bythe newspapers El País and El Mundo and EFE News Agency.

Source: Prepared by Genoma España from data provided bythe newspapers El País and El Mundo.

This section shows a comparison of both the current situation and the futuredevelopment of biotechnology in various countries. This review is made by studyingthe resources allocated to biotechnology and the results of its exploitation andproduction.

28

Indicators Countries

Investedresources

Resultsobtained

Public R&D subsidies

R&D investment by companies


Number of employees

Doctors in life sciences

Scientific production (articles)

Number of companies

International patents published

European patents granted

American patents granted

Turnover of companies

USA

Canada

Germany

EU-15

Spain

Two basic criteria were used to select the countries for this section: thematic homogeneity(with regard to measuring indicators) and time homogeneity (with regard to the period).The reference period for the comparative analysis is 2000-2003 and the reasons forselecting these countries were as follows:

• United States: leader in biotechnology.

• Canada: has a State Pact for the development of biotechnology.

• Germany: one of the EU’s leading countries in biotechnology.

• EU-15: allows us to see Spain’s position and growth with respect to the countries ofthe European Union as a whole.

• Spain: the subject matter of our study.

In order to adequately compare the selected countries, we played down the indicatorsof both invested resources and results obtained as against the Gross DomesticProduct (GDP) and population of each country.29 We also took the United States as areference to reflect each country’s position: each US indicator was given a value of100 and compared with each country’s indicators. The average of all the indicatorsgives us a synthetic indicator for each country.

3. International BiotechnologyComparisons

COM

PARI

SONS

29 Monetary variables (R&D expenditure, innovation expenditure, venture capital investment andturnover of companies) are put into perspective as a function of GDP, whereas, in the case ofthe other variables, this is done as a function of the population.

29

The relative size of Spanish biotechnology is a quarter of that of the United States. Spain is in a developmentprocess; and has little experience in exploiting biotechnology when compared with more consolidated countriesin the field. Although we evolve faster at an average variation rate of 8% for the period, the distances arerelatively too great to cover in the short term. The only two indicators showing competitive values with respectto other countries are the number of doctors in life sciences and scientific production. The numbers of patentsand employees are approximately 5% away from the leader, whereas companies have a value of 43%, and theturnover and private R&D investment values are 14% and 23%, respectively.

Positioningof BiotechnologyUSA Base = 10030

AverageAnnual

VariationRate

Spain 26.93

61.87

63.24

100.00

93.86

Germany

EU-15

USA

Canada

8.62%

–0.29%

4.37%

0.00%

2.42%

Positioning of the Synthetic Indicator(USA Base: 100)

27

62 63

94100

0

20

40

60

80

100

120

USACanadaEU-15GermanySpain

The relative position of each indicator clearly shows that the resources allocated to biotechnology by theAmerican economies (Canada and the US) are approximately 3 to 4 times greater than the resourcesinvested by European economies (EU-15) and about 15 to 20 times greater than the Spanish investment.The representation of Spain’s resources is almost linear. It hardly looks polyhedral at all, which reflects aserious dysfunction in one or more of its indicators.

Positioning of Resources Allocated to Biotechnology31

GERMANYPUBLIC R&D PUBLIC R&D PUBLIC R&D

VENTURE CAPITAL

VENTURE CAPITAL VENTURE CAPITAL

VENTURE CAPITAL VENTURE CAPITAL

DOCTORSIN LIFE

SCIENCES

DOCTORSIN LIFE

SCIENCES

DOCTORSIN LIFE

SCIENCES

DOCTORSIN LIFE

SCIENCES

DOCTORSIN LIFE

SCIENCES

PRIVATEEMPLOYEES

PRIVATEEMPLOYEES

PRIVATEEMPLOYEES

PRIVATEEMPLOYEES

PRIVATEEMPLOYEES

40.1

30.1

30.8

31.2

100.0

27.7

22.2

94.1

PRIVATE R&DEXPENDITURE



EU-15

SPAIN

1.8

27.2

13.5

5.6

68.6

CANADA

100.0

100.0

41.440.5

76.2

100.0

100.0

100.0

USA

66.7

51.6



48.3

30 The biotechnology position indicator with base USA = 100 is obtained by integrating the resources and results variables for afour-year average (2000-2003). Weighting factors for these variables have not been taken into account, since the sensitivityanalyses carried out in relation to them have shown no significant variations.

31 These comparison charts are obtained by giving a value of 100 to the indicator with the highest value: Canada forscientific production, turnover and number of companies; and the USA for patents published and granted in Europe andAmerica.

Positioning of Biotechnology


30

COMPARISONS

Comparative Analysis of Resources Allocated to Biotechnology

• The number of PhDs in life sciences is by far our best resource (68), higher than Canada and even theUnited States (66). The leader in this indicator is by far the EU-15 with 100 points.

• Venture capital invested in Spanish biotechnology is the worst indicator of available resources(1.8), when compared with the EU-15’s average value of 27.7. The leader in this indicator isCanada, whose value doubles that of the US.

• Public subsidies to biotechnology R&D in Spain (27.2) are similar to the German value (30.1) butconsiderably far from the leader, Canada, with 100 points.

• The resources devoted to biotechnology by Spanish companies are meagre. The indicator ofbiotechnology R&D investment by Spanish companies (13.5) is just 50% of the German value, andthe distance from Canada (76.2) would be very difficult to overcome. Regarding the number ofemployees, Spain is struggling to reach a value of 5, whereas the EU-15 and Canada havesignificantly higher values. The leader in both business indicators is the USA.

SCIENTIFICPRODUCTION





DWPI PATENTSTURNOVER TURNOVER

TURNOVER

TURNOVER TURNOVER

EUROPEAN PATENTSGRANTED





NUMBER OFCOMPANIES

NUMBER OFCOMPANIES

NUMBER OFCOMPANIES

NUMBER OFCOMPANIES

NUMBER OFCOMPANIES

PATENTS GRANTEDBY USPTO





DWPI PATENTS DWPI PATENTS

DWPI PATENTS

EU-15

83.5

22.4

59.9

23.236.0

37.3

GERMANY

72.6

39.3

92.3

28.331.8

12.8

DWPI PATENTS

SPAIN

71.1

5.7

4.3

1.913.4

8.4

CANADA USA

100.0

13.1

4.4

47.7

100.0

100.0

83.5

100.0

100.0

100.0

37.5

82.3

The main resources of Spanish biotechnology are highly qualified personnel and availability of public funds. Both resources constitute a good starting point for the development of a productive biotechnology sector in Spain.

Positioning of the Results Obtained from Biotechnology32

32 These comparison charts are obtained by giving a value of 100 to the indicator with the highest value: Canada forscientific production, turnover and number of companies; and the USA for patents published and granted in Europe andAmerica.


31

The models for the productive exploitation of biotechnology are clearly different in Europe and America: theEuropean model stands out mostly in scientific production, measured by the number of articles published andEuropean patents granted; whereas the American model, with the US and Canada at the lead, stands out—inaddition to the same indicators as in Europe—by the turnover of biotechnology companies. Canada is theleader in number of companies, and the US leads the number of patents granted by both the European and theAmerican offices. The scientific results are undoubtedly even in both models, but the financial results clearly tipthe scales in favour of the American model.

The results for Spain show that biotechnology research is mostly basic with a very low applied component,due to a stronger focus on publishing results than on obtaining patents. There is no compensated structurefor the axes, since five of the six indicators show an insignificant proportion.

Comparative Analysis of the Results Obtained from Biotechnology

• Spanish scientific production in biotechnology (71.1) is commensurable with German production(72.6) and even with the American value (83.5). All these values are of course relative to thepopulation. The leader in this indicator is Canada.

• The number of patents published in international patent gazettes and the number granted by boththe European and the American Patents Offices are undoubtedly the worst result for Spanishbiotechnology. The indicator of Spanish patents granted by the European Patents Office (1.9) isabout 2% of the value for German patents granted (92.3). The leader in both indicators is the USA.

• Spanish biotechnology business results, specifically the number of companies (13.4) and turnover(8.4) indicators, are very low compared to the European average: 36 for the number of companies,and 37.3 for business turnover. The leader in both aspects is Canada.

Spanish knowledge production-oriented biotechnology is internationally competitive.However, Spanish biotechnology is very deficient with regard to

producing applications, products and services.

32

COMPARISONS

Dynamism of Biotechnology

We used the year 2000 as the base year to describe the trend of the biotechnology market. We gave avalue of 100 to the result of each indicator for that year, and we measured the annual variation rates for2000-2003. The average value of all indicators for each country was then used to form the syntheticindicator showing the dynamic differences among the selected countries.

Dynamism33

of BiotechnologyBase Year 2000: 100

AverageAnnual

VariationRate

Spain 154.63

113.80

112.63

106.62

114.24

Germany

EU-15

USA

Canada

24.75%

5.61%

6.23%

4.07%

8.98%

Relative Growth of Biotechnology(2000-2003 Period)

4.07%

5.61%

6.23%

8.98%

24.75%

0 5 10 15 20 25 30

Spain

Canada

EU-15

Germany

USA

Spain has the highest trend index for biotechnology for the reference period, although it sprang from a relativelylow starting point. This effect is due mainly to increased investment and turnover in the business sector and tothe rise in employees and patents applications. The number of companies has grown by 64% (between 2000 and2003) and the sector’s profits have doubled, as have private R&D investments. All this explains why Spain is thecountry with the fastest development, at an average growth rate of 25% when compared with the EuropeanUnion’s average of just over 6%.

Dynamism of the Resources Invested in Biotechnology

Dynamicsof Resources

AverageAnnual

VariationRate

Spain 123.85

105.32

108.13

96.92

98.51

Germany

EU-15

USA

Canada

10.89%

–2.30%

1.62%

–3.96%

–1.43%

Synthetic Indicator of BiotechnologyResources

Public R&D investment+

Private R&D expenditure+

Venture capital investment+

Number of employees+

PhD's in life sciences

Using only the resource indicator, Spain shows the greatest biotechnology trend 15 points higher than theEuropean Union and over 25 points above the United States. This effect is mainly due to the increase in privateR&D investment and the hiring of personnel with average values of 30% and 18%, respectively.

33 The dynamic indicator for biotechnology with base 2000:100 is obtained as a mean variation rate of the integration ofall variables for 2000-2003. Weighting factors for these variables have not been taken into account, since the sensitivityanalyses carried out in relation to them have shown no significant variations.


33

Dynamism of the Results Obtained in Biotechnology

Dynamicsof Resources

AverageAnnual

VariationRate

Spain 175.16

119.46

115.63

113.09

124.72

Germany

EU-15

USA

Canada

32.51%

10.28%

9.10%

8.81%

14.94%

Synthetic Indicator of BiotechnologyResults

Public R&D investment+

Private R&D expenditure+

Venture capital investment+

Number of employees+

PhD's in life sciences

Just like with the trend of the synthetic resource indicator, Spain is the country with the most dynamic resultswith a growth of 175 points between 2000 and 2003. This is mainly due to the rise in the number of patents andbusiness turnover. Its average annual growth rate is 4 times that of the United States and twice that of Canada.However, if the variations in the annual rates are taken into account, there is a serious fall in growth from 64%in 2000-2001 to 14.23% in 2002-2003.

It is obvious that results are growing at a much more significant rate (32.5%) than resources (10.8%). This isproof of the efficacy of Spanish biotechnology.

Spanish biotechnology is growing at four times the averageEuropean Union rate. However, its current positioning as measured by invested resources

and results obtained is less than half of that of the European Union.

Po

siti

on

ing

Spain

Trend

0 50 100 150 200

0

50

100

150

200

Germany EU-15 USA Canada

Aggregate Situation of Biotechnology

34

COMPARISONS

Situation and Convergence

Comparing the average value of the played down results indicator with that of the resources results in the chartshows Spain in a very backward position, near Italy, Luxembourg, Greece and Portugal. Increasing the numberof variables and countries does not change the scene.

The United States, Switzerland, Denmark and in any event Sweden obtain results more efficiently with respectto their resources. The remaining countries and Canada are less efficient at generating results. The Spanishposition is due to the low level of resources invested when compared to other countries. However, Spainproduces results with a similar efficiency as Canada and Germany.

80

0 10 20 30 40 50 60 70 80

70

60

50

40

30

20

10

0

LUXEMBOURG

GREECE

ITALY

PORTUGAL

AUSTRIA IRELAND

FRANCEEU-15

SPAIN

GERMANY

NETHERLANDS

SWITZERLAND

UK

BÉLGICA

SWEDEN

DENMARK

y = 0.8038x - 8.1122R2 = 0.5253

CANADA

FINLAND

USA

Resu

lts

Resources

Aggregate Situation of Biotechnology

Although Spain’s growth rates are higher than those of the other countries in the study, it will not convergewithin a reasonable temporal horizon unless an appropriate additional effort is made. Taking the United States asthe leader (USA: 100) and using the accumulated growth rate for the period under study (2000-2003) for Spain,a real convergence of biotechnology is not estimated for another 40 years.

Convergence with the United States34

0

20

40

60

80

100

120

SpainUnited States

20502045204020352030202520202015201020052000

Within Europe, the biotechnology situation in Spain is below the European average (for countries prior to theexpansion of the EU) and at only a quarter of the US level. Catching up with the European average in 20 yearsinvolves maintaining an approximate additional growth of 5 points for Spain for two decades. A reasonablecalculation suggests that such growth can only be attained if a nationwide strategy resulting in greater growth forbiotechnology is defined and implemented. This has happened in countries such as Canada, which now has one ofthe most competitive markets in the world.

34 Convergence has been estimated by using a simple model with the aid of a statistic approximation known as theequation for the cumulative rate of growth.

35

4. Macroeconomic Relevance and Forecasts for the Future of Biotechnology in Spain

RE

LE

VA

NC

E

Before assessing biotechnology on the basis of its more visible economiceffects, it is therefore essential that we recognise its potential impact on the

quality of goods and services, the reduction in pollution costs, and overallinnovation in a knowledge society.

Making a correct assessment of the significance of any sector or activity is always acomplex task. But when the field has both social and economic implications is in themiddle of an accelerated growth process and its consequences affect a wide range ofcompanies in different sectors of production, as is the case of biotechnology,problems multiply.

The first thing we must point out is that a purely “economicist” assessment with ashort term vision only takes into account part of its real impact on the social well-being.“The economic impacts of biotechnology are probably less substantial than theireffects on environmental conditions and quality of life... We could call this its “socialproductivity.”35 Even within a purely economic context, we must recognise the need toinclude in the assessment the impact of biotechnology on the improvement of publicservices, reduced implied costs in the application of technologies and the significanceof knowledge as a source of capital.

Improved Quality of Public Services: in the field of biotechnology, a significantproportion of human health improvements will obviously give rise to better qualityservices or cheaper products, without necessarily increasing the bills, and evenpossibly decreasing the cost of certain public services.

Reduced Implied Costs due to the Application of Technologies: the Kyotoagreements and the establishment of the EU Directive allocating gas emissionallowances enable us to make a financial assessment of the reduction of thegreenhouse effects (a cost of up to 10 euros per tonne of CO2 emitted). This is acleaner biotechnology option, which may be seen as a reduction in environmentalcosts rather than as an increase in the turnover of certain companies.

The Significance of Knowledge as a Source of Capital: the Canadian Science andTechnology Foresight Pilot Project assesses the potential long term (10-25 years)consequences of scientific and technological advances on society, and assigns astrategic role to systems biology, due to its ability to integrate the research results ofmultiple scientific disciplines, resulting in improvements in fields as diverse as newmaterials, computers, the protection of the environment and therapeutic treatments.

35 OECD, Biotechnology Indicators and Public Policy, 2002.


Macroeconomic Impact

The most immediate measurement in the assessment of the economic impact of biotechnology is thenumber of companies devoted to this field, their turnover and the number of jobs they create.36

According to the very strict definition of “biotechnology company” laid down by the OECD for companiesfully devoted to biotechnology (CFDB), there are only just over 100 such companies in Spain, employingabout 1,800 people in total and with a turnover of around 400 million euros. If we compare these figureswith the total number of companies (over 1.5 million, and even over 2.5 million including small andmedium-sized businesses and freelancers), the number of employed people in our economy (just over 17million) or the GDP (around 800,000 million euros), the obvious conclusion is that its relative economicsignificance is very small. Just one out of every 15,000 companies is a biotechnology company; a little overone out of every 10,000 jobs is a biotechnology job; and turnover accounts for only five euros out of every10,000 euros of the GDP.

However, a similar or even slightly higher number of companies (around 100) are partly devoted tobiotechnology (CPDB), since some of their business lines are in this field and they also invest inbiotechnology RDI. In all, they can account for about 19,000 jobs and 6,800 million euros in turnover(which is close to 1% of the GDP). The problem, of course, is the lack of available data on the extent towhich these companies are devoted to biotechnology.

As an estimate of the biotechnology content of partly devoted companies, we can assume that theirbiotechnology activities are proportional to the number of researchers in relation to the total number ofemployees. Using the data provided by the Spanish National Statistics Institute (INE) and obtained in a surveycarried out among companies with some biotechnology activities, we can infer that, on the average,biotechnology activities account for around 8% of the turnover of partly devoted companies. These percentages,however, vary noticeably between the various branches of production, varying from 5% in food and agricultureindustries to 66% in the case of IT services, R&D and other business services. These figures can beincorporated into biotechnology business activities. We could then add public biotechnology activities, whichare part of the research and development carried out in public research institutes and universities.

Starting from the value of the funds granted for research projects, and assuming that these fundsrepresent 40% of the value of the projects, we could assume an approximate turnover of 440 millioneuros and around 6,400 researchers. According to INE estimates, this last figure could be as high as 6,800.For the purposes of obtaining an initial order of magnitude, and using the data for 2002—the mostcomplete data—we can infer that there are about 11,800 jobs related to biotechnological research, andthat the total biotechnology turnover may be close to 1,300 million euros, i.e. a little under 0.2% of theGDP.

36

RELEVANCE

TURNOVER EMPLOYMENT

Companies fully devoted to biotechnology

Companies partly devoted to biotechnology

Universities and Publi R&D Centres

TOTAL

€ 296 M

€ 596 M

€ 440 M

€1,332 M

1,654

3,836

6,400

11,890

36 The economic impact of biotechnology in Spain has been reflected on an Input-Output table in order to define thecontribution and economic significance of Spanish biotechnology on the basis of demand.

Turnover and Employment in Spanish Biotechnology (2002)


37

Spanish biotechnology directly employs around 11,800 people, most of whom holduniversity degrees and doctorates, and has a business turnover and public investment

of 1,300 million euros, 0.2% of the GDP.

Once we have estimated the direct economic impact of Biotechnology, we must quantify the global impactof this activity, which includes those companies that act as direct and indirect suppliers and customers ofgoods and services provided and required by biotechnology companies. This chained effect estimate, whichhas already been carried out at an international level, suggests that the expansive effect is a lot moresignificant than the direct effect itself.

Thus, in the United Kingdom,37 the relationship between jobs in specialised companies (14,000) and thetotal number of biotechnology-related jobs including consulting and services (40,000) results in a totalfigure of 3 jobs for each direct job. On the other hand, a study carried out in the United States38 suggeststhat, for every 100 employees in companies devoted to biotechnology, a further 30 jobs are created insupplier or customer companies. If, in addition, we wish to determine the final effect of biotechnology, wemust add the effects of generated income (derived from the purchases of goods and services made bypeople directly or indirectly employed in biotechnology activities) to this calculation. According to this, 190jobs are created for every 100 jobs in biotechnology. If we carry out a similar calculation for turnover, wecan estimate a generation of 1.3 million dollars’ additional turnover for every million dollar of turnover ofcompanies fully devoted to biotechnology.

In Spain, taking the 2002 data as the base, we can infer a total turnover of 795 million euros and about 7,700extra jobs as a result of the indirect effects of biotechnology companies’ purchases and investments, and a totalturnover of 637 million euros and 6,377 jobs induced by generated income.

The economic significance of biotechnology is 0.4% of the GDP,but its effects are spread out over sectors representing up to around 20% of GDP.

37 UK BioIndustry Association and Arthur Andersen.38 The Economic Contributions of the Biotechnology Industry to the U.S. Economy, Ernst & Young, 2000.

DIRECT, INDIRECT AND INDUCED ECONOMIC EFFECTS OF BIOTECHNOLOGY IN SPAIN(ESTIMATED DATA FOR 2002)

INDIRECT EFFECT

DIRECT EFFECT

Non-biotechnologyIndustry

€795 M turnover7,768 employees

Consumergoods and services

€637 M turnover6,377 employees

Biotechnology Industry

€1,332 M turnover11,890 jobs

INDUCED EFFECT

Equipment, supplies, etc.

Purchases,investment,

etc.

Purchases

Purchases

Goods and services

Goods and services

38

RELEVANCE

According to the data shown in the above diagram, biotechnology activities in Spain have an economic andsocial impact of 2,700 million euros in turnover and about 26,000 jobs. Specifically, each job generated inbiotechnology can result in the creation of two further jobs in purchasing or supplying sectors.

Assuming an annual growth rate of 25% for direct turnover and 20% for direct employment in allbiotechnology activities including fully devoted companies, partly devoted companies and public research,the (direct, indirect and induced) economic impact of Spanish biotechnology for 2004 is estimated at 4,000million euros in turnover and 36,000 jobs.

The turnover and direct, indirect and induced employmentof Spanish biotechnology in 2004 is estimated at 4,000 million euros

and 36,000 employees/workers respectively.

Forecasts for the Future

With regard to possible future scenarios for Spanish biotechnology, a Delphi expert survey reached similarconclusions to those shown in this section and in the International Biotechnology Comparisons section.

• The opinions of the experts consulted confirm that Spanish biotechnology will not catch up with EU-15biotechnology for at least 20 years, and that it will take over 30 years to catch up with the US. In realterms, these impressions confirm that convergence is unlikely to happen under the current investmentsand state-of-the-art conditions.

• The most significant social and economic impact of biotechnology for the next 15 years will be on healthand quality of life, followed by technological innovation and industrial research.

• Two out of every 3 experts are confident that there will be many genomic applications in the areas ofhealth, environment and agriculture by 2010. They also believe that pharmaceutical innovations will bebased on genomics and genetics.

• The biotechnology market will grow in value by 14% per annum between 2004 and 2015. The marketsthat will contribute the most value will be, in order of importance, agriculture, materials, human healthand the environment.

Growth of the BiotechnologyMarket Value

SpanishScenario

2004-2015

EU-15Scenario

2004-2015

Human health

Agriculture

Food and drink

Chemistry

Processing of materials

Environment

Total biotechnology products

16.1%

27.1%

8.4%

4.3%

24.3%

13.4%

13.9%

18.0%

24.4%

8.8%

5.7%

28.3%

15.5%

16.1%


39

5. International Measures to Encourage ProductiveBiotechnology

ME

AS

UR

ES

In this section we have taken as a reference the main programmes, instruments andtools implemented in different countries to encourage biotechnology. Specifically, wehave studied international initiatives with the following goals:

• To promote attracting private funds to invest in biotechnological research;

• To promote biotechnology transfer and the generation of patents; and

• To promote the creation of biotechnology-based companies.

The common denominator of all these initiatives is, undoubtedly, globalisation. FromCanada to Chile, from London to Singapore and from Japan to Sydney, it is possibleto draw lines crossing dozens of countries, most of which have biotechnologypromotion measures.

In general terms, before going into detail about specific measures or initiatives for theinternational promotion of biotechnology, it is worth noting that any successful biotechaction must be backed by the following:

• Scientific excellence and abilities;

• State or federal research policies, which are well coordinated between the differentpublic administrations; and

• A focus on collaboration and innovation.

Since the actions aimed at achieving these three goals belong to the general scope ofeducation, science and technology policies, they have not been analysed. However,we have included comparisons of concrete measures taken in the biotechnology fieldby countries such as Canada, the United Kingdom, Germany and Singapore to attainthese aims.

Attracting Private Funds to Invest in Biotechnological Research:the International Scope

There are various ways to attract private funds for biotechnology research aimed atdeveloping both knowledge and new applications. From these, the following are worthmentioning due to the significant role played by Public Administrations:

• Science parks;

• Investment consortiums; and

• Cooperation projects.

All three of these aim at mobilising private funds through the public structuring ofinvestment. In addition, they all have a public investment or subsidy componentrendering the private investment even more attractive.

40

MEASURES

• Science Parks

The first science park, Stanford Science Park (USA), was created in 1950. The concept was soontransferred to Europe, specifically to the United Kingdom and France. In the late 60s some UK universitiestook steps to create an environment to propitiate the creation and development of technology-basedcompanies. Some early experiences include Cambridge Science Park in 1972. Growth continued in the1990s; by then, over 50% of universities had an agreement or collaboration of some kind with scienceparks.

Science parks have been evolving, first throughout the last half century and later in the 1960s and 70swhen technology parks were built (usually promoted by a group of companies). Science-technology parks,which included technological centres, appeared later in the 1980s. Finally, science parks have been builtfrom mid-1995 to date, promoted by universities with a significant industrial participation. Spain hasexamples of all three models, all of which are very important in the respective phases of creation,development and maturing of biotechnology companies. However, there are very few examples of scienceparks, which are the key to the creation of biotechnology spin-offs.

The main characteristic, which makes science parks different from the other models, is the fact that they arelocated in universities and provide scientific, technical and consulting services, all of which are in high demandby biotechnology entrepreneurs, as well as providing an ideal location for company R&D departments. Thissituation gives rise to a “breeding ground,” which makes it possible to create biotech companies, in particularthose with the highest value: the ones devoted to developing products.

Science Park ModelBased on Switzerland’s Science-Technology Parks (Technopark®)

IndustryBanksInsuranceVenture capitalPublic aids

Foundation

TechnologyTransfer

Technology Centres

Universities

Start-up/spin-off

Company R&Ddepartments

SCIENCE PARK

In the United Kingdom, science parks takeup 1,200,000 m2 2,204 companiesincubate and are located, and 47,340people work, in these spaces. Thepresence of the biotechnology sector hasdoubled in the last ten years and nowrepresents 20% of the companies in theseparks.

Incubation Sectors in UK Science Parks

Telecommunications andInformation Society

Consulting

Biotechnology

Support Services

0

10

20

30

40

50

03019997959385


41

Science parks are undoubtedly a powerful tool to structureresearch around strategic lines, access state-of-the-art technologicaltools and platforms and use research results to financial advantage.

Success Factors in the Creation and Development of Science Parks

• Being clearly related to and associated with one or more knowledge producers.

• Having the effective involvement of various agencies and authorities of their geographic environment.

• Being aimed at and incorporating companies based on innovation and research, companies with ahigh capacity for absorption, and not so-called traditional (or not very technology-intensive)companies or sectors.

• Giving priority to the building of a “trademark” rather than adequate spaces, basically throughefficient innovation services.

• Possessing a professional management team.

• Having a perfectly outlined local innovation system, being identified all their agents and havingestablished a network with them all, justifying each of their roles and establishing collaborationsamong themselves.

• Proving their ability to provide the innovation services in an efficient manner and identifying theagent or agents in charge of providing them.

• Involving the private sector in the building and management of the spaces. This aspect is seen asbeing the least value added.

• Establishing a relationships with agents worldwide.

• Having the support of a large company, which can promote and lead the process of attractingoccupants.

• Having fully identified their competitive strategy and differentiation from the competition, which isunderstood to mean the other parks being developed in the country and, more specifically, in thevicinity of each initiative.

• Having an element of specialisation within the chosen field (such as biotechnology), and arguing itin every way: strategically (in relation to knowledge production), financially and with regard to thedevelopment of the environment.

• Having a business plan including relevant considerations on the strategy to be followed by thepark, the necessary resources to implement it and the means available to do so.

• Investment Consortiums

Biotechnology investment consortiums provide another important mechanism to attract proper funds.These consortiums emerge as a result of a focus on demand for scientific research. The combination of agood research base of industrial interest, and public structuring through an agency or entity in charge ofpromoting biotechnology, is key to the establishment of biotechnology investment consortiums.

There are some interesting examples of public-private research consortiums. From these, the StructuralGenomics Consortium in the United Kingdom—which is led by the Wellcome Trust Foundation and has asignificant economic contribution from pharmaceutical company GSK—and the Chilean Biomineríaconsortium—of which 60% is funded by private investors and 40% by public funds—are worth mentioning.

42

MEASURES

• Cooperation Projects

And, finally, another interesting mechanism is provided by cooperation projects, whose priority is tostrengthen the links between public and private RDI. These projects provide the necessary knowledge-basefor the subsequent development of products and applications. The public and private financial support,usually with a 50% split, has a multiplier effect on the investment and makes it possible to exploit theresults obtained. The generation of contacts (networking) is the most valuable intangible benefit of theseprojects.

There are many examples of cooperation projects, which make it possible to attract private funds, to carryout basic research. This basic research, however, is aimed at obtaining results, which can then beexploited. The Technology Programmes of Finnish Innovation Agency TEKES, which is currently managingfive cooperation projects with 50% private and 50% public investments varying from 7 million euros forsystems biology to 120 million euros for molecular biomedicine, is worth mentioning among theseexamples.

Spain has implemented this mechanism through the Genoma España Foundation. In the first call threecooperation projects co-funded with Genome Canada, the Spanish Autonomous Regions and companieswere set up. In the last call the Tomato Genomics cooperation project, which is funded in three equalparts, 1/3 by Genoma España + 1/3 by the Autonomous Regions + 1/3 by the manufacturing andexporting industry, was established.

Structural Genomic Consortium (SGC)of Canada and United Kingdom

SGC FoundationDetermining the structureof 350 proteins involved in humandiseases and infections

Wellcome TrustGlaxoSmithKlineGenome CanadaOntario Research and Development Challenge FundOntario Innovation TrustCanadian Institutes of Health Research

€95 M

3 years

Biominería Chilean Consortium

BIOSIGMA, S.A.Funding of biomining projects by public tender,

with special emphasis on the use ofGenomics, Proteomics and Bioinformatics tools

Private Investors:• Corporación Nacional del Cobre

(CODELCO)• Nippon Mining & Metal Co. Ltd.

Public Investors:• Corporación de Fomento a la Producción

(CORFO)• Comisión Nacional de Investigación Científica

y Tecnológica (CONICYT)

€3 M €2 M


43

Cooperation Projects of Finnish Technology Agency TEKES

COMBIO-Biomateriales: €26 M in 2005DRUG 2000-Biomedicina: €120 M in 2005Food innovation: €42 M in 2004NEOBIO-New Biotechnology: €87 M in 2005Systems Biology and Bioinformatics: €7 M in 2004

CompaniesResearch centres/UniversitiesTEKES

Biotechnology and Chemical Technology Programme

Participants:

• 159 Companies

• 80 Public centres

Funding:

• 50% TEKES

• 50% Companies

3/5 years and €20-150 M per project

Planning and

strategy

TEKES TECHNOLOGYPROGRAMMES

Cooperation Projects Genoma España / Genome Canada

Funding (Spanish part):

• 16% companies.

• 24% Autonomous Regions

(Andalusia/Murcia).

• 60% Genoma España.

Funding (spanish part):

• 37.5% Autonomous Regions

(Andalusia/Catalonia/Cadiz regio-

nal government)

• 62.5% Genoma España.

Funding (Spanish part):

• 15% companies.

• 7.5% Autonomous Regions

(Catalonia).

• 77.5% Genoma España.

3 years and €4 M per project

PUBLIC CALLFOR PROJECTS

GRAPEGENGrape genomics

SEGMENTAL DUPLICATIONSHuman Health Genomics

PLEUROGENEFlatlish Genomics

Genoma España Genome Canada

44

MEASURES

American universities’ technology transfer offices are usually fairly successful. They are usually managedby professionals and have excellent “industrial relations offices,” which help transfer the results to industry.In Europe, on the other hand, these offices are “officialised,” i.e. admin-oriented with little or no possibilityof encouraging commercial activity. As a result of this each university or public research centre in the USapplies for six times more patents on the average, and the income they obtain from licences is an order ofmagnitude higher than the figure for an average university or public centre in Europe.

In the last few years, one of the main alternatives for the promotion of technology transfer in Europe hasbeen for public institutions—ministries, universities and research councils—to create professionalorganisations or companies to gain greater flexibility for productive development and the marketing ofscience.

Comparative Indicators in Some Technology Transfer Offices in Europe and the USA

Promoting Biotechnology Transfer and Generating Patents:the International Scope

Technology transfer companies generally follow three organisational models: they can be internal units ordepartments within research organisations; subsidiaries or partly-owned organisations created by researchorganisations and operating independently; or independent organisations providing services to differentpublic research bodies.

Types of Research ResultTransfer Offices in Europe

Internal unitin a University

or publicresearch body

53%

Independentorganisation

33%

Subsidiaryorganisation

14%

Number of Research Result TransferOffices in Europe

334

209

165

165

93

58

31

31

27

26

22

20

20

17

7

0 50 100 150 200 250 300 350

LuxembourgBelgium

NetherlandsPortugalGreeceIrelandFinland

DenmarkAustria

SwedenItaly

SpainUnited Kingdom

FranceGermany

MRCtGarching

Innv.FIST-CNRS

Univ.Columbia

CSIC

Country(year of creation)

Personnel

Patent applications

Licence agreements

Spin-offs

Licence income in 2003 (€M)

UnitedKingdom(2000)

35

41

32

18

21.6

Germany(1970)

17

138

84

63

17.2

France(1992)

32

245

48

109

47.5

USA(1982)

31

443

40

60

137

Spain(1997)

39

164

30

12

2


45

Possibly one of the most interesting examples of these professional organisations in Europe is the publictechnology transfer company British Technology Group (BTG), which has been listed on the London StockExchange since 1996. Among its success stories is the interesting interferon molecule in the fight againstcancer, which took 14 years after the patent was obtained to start yielding profits—which are counted indozens of millions of pounds. Other examples include MRC Technology Ltd. (MRCt), which manages thepatentability and marketing of the UK’s Medical Research Council’s results and whose success stories includethe creation of the spin-off company Cambridge Antibody Technology, has a market capitalisation of$500 million in NASDAQ and £350 million on the London Stock Exchange; Garching Innovation GmbH, MaxPlanck Society’s technology transfer company in Germany; and France Innovation Scientifique et Transfert(FIST), an external company, which negotiates the transfer of results obtained by the Centre National de laRecherche Scientifique (CNRS) in France.

In Europe the creation, in the 1990s, of professional technology transfer officesor companies promoted by the various public administrations, universities

and public research centres are yielding significant financial profits.

Finally, it is interesting to note that the most concrete patent application issues (one of the basic pillars oftechnology transfer) is more flexible in the American system, since they have grace periods, which helpharmonise scientific publications and patent applications. Specifically, in the United States, it is possible toapply for a patent up to one year after the publication of the research results (provisional patentapplication); whereas this is not possible in Europe.

Promoting Biotechnology-based Companies: the International Scope

There are two main sources for the generation of biotechnology-based companies, commonly known asspin-offs: universities or public research centres and companies. Programmes aimed at supporting theemergence of companies from both sources don’t make much of a difference, although there is a clearstand in favour of promoting entrepreneurship among public researchers.

The development and advance of basic scientific research in molecular biology and related sciences isnecessarily nested in the productive biotechnology sector, more specifically in the funds and technologicaldevelopments it provides. For this reason, numerous countries have started different mechanisms topromote this productive sector either by creating companies or by providing financial support fortechnological development projects in small companies. The vast majority of these mechanisms are basedon public programmes equating clinical researchers with scientific ones and technologists with scientists,supplementing the public basic research funding programmes with technological development fundingprogrammes.

In Spain the INGENIO2010 Initiative, presented by the President of the Government in June 2005, willunquestionably boost technological development in Spain. However, to date, the national RDI system hasnot borrowed the spirit of many of the international programmes referred to in this document, specificallyin relation to equating clinical researchers/technologists with scientific researchers/scientists. Theorganisation of the State’s national autonomous communities and local divisions with regard to R&Dreflects a clear predominance of R (research) over D (development).

46

MEASURES

The Public Administrations employ different approaches to promote the creation of biotechnology companies as asource of economic wealth and employment. The following are particularly worth mentioning.

I. Public Seed Capital

USA: The US Small Business Administration

Office of Technology has SBIR (small business

innovation research) funds. These are part of a

subsidy programme that in 2004 paid off 563

million dollars to the health, pharmacy and

biotechnology fields alone. This amount was

provided by the National Institute of Health

(NIH), which is interestingly the first source of

national funding for basic research projects in

biotechnology.

II. Promoting Private Seed Capital

Investment

Canada: The provincial governments caused a

significant part of civil servants’ pension funds

(Caisse de Depot) to be invested in spin-off or

start-up biotechnology companies. The early

investment of pension funds in companies such

as Biochem Pharma, which yielded very

noteworthy returns for these funds, helped create

a culture of investment in and support for

biotechnology in Canada.

III. Promoting Entrepreneurial Culture

United Kingdom: Biotechnology Mentoring and

Incubator Challenge, a national programme

specifically aimed at the biotechnology sector and

created in 1996 to encourage the provision of

services to support the creation of biotechnology

companies. This programme has enabled the

creation of 100 biotechnology companies, 750

direct jobs and a total investment of 358 million

euros.

IV. Tax Incentives for Start ups and

Investment

Canada: The Canadian region of Québec has

supplemented the federal effort with the creation

of Biotechnology Development Centres, a specific

programme to support the location of companies

in biotechnology parks and bio-incubators and

supplement the federal tax incentives with

provincial tax incentives, resulting in a possible tax

deduction of up to 70% of the R&D expenditure of

businesses. Canada’s tax incentives policy has

been a great success; a significant number of US

pharmaceutical and biotechnology companies

migrated to Canada in the 1990s.

V. Supporting the Creation of Regional

Clusters

Germany: In 1996, the Ministry of Education

and Science called for tender to consolidate

Bioregions, and invested up to 90 million euros

in five years in the three winning “Länder.” In

view of its success, a new tender, with a 50

million euro award, was subsequently called for.

VI. Supporting the Creation of Infrastructure

and Attracting Talent

Singapore: Biopolis, a business science

complex that provides a space for biomedical

R&D activities to promote a culture of

cooperation between public and private

research, began operating in 2003. Companies

such as Novartis, Paradigm Therapeutics and

Vanda Pharmaceutical, among others, have

already settled in the campus. It has 185,000

square metres and an investment of 292 million

dollars.

VII. Providing Assistance to Industrial

Research and Innovation

Canada: Through the Industrial Research

Assistance programme, the National Research

Council provides advice and funding by means

of repayable loans to create and develop

biotechnology companies. The main benefits of

this programme are flexible negotiation

(the financial return on the investment is

negotiated on a case by case basis) and the

availability of one of the largest networks of

industrial technology advisors, specifically more

than 260.

In addition, the region of Québec has

biotechnology parks and bio-incubators within

the Biotechnology Development Centres (BCD)

programme. This includes the Cité de la Biotech

in Laval, which provides support services for

research, product development and marketing,

and has a total investment of 150 million

Canadian dollars of which 1/3 is publicly

contributed and 2/3 is from private

investments.


47

As part of the studies conducted and commissioned to draft this strategic foresight for Spanishbiotechnology, a round of Delphi surveys was carried out among national and international experts toidentify the factors of business success in biotechnology, in particular for spin-off companies whose goal isto develop new products. The most important of such factors are the human team, access to technologyand infrastructure, access to international markets and the availability of venture capital funding.

Success Factors in the Development of BiotechnologyProducts at a Global Level

Degree of Importance

Access to technology and infrastructure

Access to Human Resources

Access to international markets

Access to venture capital

Access to public subsidies

Information about the markets

Lack of intellectual property protection

Marketing and distribution channels

Patent rights in the hands of other stakeholders

Compulsory authorisation costs

Public perception/acceptance

Tax breaks and deductions

International legal harmonisation

Domestic market size

4.5

4.5

4.5

4.4

4.0

3.9

3.9

3.7

3.7

3.5

3.4

3.4

3.3

3.0

Implementation of Measures to Encourage Productive Biotechnology in Spain

A detailed study of international biotechnology promotion measures shows that any support measure ortool must first be designed within a general strategy and a specific strategy for each country. Applyinginternational experience to the domestic context shows that there are several, non-exclusive, possiblestrategies to encourage productive biotechnology in Spain. Three of these are particularly worth notingwithin a framework for common action on the state-of-the-art conditions:

• Biotechnology as a transversal technology sector, a first strategy responding to the need to encouragebusiness research;

• Biotechnology as a new economic sector, a second strategy responding to the need to encourage the transferof public research to the business sector and to the creation of new companies; and

• Clustering, or the concentration of biotechnology, a third strategy responding to the need to create publicresearch centres of excellence bringing together personnel, knowledge and infrastructure around welldefined lines.

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MEASURES

StrategyBiotechnology

as a TransversalSector

Biotechnologyas a New Sector

Concentrationof

Biotechnology

Basic needsor requirements

Measures,tools and actions

to supportbiotechnology

The Need toEncourage Private

Research

Designing businesstraining programmes,

information services, andinformation and

networking websites

Promoting awarenessmeasures

Carrying out activities topromote networking and

relations betweencompanies

Technology centres andtechnology dissemination

centres

Direct assistance to alltypes of R&D but

particularly to thosetypes, which stimulatecooperative research

Maintaining the currenttax incentives for RDI(traditional schemes)

Programme to encouragethe creation of R&Ddepartments within

companies

The Need to Encouragethe transfer of Public

Research to the BusinessSector and Spin-offs

The Need to CreatePublic Research

Centres ofExcellence

Programmes that encouragebusiness research aimed at

marketing innovations

Programme to encourage anentrepreneurial culture

Funds for public sector researchgroups to create spin-off

companies, in stages prior toNEOTEC (concept capital)

Programmes and funds to exploituniversity patents

Designing specific tax schemes forspin-off companies, which do notgenerate any profits in the firstfew years of commercial activity

Creation and/or promotion ofpublic investment entities and

funds

Encouraging guarantee systemsfor investors in biotechnology

companies

Promoting bio-incubators andspecialised science parks

Creating specialised and“centralised” technology transfer

support units

Bringing foreign private companiesoperating in the technology

transfer field into the Spanishmarket

Encouraging the“concentration” ofquality research:

centres of worldwidescientific excellence

Highlighting thequality and integration

of disciplines inbiotechnologyresearch group

assistanceprogrammes

Reinforcingprogrammes to hireand train scientific

personnel specialisingin biotechnology and

related sciences

Creating organisationsto promote

biotechnology clusters

Supporting scienceparks as central

elements inbiotechnology clusters

Designingprogrammes to attract

R&D-intensivemultinationals

Fundamentalsupport elements

AwarenessInformation and

Support

Funding and AdvancedSupport Services for New

Technology-based Companiesand Patent Applications

Trainingand Attracting

Talent


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7. The Challengesof Biotechnology in Spain

CH

ALL

ENG

ES As seen in the aspects analysed in this report Spanish biotechnology is facing asignificant number of challenges, which can only be addressed with a comprehensiveand strategic approach. The following are particularly worth noting:

• Maintaining a significant public investment in biotechnology R&D as well as theannual growth rates of such investment. In 2010 public investment should accountfor over 500 million euros per annum, more than twice the 2004 figure, and over1,000 million euros should be accounted for by private investment.

• Structuring the development of biotechnology through coordinated action by thedifferent Public Administrations in locations that bring together the various actorsand people in charge of such development: universities, research centres, hospitals,companies, support services and infrastructures.

• Equating technologists with scientists and clinical researchers with scientificresearchers, both professionally and socially, and promoting these as social successmodels.

• Stimulating and funding the protection of public research biotechnology results(patents) and the creation of technology-based companies (spin-offs) on the basisof such research. Both patents and spin-offs are potential sources of wealth for theSpanish society as well as further funding for public research.

• Attracting both industrial and financial private capital by means of new technologicalinnovation and development tools supplementing the National RDI Plan and theprogrammes of the Autonomous Communities.

• Defining and implementing a strategic plan for Spanish biotechnology in order forthe economic relevance of this “sector” to reach directly and indirectly 1.6% ofthe Spanish GDP and contribute to the creation of 100,000 jobs.

In the new society based on knowledge and global competitiveness biotechnologyshould become a source of wealth and social well-being for the Spanish citizens.We have excellent foundations to make this a reality.

Finally, it is worth mentioning that many of the challenges we have described hereinare common to other industrial and technological sectors. They will therefore beaddressed by the new national research policy, which is being implementedhorizontally during this year 2005.

Orense, 69, 2nd floor 28020 Madrid, SpainTel.: 91 449 12 50 - Fax: 91 571 54 89http://www.gen-es.org/

Spanish Biotechnology: Economic Impact, Trend and Perspectives

Economy & Finance

Transcript of Spanish Biotechnology: Economic Impact, Trend and Perspectives