McKinsey delivered a mostly upbeat assessment of Europe’s biotechnology industry in August when it published a report titled, “Biotech in Europe: A Strong Foundation for Growth and Innovation.”

“European biotechs offer investors space for growth and momentum,” McKinsey concluded in its report. “With a strong science base that is less fully utilized than its U.S. counterpart, they have ample opportunities to translate innovation into products. Armed with adequate funding to expand, they could achieve global competitiveness and success in coming years.”

McKinsey noted that total investment of all types (VC, initial public offerings, follow-on public offerings) in European biotechs more than doubled during 2012–2018, when €11.9 billion ($13 billion) in investment was recorded, compared with €5.1 billion ($5.6 billion) in 2005–2011. VC activity more than tripled from period to period, reaching $2.3 billion, “thanks to the emergence of bigger, stronger European VC funds.”

However, McKinsey acknowledged several challenges to Europe biotech growth in coming years. One key challenge is a large and growing gap in late-stage financings compared to the U.S. European biotechs are more attracted to going public in the U.S. since biotech IPOs were three times larger on NASDAQ than on European exchanges. From 2012 through the report’s publication in August, nearly one in three European biotechs that filed for an IPO (34 companies) did so directly on U.S. exchanges—while nearly all (98%) of follow-on offerings by European biotechs had been launched on U.S. markets.

Another challenge cited by McKinsey is generating and protecting intellectual property. Between 2012–18, the U.S. originated about three times as many patent registrations for new medicines as Europe did, while China originated about nine times as many as Europe.

Patents and VC financing are among the five criteria used by GEN to rank countries in its annual A-Lists of top European biopharma clusters:

  • Patents—Based on the number of “biotechnology” and “pharmaceutical” patents granted to, plus biotech and pharma patent applications made by, countries in Europe, as furnished by the publicly available European Patent Office database of granted patents per field of technology and per country of residence during 2018.
  • Venture Capital (VC) funding—Combines figures compiled by Invest Europe with figures furnished by some of the countries themselves, either on their own websites, in publicly available reports, in public announcements, or as responses to email queries from GEN.
  • Public research funding—Figures taken from the publicly available European Union Community Research and Development Information Service (CORDIS) website of grants issued through the current Horizon 2020 research funding program (2014–2020).
  • Number of biotech companies—Combines figures furnished by representatives of the countries themselves, either on their own websites, in publicly available reports or public announcements, in news reports, or as responses to email queries from GEN. Where known, figures reflect companies with an “exclusive” or “pure” focus on biotech.
  • Jobs—Based on various sources from industry groups, regional life sciences campuses, public and/or private economic development groups, and press articles when written by or directly attributed to an industry source. Where possible, medical device or “medical technology” job numbers normally included in “life sciences” employment numbers were excluded, leaving job numbers more closely focused on biotech and pharma.

This year’s European cluster ranking includes all countries that appeared on GEN’s 2018 A-List of top 10 European biopharma clusters, but with several significant changes, including a new number-four nation and much of the bottom half of the list. Two countries just missed making this year’s list despite top-10 rankings in selected areas: Ireland placed 10th in VC (€69.369 million [$76.2 million], according to Invest Europe), while Austria’s 10th-place ranking came in public financing (2,193 grants).

Top-10 rankings in venture capital: Ireland ranked seventh (€80.15 million [$92.1 million]), and Austria, eighth (€69.061 million [$79.4 million]), both according to Invest Europe (formerly known as EVCA; European Private Equity and Venture Capital Association).

 

10. Sweden

Three officials—Minister of Enterprise Ibrahim Baylan, Minister for Higher Education and Research Matilda Ernkrans, and Minister for Health and Social Affairs Lena Hallengren—raised hopes within Sweden’s life sciences industry in June by publishing a commentary in Dagens Medicin advocating a strategy that would raise the country’s profile worldwide. Sweden took the first such step last year by creating a government Office of Life Sciences tasked with developing such a strategy. In November 2018, the nation published a status report or Life Sciences Road Map urging Sweden to focus beyond drug development, into digital healthcare and health data, precision medicine, and “tomorrow’s health and social care.”
 
While the strategy is still in the works, Sweden’s government delivered some good news to the industry in the 2020 budget bill submitted September 18—it plans a further cut in fees for employers that carry out R&D in order to stimulate innovation, though details have yet to be presented. The strategy is intended to build upon assets that range from academia (Karolinska Institute and Lund, Uppsala, and Göteborg Universities) to industry (and from giants like AstraZeneca and Pfizer-acquired Pharmacia to smaller biotechs).
 
Sweden ranks sixth in number of companies (566, according to the Swedish Life Sciences Database, whose partners include industry group Sweden Bio and SWELife—the government-funded life-sciences strategic innovation program. The country is also sixth in jobs (40,000, according to Sweden’s R&D funding agency Vinnova), but ninth in public research funding (2,380 grants), 10th in patents (93 granted and 173 applications in 2018), and 11th in VC (€38.267 million [about $41.9 million], according to Invest Europe.
 

9. Denmark

Bagsværd-based Novo Nordisk made history September 20 when the FDA approved the company’s Rybelsus® (semaglutide) for type 2 diabetes in adults—the first U.S.-approved oral glucagon-like peptide-1 (GLP-1) receptor agonist. Five months earlier, Novo Nordisk signaled its intent to manufacture that and other next-generation diabetes treatments in Denmark by announcing a DKK 650 million ($95 million) expansion of its half-century-old production site in Kalundborg. The expanded site is set to begin production in 2020.
 
Novo wasn’t the only Danish biotech succeeding with the FDA. On September 24, the agency authorized Copenhagen-based Bavarian Nordic’s smallpox and monkeypox treatment Ynneos™. Another home-grown biotech, Copenhagen-based Genmab, raised approximately $546.5 million in net proceeds in July through a U.S. initial public offering of American Depositary Shares on the Nasdaq Global Select Market. And in September, Medicon Valley Alliance, which oversees a mini-cluster linking the Greater Copenhagen region of eastern Denmark to southern Sweden, lost its chairman Søren Bregenholt, PhD, after he was appointed CEO of U.K.-based Macrophage Pharma.
 
Denmark’s number of biopharma companies (536, the Ministry of Foreign Affairs or MFA told GEN) place the country fifth. Denmark is sixth in patents (156 granted and 465 applications in 2018), but eighth in jobs (30,869, according to the MFA), ninth in VC (€72.705 million [$79.5 million], according to Invest Europe), and 11th in research funding (1,999 grants).
 

8. Belgium

One of Belgium’s best-known drug developers, Mechelen-based Galapagos, showed this summer that European biopharmas are just as capable of scoring big-money collaboration deals as their counterparts in the U.S. or Asia. Gilead Sciences on July 14 said it will invest $5.1 billion to nearly double its minority stake in Galapagos from approximately 12.3% to at least 22%—and possibly about 30%—through a 10-year global R&D collaboration in which Gilead will expand its role in the companies’ arthritis candidate filgotinib and co-develop the rest of Galapagos’ pipeline.
 
Galapagos is an industry anchor within Belgium’s Flanders region, where Mont-Saint-Guilbert-based Promethera Biosciences in May dosed its first patient in a Phase IIa trial of its HepaStem, which according to the company is the world’s first liver stem cell therapy candidate for late-stage NASH. In the Wallonia region, Gosselies-based CDMO MaSTherCell said in March it will triple its European capacity by building a new manufacturing site for late-stage and commercially-approved gene therapies. The facility is set to open in 2021. Wallonia’s bioindustry group BioWin is even reaching out beyond Belgium, inking a cross-membership agreement with French counterpart Medicen Paris Region.
 
Belgium scores highest in jobs, ranking fifth (46,500, based on the 26,500 Wallonia jobs and 20,000 Flanders jobs cited by regional groups), with EFPIA counting 35,711 pharmaceutical jobs. The country is seventh in public research finding (3,401 grants) and VC (€129.366 million [$141.5 million], according to Invest Europe), but ranks lower in patents (eighth with 138 granted and 315 applications in 2018), and number of companies (10th with 308 according to Biotechgate, presumably including the 157 tallied in Wallonia by BioWin).
 

7. Italy

While Italy’s politics remain turbulent, reflected in the August resignation of Prime Minister Giuseppe Conte, the nation’s biopharma industry shows signs of smoother sailing, reflected in its rising two positions in this A-List compared with 2018. Italy places fifth in research funding (5,434 grants) and venture capital, where it has leaped from 11th last year to fifth (€157 million [about $172 million], Italy’s ENEA, the Italian National Agency for New Technologies, Energy and Sustainable Economic Development told GEN). Italy ranks lower in patents (seventh with 177 granted and 256 applications in 2018), number of companies (ninth with 319 according to ENEA), and jobs (10th with 8,599, according to ENEA).
 
On September 11, Milan-based Genenta Science Thermo raised €13.2 million ($14.4 million) in a private financing to fund a pair of ongoing Phase I/II trials for its cancer stem cell therapy Temferon. One trial will assess patients with solid tumor glioblastoma multiforme; the other, patents with multiple myeloma. The financing brings Genenta’s total capital raised to €30.2 million ($33 million). Among companies growing in Italy is Thermo Fisher Scientific, which in March revealed plans to expand sites in Monza and Ferentino, Italy, as well as Greenville, NC, as part of a $150 million Pharma Services investment designed to add capacity for sterile liquid and lyophilized product development and commercial manufacturing.
 

6. Switzerland

Lausanne-based ADC Therapeutics, the developer of antibody drug conjugates targeting major cancers, withdrew a planned IPO on the New York Stock Exchange on October 2, but not before disclosing plans to raise up to approximately $205.9 million in net proceeds. Another home-grown biotech, Basel-based Roivant Sciences—owner of 20 companies or “vants”—in September sold five of those companies to Sumitomo Dainippon Pharma for $3 billion upfront. The megadeal gave Sumitomo Dainippon a more-than-10% stake in Roivant, and an alliance overseeing more than 25 clinical programs and multiple potential product launches through 2022.
 
Yet the biggest headlines from Swiss biopharmas have come from a pharma giant. Basel-based Novartis’ AveXis gene therapy subsidiary in May won FDA approval for Zolgensma® (onasemnogene abeparvovec-xioi), a treatment for pediatric spinal muscular atrophy. Soon after, Novartis generated controversy by pricing the gene therapy at a list price of $2.1 million, though it added that it was working with insurers to develop patient access programs. Novartis later fired AveXis’ co-founders, brothers Brian and Allan Kaspar, blaming them for manipulated data submitted to the FDA; Brian Kaspar has publicly denied any wrongdoing.
 
Switzerland scores highest in patents (third with 341 granted and 925 applications in 2018), and next-highest in venture capital (fourth with CHF 252.6 million [$254.9 million] according to the 2019 Swiss Venture Capital Report by Startupticker.ch with SECA [Swiss Private Equity & Corporate Finance Association]). However, the nation ranked eighth in research funding (2,544 grants), ninth in jobs (14,319, according to Swiss Biotech Association), and 11th in number of companies (249, also according to Swiss Biotech Association).
 

5. The Netherlands

The Netherlands has actively positioned itself to gain from the U.K.’s pain over Brexit. In August, the Netherlands Foreign Investment Agency (NFIA) announced that 98 companies were worried enough about the U.K.’s future to move to the Netherlands. “Health and life sciences” are among the industries that U.K. companies are most attracted to in Holland. No doubt those companies are being drawn by closer proximity to the European Medicines Agency, which in March moved its offices to Amsterdam from London.
 
Among biotechs recently making news in the Netherlands is U.S.-based Fujifilm Irvine Scientific, a leading developer and manufacturer of cell culture media, which in July announced plans to open a European hub in Tilburg; the cGMP manufacturing facility will be the company’s third worldwide. Most recently on October 2, Lonza said its GMP facility in Geleen will oversee clinical manufacturing of Paris-based Cellectis’ allogeneic UCART product candidates targeting hematological malignancies.
 
The Netherlands’s rankings show consistency, ranging between fifth in patents (185 granted and 593 applications in 2018), and seventh in jobs (“over 34,000,” according to NFIA’s website) and number of companies (512, according to NFIA, which cites Holland BIO’s Dutch Life Science Database). In between, the country places sixth in grants (4,264) and venture capital (€134.479 million [$147.1 million], according to NVP, the country’s private equity and venture capital association).
 

4. Spain

The Spanish Association of Biotech Companies, ASEBIO, reported some record-breaking numbers from its Investor Day event held September 25–26: Sixty investors from nine countries attended the event, providing more than 500 partnering opportunities for the 280 participating companies. ASEBIO is hoping that activity translates into more financings: Spain ranked eighth in VC last year with nearly €95 million (about $104 million)—though the amount of VC investment by overseas firms has nearly doubled from €40 million (nearly $44 million) in 2016 to €74 million ($81 million) last year.
 
Beyond venture capital, Spain ranks ninth in patents (95 granted and 299 applications in 2018). The nation ranks much higher at fourth in both number of companies (713) and jobs with a combined 67,716 (42,687 pharma jobs according to EFPIA, and 25,029 biotech jobs according to ASEBIO). Yet Spain’s brightest spot is public funding, where it reached third with 6,154 grants.
 
Another strength of Spain is diagnostics development: In May, a respiratory diagnostic panel originally developed by Barcelona-based STAT-Dx won FDA approval, more than a year after STAT-Dx was acquired by Qiagen for up to $191 million. Spain can also expect to see more biomanufacturing since Grifols revealed plans in May to build new manufacturing facilities in Murcia (products for the U.S. market) and Llica de Vall, Barcelona province (addition to plant in Parets), part of a €1.4 billion [$1.5 billion] companywide investment through 2022.
 

3. France

President Emmanuel Macron committed France to becoming a “start-up nation” when he took office in 2017. Macron moved to deliver on that promise September 19 during “France Digitale Day 2019,” where he announced plans for a €5 billion (about $5.5 billion) development fund designed to support early-stage digital health and other tech companies. The fund could help France achieve another ambitious goal articulated last year by Macron—becoming a global leader in AI by spending €1.5 billion ($1.6 billion). Macron also seeks to reduce red tape for early-stage companies seeking to raise the equivalent of $100 million or more.
 
Two home-grown companies reported successes in April. Paris-based Cellectis in April won FDA approval for its IND to begin a Phase I trial of UCARTCS1, the first allogeneic CAR-T therapy for multiple myeloma to enter clinical development. Lyon-based Calixar licensed its native membrane protein stabilization technology to Regeneron Pharmaceuticals.
 
France advanced last year to second in VC (€594 million [$649.8 million], France-Biotech told GEN) while staying second in patents (416 granted and 866 applications in 2018). The nation dipped to fourth in research funding (5,581 grants), but is third in number of companies (720, according to France Biotech) and jobs (98,694 pharma jobs according to pharma industry group LEEM [Les Enterprises du Medicament], down 92 from a year ago, and about 20,000 biotech jobs, according to France Biotech.
 

2. Germany

“Germany is Europe’s great untapped player in biotech,” Richard Mason, MD, co-founder of the Foundation Institute for 21st Century Medicine, recently told Pharmaceutical Market Europe. Mason headed XO1 until its 2015 acquisition by Johnson & Johnson—which later tapped him to head J&J Innovation’s London Innovation Centre. “While Germany has produced far fewer biotech companies than you would expect, it’s definitely the place to watch.”
 
Taxes and bureaucracy may indeed have impeded startup creation, as Mason asserts. But the Federal Ministry of Education and Research (BMBF) encourages translation of research into new companies through GO-Bio, launched in 2005. Larger home-grown companies have had successes: BioNTech plans to raise up-to-$267.8 million in net proceeds through a U.S. IPO of American Depositary Shares on the NASDAQ Global Select market. On September 24, Hamburg-based Evotec launched a partnership with Takeda Pharmaceutical to develop at least five drug candidates, with Evotec to receive an undisclosed upfront fee, up to $170 million per program, and tiered royalties.
 
Germany maintains its number-one rankings in patents (605 granted and 1,360 applications in 2018) and jobs (130,902 pharma jobs according to the German Association for the Pharmaceutical Industry [BPI], and 27,445 biotech jobs according to BIO Deutschland). The federal republic placed second in research funding (6971 grants), second in companies (1,232) and rose one position to third in VC (€369 million [$403.7 million], according to BIO Deutschland).
 

1. United Kingdom

It’s anyone’s guess at deadline whether the U.K. carries out its no-deal Brexit on October 31 as promised by Prime Minister Boris Johnson, let alone what effect it may have on the kingdom. Johnson’s government has committed £434 million ($533.3 million) toward shipping and storage to prevent shortages of medicines and medical products upon a pullout from the EU. The U.K. BioIndustry Association (BIA) has stepped up its Brexit webinar briefings from monthly to weekly.
 
In May, the BIA and the Medicines Discovery Catapult showed strong growth potential where drug discovery is concerned, in a report that found the segment could support an additional 33,000 jobs and 50 early clinical stage companies by 2025. It helps that the U.K. leads Europe in biopharma VC (£1.113 billion [about $1.4 billion], according to the BIA. But on October 3, the BIA predicted the U.K. will not likely equal that amount this year, since just £458 million ($566 million) in VC has been raised by U.K.-based biotechs in 2019 as of August 31.
 
The U.K. is also top-ranked in public funding (7,981 Horizon 2020 grants) and number of companies (2,153 biopharmas, according to Bioscience and Health Technology Statistics 2018, issued in May 2019 by the government of Johnson’s predecessor Theresa May). The U.K. is second in biopharma jobs (about 121,000, including biopharma service and supply jobs), but fourth in patents (276 granted and 549 applications in 2018).

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