Pride and pioneers
NRW's behemoth chemical companies generate about one third of the German chemical industry's global sales. For biotechnology, this dominance can be both a blessing and a curse.
For more than a century, the state of North Rhine-Westphalia (NRW) has been the heartland of Germany's pharma and chemistry industry. Today, while the chemical industry is still strong, Germany is no longer the pharmacy of the world although NRW still houses a significant portion of companies active in pharmaceuticals. This amounts to about 150 companies, mostly small and medium-sized enterprises; only four have more than 1,000 employees. Most global pharmaceutical companies are represented in NRW—by subsidiaries, production facilities, or distribution centers—a reflection of the highly qualified employee base and the size of the market....
The presence of big corporations has impacted the state's biotech industry which today is much stronger in white than in red biotechnology.
In medical or red biotechnology, NRW had a late start, just like the rest of Germany. According to science historian Ulrich Dolata, who published extensively about the beginnings of biotechnology in Germany, almost no collaboration occurred in the 1980s between the established German pharma industry and the few newly-founded German biotech startups. Instead, industry looked solely to the United States, even setting up research subsidiaries there.
Dolata concludes that the German pharma industry did not grasp the significance of biotechnology, a view endorsed by others. In her book The Lab in a Box, science historian Inken K. Rebentrost recounts the story from the mid 1980s when one of Qiagen's founders was asked by a German pharma head of global research whether he thought his company should buy into Genentech at a given price. When advised to buy the very next morning, the pharma manager laughed and commented that this would be waste of money as all these companies would fall into the German pharma industry's lap like ripe fruit.
History has proven otherwise. When the German pharma industry finally realized the impact biotech already had on its competitors in the United States, companies rushed to establish collaborations and subsidiaries across the Atlantic. This leaning to the United States was due to the more advanced R&D landscape there, and the more supportive environment. However, as US scholar Robert Yuan dryly noted, the partnerships were made "more out of fear of being left behind than out of a spirit of excitement at the possibilities in the future."
According to Rebentrost, the lag in developing a supportive R&D landscape was caused by Germany's inflexible academic structures and the initial failure of industry to integrate basic research. Neither side was interested in the other. German academics simply did not want to work on industrial applications and they were banned from working for enterprises while maintaining their university positions. In fact, any ties to industry were frowned upon. Industry didn't consider German academia to be fertile ground. When the German government in the 1970s ordered a study on biotechnology from DECHEMA, an influential association of industry professionals, to shape its funding policy, DECHEMA recruited its experts solely from big corporations, completely ignoring the innovative potential of academia. So, while the study underlined the importance of basic research in general, it failed to recommend funding aimed at translating the results of academic research into technology.
This all changed in 1995 when the German government launched its BioRegio initiative. The program aimed to improve and integrate biotechnology R&D activities within regions by bringing together research institutions, companies, investors, patent lawyers and so on. It was designed as a competition. Entries included profiles and perspectives and described opportunities for cooperation and the setting up of new enterprises. Seventeen regions across Germany submitted proposals, with NRW's BioRegio Rheinland being one of three winners, bringing in 50 million DM of funding.
"The BioRegio program really has made a difference," recalls Jürgen Schumacher, one of the cofounders of Qiagen and most recently CEO of NewLab BioQuality in Erkrath. "BioRegio was a wake-up call which led to the establishment of a sustainable biotech landscape. In the beginning, local pharma companies were bystanders, but that attitude has vanished over the years."
Currently, NRW houses about 300 life science-related companies, including 170 core biotechnology enterprises and internationally renowned heavyweights such as Qiagen, Miltenyi Biotec, and Rhein Biotech. On top of this there are spinouts, collaborations, and acquisitions abound.
Apart from the sheer numbers of enterprises, BioRegio in NRW led to the creation of seven regional competence networks comprising academia, industry, regional governments as well as funding institutions. Even biotech-versed business angels have appeared. The resulting collaborations have been fruitful and created a wealth of spinouts from the state's universities and academic institutions.
The state's biotech industry is on the acquisition radar of big pharma and international biotech companies. One of the first companies to be acquired by a US enterprise was Cologne-based Artemis Pharmaceuticals which was founded in 1998. In 2001, it was taken over by US-based Exelixis. The company, which is developing sophisticated animal models, is now owned by Taconic Farms, and is named TaconicArtemis.
Another example is Coley Pharmaceutical, a spinout of Qiagen which was founded in 1997 with offices in the United States and in Hilden, Germany. It was acquired for nearly $200 million by pharmaceutical giant Pfizer at the end of 2007, mainly because of its vaccine adjuvants. The company had set out to develop biopharmaceuticals for targeted induction of immune responses that fight diseases.
2008 saw the acquisition of three other biotech companies based in NRW. Cologne-based Amaxa, which was founded in 1998 as a developer of transfection technologies, was taken over by the Swiss Lonza Group. Direvo was acquired by Bayer. And Charles River Laboratories bought NewLab BioQuality, a service provider of quality control analysis for biopharmaceuticals. All of these businesses have been maintained at their original site so that the buyer can tap the full potential of the location, its employees and the local network.
"These examples demonstrate that North Rhine-Westphalia is strong in enabling technologies and one of its advantages is its diversity," says Bernward Garthoff, Clustermanager of BIO.NRW, the umbrella organization representing the state's biotech clusters."If you are looking for a solution to a problem, you will find an expert here," he says, citing the enabling technologies from analytics and diagnostics to gene therapy vectors, biochips, and manufacturing skills. "There's huge chemical expertise," he adds, "there is genomics know-how, a broad competence in analytics, and also nanobiotechnology. The region around the city of Münster is home of Germany's sole nanobiotechnology cluster, which bundles expertise in this novel field across Europe."
The state government has recognized that it takes more than funding basic research and industry cooperation. "To make the state attractive to big pharma, we need collaborations along the entire value chain," says Andreas Pinkwart, NRW's Minister for innovation, science, research and technology. "As an example, pharma needs fresh ideas, new technologies, but also access to patients. And in recent years, Germany has been facing strong competition from China, India, Eastern Europe and other regions as a location for clinical studies. Therefore we have put efforts into strengthening clinical research, and already we see some results."
As a first success, pharmaceutical company Bayer decided to relocate its clinical research to NRW. "The company has closed a preferred partnership agreement with Cologne University Hospital," says Pinkwart. "They will work together in preclinical research, but also conduct joint clinical studies. If university researchers discover something of interest it is first offered to Bayer, while Bayer will approach the clinic first for planned clinical studies." Collaboration areas comprise oncology, cardiovascular, and central nervous system disorders. "This partnership aims to serve as a model," he adds, "and I am inviting US pharma companies to set up similar collaborations or clinical research centers here."
Apart from enabling technologies, the state is also home to biotech companies developing therapeutics, like Paion in Aachen, a company focusing on neurological indications such as stroke and pain, or Biofrontera of Leverkusen, which is developing innovative treatments for skin and inflammatory diseases.
The latest wave of biotechnology developed in much closer collaboration with industry, specifically the chemical industry. Right from the beginning, white biotechnology enjoyed more interest from industry than red biotechnology.
"In white biotechnology, which is very strong today in Germany and in particular in North Rhine-Westphalia," says Schumacher, "strategic cooperations between global players and [small and medium-sized enterprises]are more frequent and much better set up than they used to be in the beginning of red biotechnology." He attributes this difference to lessons learned and the fact that, in contrast to big pharma, there are still several global chemistry players around alongside medium-sized companies eager to network and learn.
As an example, in 2007 chemical company Degussa opened its Science-to-Business Center for Biotechnology in Marl where 60 researchers and technicians will collaborate with academic and SME partners to develop novel products and processes based on raw materials from renewable resources. Degussa is investing €50 million over five years, while the state government will contribute €11 million. In the first year, the center has entered into 40 research collaborations with NRW-based research institutions and enterprises.
This again is the result of a learning process: White biotechnology is already contributing considerably to the chemical industry's turnover, however it still suffers from lack of standardized solutions. "One day, in white biotechnology we will have standard modules ready for combining just as it is common in conventional chemistry synthesis," says Andreas Schmid, head of the Laboratory of Chemical Biotechnology of Technical University Dortmund. "But to develop it, we need collaborations across multiple disciplines and between industry and academia."
In this case, it looks as if the chemists working in the big corporations are a blessing to the biotech industry.