10,000 EmployeesAround Biotechnology
More than 300 companies with biotechnology activities, 71 of them entirely dedicated to it, make the Spanish life science sector one of the most active places in this emerging market. Despite the support from organizations like ASEBIO (Spanish Bioentrepreneur Association) or Genoma España (Spanish Association to Promote Genome and Proteom Activities) there is still a long way ahead to reach the competitiveness of other European countries (see also interview with Francisco Bas ASEBIO's General Secretary on page 39). Nevertheless there are very good tools to improve the current market situation and some of the young Spanish companies are already dealing with own novel products or signing development agreements with international big pharma giants.
This is the fourth year in a row that the ASEBIO Index, the indicator of trends of the biotechnology Spanish sector, is compiled. In summary, it confirms continued growth of the sector despite the fact that there is still room for significant improvement and leveraging the growth of the Spanish biotech sector.
Some of the remarks made by the biotechnology experts state that notwithstanding the lack of critical mass of the sector, there is activity in the right direction, and that more determined policies would give an important push to the pace of growth.
There is a lack of both entrepreneurs and public support to give assistance to that very scarce entrepreneurial talent, and plans to set up biotechnology companies similar to those preceding the success of other European biotechnology regions such as UK, France and Germany need to get started urgently. The improvement of access to seed capital funding and the activity of venture capital firms specialised in biotechnology has not been complemented by the additional financial tools that spearhead the growth and maturity of companies already established. Some public sources of capital are particularly worthless for companies in this sector with all the red-tape and associated endorsements and pledges needed.
More than 300 companies that are highly active in the biotechnology sector currently have ongoing businesses in Spain.
According to data compiled by Genoma España the classification of these companies according to their biotechnology R&D investment effort shows that 71 companies are entirely dedicated to biotechnology, 79 are partially dedicated and 49 are user companies; and all of them actually have research labs of their own. On top of these, nearly 200 companies are specialised service providers. Companies entirely dedicated to biotechnology, which are the engine generating knowledge in the Spanish biotechnology sector, had revenues of Euro124 million, invested over Euro152 million in R&D activities and provide employment to 1,700 people.
In order to provide a complete picture of the sector, ASEBIO includes those companies carrying out biotechnology marketing and production activities; and others associated with the more classic biotechnology (production of vaccines, antibio-tics, food ferments etc.). Summarised in this fashion, Spanish biotechnology generates in excess of Euro1.9 billion in revenues and employs approximately 10,000 people.
The picture of the average Spanish biotech company improves as compared with previous editions in that it has a bigger mean size, a slightly better access to international markets and a geographical location increasingly less centralised to Madrid and Barcelona.
The most current issues in the sector are the growing opportunities of biotechnology in a pharmaceutical sector deep in crisis, the normalisation of agricultural applications in Europe, the lack of a legal position for functional food and the biofuel boom.
The two main obstacles to growth of the sector, namely the absence of an integrated European system of intellectual property and the lack of instruments for funding of biotechnology companies, continue without a solution in spite of being adequately highlighted by the European Commission.
Even though the Spanish state has not established an integrated strategy for the promotion of biotechnology as suggested by the European Commission, the founding of Genoma España, the incentives to venture capital firms promoted by the Department of Science and Technology, programmes such as Neotec (CDTI) or the programme for new businesses of the Department of Economy turn out to be encouraging initiatives with a scope still difficult to estimate.
According to the budget of the new National Plan for R&D and due to the introduction of new fiscal measures, the R&D expenditure of the public sector should surpass Euro5 billion by 2007 (41.3% of total expenditure), whereas private sector spending should exceed Euro7 billion (58.7%).
The regulatory landscape has been the object of notable improvements in the last year: the approval of new varieties of GMOs by the Department of Agriculture and the transposition of the guidelines on “Confined utilisation, voluntary liberation and marketing of GMOs” on one side, and the law initiative on “Assisted Reproduction Technologies,” which will allow research with remaining non-viable embryos; both are important advances.
Law 9/2003 tries to adapt the Spanish judicial system to the new EU regulation and integrates certain rules to face the new demands related with management and control of activities of confined utilisation and voluntary liberation, including the marketing of GMOs.
In July 2003 the Spanish Council of Ministers passed the draft of Law 35/88 aimed at a reform of the current Law of Assisted Reproduction Technologies, which was passed in 1988. Since then, considerable advances have taken place in both technologies and medical practice, making it an imperative to review and value the elements that come together in Assisted Reproduction Technologies.
According to the fourth Eurobarometer, Spain considers the application of biotechnology useful, morally acceptable and promising.
There are significant differences between the degree of understanding, knowledge and concern on biotechnology in the different members states, and there is a substantial lack of information (72% of all questioned wanted to know more) and low confidence in the national authorities (only 3% consider them as the most trustworthy source of information).
The support for genetically modified (GM) crops has diminished since 1996, while support for medical applications of modern biotechnology in the pharmaceutical sector and genetic analyses remains high.
The new policy granting fiscal incentives to R&D activities and the certification system that ensures its correct use are needed but do not ensure a major participation of the industry in biotechnology research.
During 2003, the Spanish Patent Office granted 918 patents from January to October, 36 of which concern the biotechnology sector and leaving behind a dire balance if we take into account the potential for generation of wealth in the Spanish scientific, technological and business system.
Another huge problem of the biotechnology R&D environment is the absence of exciting scientific career perspectives and the consequent loss of intellectual capital due to brain drain. Additionally, Spain suffers from scarcity of a qualified managerial workforce for scientific companies: the attraction of foreign bio-executives or bio-entrepreneurs might improve the skills to capitalise R&D from a business perspective.
Public and private funding as sources of income are only of use to analyse the viability of the project rather than make it happen. For early-stage company formation, larger funds, which are available almost exclusively to specialised investors such as venture capital companies, are needed.
In Spain, the possibility of trading at the stock exchange is close to zero, eliminating a fundamental funding source for biotechnology companies and limiting the participation of venture capital. This barrier could be circumvented through the creation of a secondary stock market.
Investors show a high degree of interest in investing in companies with products close to commercialisation, and avoid projects of high uncertainty.
In Spain, there have been more investments in 2003 than in previous years, even though the amounts invested were as small as they used to be.
Creation of Bioregions
Like in other European countries some Spanish regions are trying to concentrate tools and skills in certain geographical sectors. The Community of Valencia, the Region of Murcia and the Community of Navarre are planning to implement such “Bioregions” supported by Vitalia Consulting, an agency specialised in Life Science. The first step to create these Bioregions in general is the identification of potential entrepreneurial ideas in university research teams, health centers, hospitals as well as in food, pharmaceutical and biotechnology companies.
The Spanish biotechnology sector faces the challenges of promoting the potential of knowledge and human resources generated by universities and public research centres, and making the most of the business ideas developed by the group of bio-entrepreneurs whose attitude has the additional merit of challenging the inertia of a system that traditionally has penalized the industrial applications of the scientific knowledge.
This situation, profusely highlighted as one of the fundamental obstacles to the development of an integrated Science, Technology and Industry System, will not change without the pull of a coordinated strategy that implies at least four big socio-economic factors: public administration, traditional business sectors, private capital and the media.