Biotech and Pharmaceuticals Region Munich 2005 · 2006. 5. 3. · Biotech companies have filed for more than 500 life science pat-ents, with institutions of scientific research fil-ing

Biotech and Pharmaceut icals Region Munich 2005

unich is one of the leading centers for

the biotechnology and pharmaceutical

industry in Europe, with close to 300 companies

and 8 renowned scientific research centers lo-

cated here. Nearly 9 billion euro in revenues in

2005 and over 25,500 people employed in busi-

ness and science make this sunrise industry a

major economic force in Munich. The employees

are highly qualified and specialized staff work-

ing in research, development, production and

marketing.

These are the findings of the first study on Mu-

nich as a business location for the biotech and

pharmaceutical industries, commissioned by the

Chamber of Commerce and Industry for Munich

and Upper Bavaria and the Department of La-

bor and Economic Development of the City of

Munich. The aim of the study was to appraise

the economic power of the biotech and phar-

maceutical industry, uncover trends and char-

acteristics, and measure the degree of satisfac-

tion with the economic conditions which the

Munich region provides.

The study presented here is the first and only one

to look at the life science industry as a whole: it

identifies and surveys biotech and pharmaceuti-

cal companies, contract research organizations

(CROs) as well as relevant suppliers, wholesal-

ers, services, and consultants. It also explores

the research landscape. The area surveyed is the

greater Munich region, which includes the city

of Munich and the counties of Munich, Freis-

ing, Ebersberg, Erding, Starnberg, Landsberg am

Lech, Fürstenfeldbruck and Dachau as well as

Penzberg and Bernried.

The business and research scene is diverse and

has a great deal of structural variety. Almost 100

small and mid-size biotechnology enterprises

are located here, as are the major international

groups in the biotech and pharmaceuticals in-

dustries. Add to these suppliers, wholesalers,

and service suppliers. And lastly, the area is a

flourishing center of scientific research, with

two leading universities, several Max-Planck

Institutes, colleges of applied science and the

GSF National Research Center for Environment

and Health.

The study shows that commercial businesses

alone invested over 500 million euro in research

and development last year. Biotech companies

have filed for more than 500 life science pat-

ents, with institutions of scientific research fil-

ing for over 1,100. The research institutes in the

region have spun off almost 60 companies in

the life science sector.

After a phase of consolidation, 2005 went very

well for biotech companies, especially for those

in Munich: They had finance rounds amount-

ing to a total of over 150 million euro and were

able to close major deals. The business appears

to have steadied, showing greater maturity and

a solid base of established firms.

The international pharmaceutical industry is

firmly established in Munich through many lo-

cal sales and marketing offices. Aside from these

activities, several pharmaceutical companies in

Munich are engaged in major clinical research.

Remarkably, no less than 37 CROs located in

Munich have specialized in the worldwide or-

ganization of clinical trials.

It is to be expected that the biotech and phar-

maceutical industry will continue to develop

positively in the coming years: 67 percent of the

surveyed companies believe their business out-

look will improve as early as next year, while 77

percent anticipate an improvement within the

next 5 years. Based on the positive evaluation

of the region’s qualities as a business location

– the companies emphasized the high quality of

life, the excellent science scene in Munich and

the high local availability of qualified personnel

– Munich will continue to play a major role as a

region for the biotechnology and pharmaceuti-

cal industry in the future.

M

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Preface

Dr. Reinhard DörflerManaging Director of the Chamber of Commerce and Industry for Munich and Upper Bavaria

Dr. Reinhard WieczorekCouncillor and Head of Department of Labor and Economic Development of the City of Munich

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Picture: Jupiter Images

Contents

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Munich 2005

Preface

Taking stock: Munich as a region for biotechnology and pharmaceuticals

The sectors in detailBiotech companies

Pharmaceutical companies

Contract research organizations

Suppliers, trade, veterinary medicine, and other life science enterprises

Consultants

The research scene

Outlook and forecast

Assessing the quality of the Munich region

Research methodology

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Biotech and Pharma-ceuticals Region

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ETaking stock: Munich as a region for biotechnology and pharmaceuticals

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Collage: Word Wide

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Taking stock: Munich as a region for biotechnology and pharmaceuticals

unich is considered a “stronghold”

of biotechnology and health care in

Germany. Many international pharmaceuti-

cal companies have joined some of the most

significant German biotechnology firms

in setting up offices in the Bavarian state

capital. In natural science research, medi-

cal technology, and health services, Munich

also plays in the upper league.

The establishment of firms such as Micro-

met, MorphoSys and MediGene in the mid-

90s laid the cornerstone for the biotech-

nology region Munich. In the middle of that

decade, the Federal Ministry of Education

and Research launched the „BioRegio“-

contest, from which three German model

regions emerged whose development as

biotechnology clusters was subsequently

subsidized. Munich was one of these three,

the other regions being the Rhineland and

the Rhine-Neckar-Triangle. A parallel devel-

opment in the mid-90s was the establish-

ment in Martinsried of the IZB (Innovation

and Startup Center for Biotechnology), the

first startup center for biotechnology in the

region. This led to a veritable boom in new

startups in 1997 and 1998, which declined

slightly in 1999 and 2000.

When the stock market bubble burst nearly

six years ago launching the general crisis

in the capital markets, it became more and

more difficult to get financing for the high

M risk business models prevailing in biotech-nology. In 2003 and 2004 hardly any ven-ture capital at all was invested in biotech

companies in Munich or the rest of Germa-

ny. The consequence: in 2004 several com-

panies had to file for insolvency.

The end of 2004 saw recovery on the ho-

rizon: The listed companies were able to

raise funds through additional capital to

strengthen their position. The following year

the finance landscape improved markedly,

and there were a number of mergers, acqui-

sitions, and collaborations. In 2005, more

venture capital was invested in biotechnolo-

gy in Munich than in the two previous years

combined.

In contrast to firms in the biotech sector,

most of the Munich pharmaceutical compa-

nies have been based in the region for years.

Only a few of their corporate headquarters,

however, are located in Munich. The drain

of major pharmaceutical corporate head-

quarters to sites abroad has been troubling

Germany for several years.

On the other hand, the greater Munich re-

gion plays an important role for pharma-

ceuticals as a center of R&D. Roche has a

staff of almost 4,000 in Penzberg engaged in

production and research, and GlaxoSmith-

Kline considers Germany one of the most

significant locations in the field of clinical

research.

The pharmaceutical industry continues to be

a major economic factor. While the number

of German pharmaceutical companies is

shrinking, several international groups are

expanding their activities in the country

– with Roche in Penzberg at the forefront.

The issue of headquarters based locally is

therefore less crucial than that of concrete

ongoing activities.

Boosted by the general discussion about

costs in health services, generic drugs are

gaining ground in Munich along with their

branded counterparts. Following the acqui-

sition of Hexal, the Novartis generic drug

subsidiary, by Sandoz and the relocation of

the corporate headquarters to Holzkirchen,

the region is now home to the second-larg-

est generic drug producer worldwide. San-

doz is about to launch its first generic drug

in the field of biologicals (i.e. biologically

active drugs on a protein base).

A dense network of consultants, suppliers,

dealers and other service providers has de-

veloped to serve the biotech and pharma-

ceutical location. This ranges from CROs

and classic strategic advisors to market-

ing specialists for the life science sector or

specialists for laboratory equipment. Tech-

nology transfer centers run by research in-

situtes also provide services to the biotech

and pharmaceutical industries. The biotech

scene also includes patent attorneys and

the German and European Patent Office as

well as the many supporting public or semi-

public agencies such as Bayern Innovativ,

Invest-in-Bavaria, Bayern International, the

Munich Business Plan competition, the Min-

istry of Economic Affairs, and of course the

Chamber of Commerce and Industry and the

City of Munich.

Numerous venture capital firms are based in

Munich. These venture capitalists are vitally

important for biotech enterprises. Munich

continues to be the capital of risk capital in

Germany, featureing such large and well-es-

tablished companies as TVM or Wellington

Partners.

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lmost 300 companies in biotech-

nology and pharmaceuticals and

their supplying industries have settled in the

greater Munich region. Next to the actual

biotechnology and pharmaceutical com-

panies, these firms include CROs, suppli-

ers, wholesale dealers and other companies

working in the life sciences. Including those

involved in life sciences at Munich research

institutes, the sector employs a total of

some 25,500 people.

Total revenues in 2005 amounted to almost

9 billion euro. Revenue per staff member

fluctuates widely depending on the type

of company. In the small and mid-size bio-

tech enterprises (SMEs) the figure stands

at 101,000 euro, while the local offices of

major biotechnology companies enjoyed

revenues of 384,000 euro and pharmaceu-

tical companies of 424,000 euro per staff

member.

The sector is particularly optimistic: 67

percent are anticipating an improved busi-

ness outlook in the coming year, and a full

77 percent are forecasting an upward trend

within the next five years (see Fig. 1).

The biotech and pharmaceutical industry is

highly research intensive: Over 50 percent of

the companies who provided details about

their activities said they conducted research

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A

Fig. 1: Evaluation of the business climate in the Munich life science industry

and development in the greater Munich re-

gion. Expenditures for R&D in 2005 came to

560 million euro.

The average R&D expenses per staff member

in small and mid-size biotech enterprises

amounted to 101,000 euro, for local offices

of major biotech companies they came to

42,000 euro and in pharmaceutical com-

panies they ran to 29,000 euro. CROs con-

duct research under contract for other firms

and therefore do not have any expenses of

their own for research & development. The

same is true for wholesalers. For suppliers

and other life science companies the R&D

expenses per staff member average out to

almost 5,000 euro (see Fig. 2).

The sector is very international. 60 percent

of all collaborations engaged in by Munich

biotech companies involve foreign partner

firms. Several small or mid-size enterprises

already maintain subsidiaries abroad. Mor-

phoSys, for instance, took over Biogenesis,

a British-American company, in 2005 and

more recently added the British Serotec

group. GPC Biotech is listed on the Ameri-

can NASDAQ inter alia, and Micromet will

also soon be listed there following its fusion

with CancerVax.

A large portion of the pharmaceutical com-

panies in the Munich region are the local

offices or subsidiaries of international cor-

porate groups.

The contract research organizations (CROs)

in the region make a major contribution to

the leading position held by Munich in the

field of life science. The Ludwig-Maximili-

ans-Universität München (LMU) and Tech-

nische Universität München (TUM) make

Collage: Word Wide

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number of firms number of staff revenues (in million euro)

R&D volume (in million euro)

total firms 28916,550 (including

research: 25,550)8,960 560

of which:

biotechnology 115 2,950 520 250

pharmaceuticals 43 10,500 4,430 310

CRO 37 900 90 ––

other firms 94 2,200 3,920 ––

research institutes8 organizations

9,000 –- ––

Fig. 2: Sales volume and R&D expenditures by type of company

Munich home to no less than two renowned

universities – both aspiring to the title of an

„elite university“. Almost 9,000 staff mem-

bers, including 5,500 doctoral candidates

and postdoctoral scientists, are working in

the field of life science at the TUM, LMU,

and the Max-Planck-Institutes for Bio-

chemistry, Neurobiology and Psychiatry, the

National Research Center for Environment

and Health (GSF), and the colleges of ap-

plied sciences (Fachhochschulen) in Munich

and Weihenstephan. These research facili-

ties have acquired over 150 million euro in

third party funds and have already spun off

more than 60 companies in the area of life

sciences.

For an overview of the business figures for the

life science industry in the Munich region see

Figure 3.

Of the 289 companies selected and analyzed

for this study, 39 percent are based in the

state capital Munich and 61 percent in the

county or in the surrounding area known as

“planning region 14” as well as Penzberg

and Bernried. The biotech companies are

concentrated just outside Munich, especial-

ly in Martinsried to the southwest of the city

(see Fig. 4 and Fig. 5).

75 percent of the firms are domestic, 25

percent foreign.

Following the definitions given in this study,

40 percent of the companies are biotech

companies, 15 percent are pharmaceutical

companies, 13 percent are CROs, and nearly

33 percent are suppliers, wholesalers or oth-

er life science companies.

Fig. 3: Business figures for the industry in the Munich region

Fig. 4: Number of companies by type in the city and the surrounding areas

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Fig. 5: Regional distribution of pharmaceutical and biotech companies (total planning region 14)

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The biotech industry is dominated by small

companies: 95 percent have 100 staff mem-

bers or less, which leaves only 5 percent with

a staff of over 100. None of the companies

have had more than 250 employees in Mu-

nich at any given time. The category of other

life science companies also contains many

micro businesses – 46 percent of these com-

panies employ only 1 to 10 people. For the

biotech companies this figure is 49 percent.

The pharmaceutical companies are quite dif-

ferent in this respect: 46 percent have over

100 employees, and half of the companies

employ over 250. Only 23 percent have less

than 11 people on staff (see Fig. 6).

In age, too, the various types of company

differ significantly. Biotechnology is a very

young industry. But a large number of the

CROs in the region have also come up over

the past years and decades – in the course

of rising demands made on clinical trial

procedures. Wholesalers and pharmaceuti-

cal companies, on the other hand, are of-

ten long-standing companies with over 100

years of history (see Fig. 7).

Fig. 7: Distribution of the companies in the Munich region by year of foundation

Fig. 6: Distribution of company size by type of company

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The sectors in detail – Biotech companiesR

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iotechnology in Munich means above

all red biotechnology: of the 115

biotech companies in the greater Munich

area, almost half (49 percent) are in

pharmaceutical development or

clinical diagnostics. Suppli-

ers of platform technologies

for the development of

pharmaceuticals were

also subsumed under

this category. Of the

remaining compa-

nies, almost a quar-

ter are developers of

BBiotech companies


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Fig. 8: Business segments which the biotech companies in the Munich region belong to

Fig. 9: Staff in biotech companies by company business orientation

equipment or reagents for biotechnological

research, while 14 percent supply biotech

services such as DNA analytics or sequenc-

ing. Suppliers of services who do not them-

selves work with biotechnological methods,

such as patent attorneys, were not taken

into consideration (see Fig. 8).

30 percent of the biotechnology companies

are situated within the city limits of Mu-

nich. Of the remaining 70 percent, most are

based in Munich County, most commonly in

Martinsried. 98 of the 115 biotech compa-

nies are German-owned.

The 115 biotech firms in the Munich region

employ close to 3,000 staff. This is a rela-

tively small portion of the total number of

employees in the area of life science. This

sector is still in development despite the

dynamic changes it has witnessed since the

early 90s. Most of the staff – over 70 per-

cent – are employed in companies dedicated

to red biotechnology, followed by 13 per-

cent in the development of biotechnological

equipment and reagents (see Fig. 9).

Almost 50 percent of those employed in

biotechnology are people with an academic

degree and almost a quarter are technical

assistants. The overwhelming importance of

R&D for the biotech industry can be seen

by the fact that more than half of all staff

members are employed in this division (see

Fig. 10).

Biotechnology is a relatively small sector

when compared to the others. However, it

employs more than its proportion of well-

trained and educated, highly qualified peo-

ple, with positive secondary effects for the

local economy in biotech regions.

The total expenditures for research & de-

velopment in biotech companies in 2005

amounted to 255 million euro. The largest

portion was accounted for by the small and Fig. 10: Staff distribution in biotech by division

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TThe sectors in detail – Biotech companies

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Fig. 11: Existing collaborations between biotech companies (only firms with headquarters in the Munich region) and other companies

mid-size enterprises in the region. These

companies spend just as much money on

research & development as they earn which

shows the high level of research intensity in

the companies and explains why the young

enterprises are not yet making a profit.

Patent applications are often seen as an in-

dicator for the degree of research intensity

in a given industry. The small and mid-size

biotech enterprises have hitherto registered

520 patent or patent family applications,

and more than 450 individual patents have

already been awarded.

Young and research intensive biotech com-

panies find it very important to collaborate

with other firms and research facilities.

This provides them with access to the new-

est technological developments and allows

them to pool their strengths and to enter

new markets. The degree of collaborations

with companies and research facilities is

therefore extremely high.

Currently companies with headquarters in

the Munich region have 117 ongoing devel-

opment collaborations with other compa-

nies; they have licensed out 66, and licensed

in 23 products or technologies. Since collab-

orations are usually launched by the head-

quarters, collaborations by local subsidiaries

of international groups were not taken into

account here. In addition there are 141 sales

and distribution collaborations (see Fig. 11).

The regional distribution of the collabora-

tions sheds light on how international the

young industry has already become: 60 per-

cent of all collaborations are with partners

abroad, 11 percent are with Munich partner

companies, and 29 percent are with firms

elsewhere in Germany.

There are 159 ongoing co-development

partnerships involving research facilities.

Academic collaborations, however, feature

a markedly different regional distribution.

Most of the collaborations are carried out

with domestic partners – 39 percent being

research facilities in the greater Munich

area, and 36 percent being other German

partners. This distribution shows the ex-

tent to which the companies benefit from

the strong presence of highly renowned re-

search facilities nearby. Munich therefore

represents a true “cluster” in the area of

cooperative partnerships between the busi-

ness economy and the scientific research

community.

Many of the young biotechnology firms in

the region finance their activities through

external private equity provided by venture

capital, business angels, or IPOs. In pharma-

ceutical research & development in particu-

lar it takes many years before companies

can hope to attain profitability. The avail-

ability of venture capital is therefore a criti-

cal factor that will determine the success or

failure of such companies.

While the limited availability of venture

capital between 2002 and 2004 was a set-

back for the business throughout Germany

including Munich, the situation has since

improved. According to the biotechnology Picture: Jupiter Images

The sectors in detail – Biotech companies

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Fig. 12: Venture capital and other external equity capital financing of biotech companies

journal „Transkript“, over 345 million euro

were invested in biotechnology in Germany

in 2005 in private financing rounds. Compa-

nies in the Munich region received over 150

million euro according to BioM research.

Double-digit millions were, for instance, re-

ceived by Wilex, Trigen or IDEA.

That means that the trend in Germany and

especially in Munich has been surprisingly

positive in the past year and has been going

in the opposite direction of general devel-

opments: For according to a study by Dow

Jones Venture One, investments in the US

and Europe in the area of “biopharmaceu-

ticals” actually dropped substantially from

4.63 billion US dollars to 3.79 billion US

dollars, or from 1.24 billion euro to 1.16 bil-

lion euro.

Taking into account the funds that Munich

biotech companies received from the stock

market through increased share capital or

convertible bonds, 2005 saw more than 200

million euro invested in biotechnology com-

panies in Munich. This does not include in-

vestments in international companies whose

headquarters are elsewhere (see Fig. 12).

Most Munich biotechnology companies put

their main emphasis on developing phar-

maceutical products, mainly medicines.

However, it may take 10 to 12 years to go

from the first identification of a potentially

therapeutic substance to its readiness for

marketing, and the risk of failure is very

high: Experience shows that only about 10

percent of all substances in preclinical trials

will ever reach the market.

The sector did not begin to develop in Ger-

many until the 90s. There are therefore not

many companies with products in late clini-

cal phases or already on the market. Never-

theless, the Munich companies are market

leaders in Germany. MediGene AG in Mar-

tinsried was the first German biotechnology

company to receive authorization in 2003

for a product, Eligard®, a therapeutic drug

for the treatment of prostate cancer. Further

substances are awaiting regulatory approval

or are in the last clinical trial phase, known

as phase III. The so-called “pipeline” of po-

tential therapies being developed by com-

panies in Munich is bigger than in any other

region in Germany (see. Fig. 13).

Total revenues in biotech companies

amounted to 520 million euro in 2005. Fol-

lowing the consolidation phase between

2001 and 2004, biotech companies without

exception see the business climate in a posi-

tive light. Almost half of the surveyed com-

panies consider the current business outlook

to be good. More than two thirds of those

surveyed also say that the situation has

improved in the past or over the past three

years. More optimistic still, the companies

expect things to continue to change for the

better: 77 percent anticipate improvements

in the coming year, 85 percent expect things

to improve in the coming five years (see Fig.

14).


A sector on the way up

In addition to the data collected in this

study, historical data showing the develop-

ment of small and mid-size biotech enter-

prises (SMEs) from a study carried out by

BioM allow a look back at the development

of this group of companies over the past few

years.

The employment figures for SMEs clearly

show the effect of consolidation. Currently

2,150 of the 2,950 employees in biotechnol-

ogy are on staff in SMEs. That figure fell for

the third year in a row in 2005, from 2,390

to 2,150. For 2006, however, the SMEs are

again forecasting a slight increase to 2,380

employees (see Fig. 15).

Figures for SME revenues are also available.

Revenues from product sales and licensing

came to over 220 million euro in 2005; this

is an increase of 17 percent compared to a

year ago. For the current financial year the

SMEs are expecting a further increase to

about 290 million euro (see Fig. 16).

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Fig. 13: Product pipeline of pharmaceutical developers (only firms with headquarters in Munich; number of studies/projects)

Fig. 14: Business climate as evaluated by biotechnology companies

Fig. 15: Staff figures in small and mid-size biotech enterprises (only SMEs)

The sectors in detail – Biotech companies

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Likewise, expenditures for research & de-

velopment rose in SMEs from 200 to 220

million euro. This increase is particularly

gratifying when viewed in the overall eco-

nomic context: Total public and private

spending on R&D in Germany dropped to

only 2.48 percent of the GDP, and increases

are not expected for 2005 or 2006 (source:

Handelsblatt, 24 February 2006 and Press

Release BMBF, 22 February 2006) (see Fig.

17).

Fig. 17: R&D expenditures in biotech SMEs

Fig. 16: Revenues in biotech SMEs


harmaceutical companies are firms

who produce drugs for use in human

medicine. They specialize in various busi-

ness segments within this field. A total of

43 pharmaceutical companies were identi-

fied and surveyed in this study (see Fig. 18).

The product segments are not mutually ex-

clusive, as for instance a generic drug can

also be a small molecule (a chemically syn-

thesized, small molecule as opposed to the

biologically produced larger protein mole-

cule, the biological). Phytopharmaca, or me-

dicinal plants, can simultaneously be OTCs,

as “OTC” simply describes how the drug is

marketed, namely over-the-counter, with-

out a prescription. Note that the evaluation

does not take into account the size of the

respective firms. Small companies in par-

ticular often concentrate on niche products,

OTC drugs, Phytopharmaca, or homeopathic

drugs.

The local sales and distribution offices of

international pharmaceutical corporations

make up a large segment of the pharmaceu-

tical industry in Munich. This is reflected in

the activities of the pharmaceutical compa-

nies in Munich. 90 percent run marketing

and distribution operations. All the same,

52 percent are also engaged in research and

development and 35 percent in production.

In 2005 the pharmaceutical companies in-

vested an average of almost 30,000 euro per

staff member in research & development, a

total of roughly 307 million euro.

Both the number and the distribution of

the employees in pharmaceuticals make it

clear that this industry is more mature than

biotechnology. With 10,500 employees,

pharmaceutical companies in the greater

Munich area employ more than three times

as many people as biotech companies do. 40

17 |

Pharmaceutical companies

P

Fig. 19: Staff distribution in pharmaceuticals by division

Fig. 18: Business segments which the pharmaceutical companies belong to

percent of all their staff are in marketing

and sales. In the small and mid-size biotech

companies, these divisions together make

up all of about 10 percent of the workforce.

Conversely, over half of the staff in biotech

firms are involved in research & develop-

ment, while in pharmaceutical companies

only 20 percent of the employees are in

R&D (see Fig. 19).

In general medical practice in Germany,

drugs are marketed to wholesalers by the

pharmaceutical companies. Correspondingly

wholesale makes up 59 percent of the phar-

maceutical companies’ customer base. Drugs

for clinical use, on the other hand, are often

distributed directly to the hospitals. Several

pharmaceutical companies also sell their

products directly to pharmacies, bypassing

the wholesalers. By contrast, industries and

private individuals play a very minor role as

customers (see Fig. 20).

Pharmaceutical per staff revenues in the

region come to almost 424,000 euro. The

cumulated revenues of all pharmaceuti-

cal companies in Munich can therefore be

placed at approximately 4.4 billion euro.

The sectors in detail – Pharmaceutical companies

The sectors in detail – Pharmaceutical companies

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Fig. 20: Customer base for the pharmaceutical companies

Fig. 21: Business climate as evaluated by pharmaceutical companies

While on average the pharmaceutical com-

panies assess their current economic situa-

tion somewhat more positively than do the

biotech companies (55 percent as compared

to 49 percent consider the current outlook

to be good), they are far more critical re-

garding future expectations and in assess-

ing developments over the past years. While

77 percent of biotech companies expect an

improvement in the next year, and 85 per-

cent in the next five years, only 35 percent

of pharmaceuticals look forward to an im-

provement next year, and 36 percent in five

years. 46 percent of pharmaceutical compa-

nies think that their business situation has

deteriorated over the past three years (see

Fig. 21).

The variables influencing the respective busi-

ness climates in biotechnology and phar-

maceuticals are fundamentally different in

nature. The biotech industry is strongly in-

fluenced by capital markets, in so far as the

companies are financed by venture capital

and the stock market. This is of no concern

to the pharmaceutical industry, which in

turn reacts strongly to cuts in government

spending in the area of public health care

in the context of national health reform.

The situation of pharmaceutical companies

is further aggravated by problems in con-

nection with empty product pipelines and

expiring patents.

n the greater Munich area there are 37

CROs, or contract research organizations.

These carry out clinic trials for biotechnolo-

gy and pharmaceutical companies and act

as consultants. CROs are highly specialized

service providers whose work is limited ex-

clusively to the testing of clinical products.

Since they have begun to play an increas-

ingly important role in the biotech and

pharmaceutical industries, they are studied

here as a separate category.

74 percent of the CROs were founded or

opened their local offices in the greater Mu-

nich region after 1990. CROs are therefore a

relatively young industry whose growth was

promoted by the increasing demands placed

on clinical trials over the past years.

CROs carry out clinical trials under contract

for companies involved in medical drug re-

search and development. So while CROs,

too, are involved in research & development,

their work is assigned by other companies,

making their research a service they supply.

A total of about 900 people are employed

in CROs in the region. Most of these (67

percent) are employed in clinical trials or in

monitoring (see Fig. 22).

75 percent of CRO customers are pharma-

ceutical companies. The biotech industry

currently only provides 17 percent of their

customers (see Fig. 23).

19 |

Contract research organizations

I

Fig. 22: Staff distribution in CROs by division

Fig. 23: Customer base for CROs in the Munich region

CROs find only barely a quarter of their cus-

tomers in the region. 31 percent are based

elsewhere in Germany, 23 percent in other

European countries, and 18 percent in the

USA (see Fig. 24).

As clinical trials are increasingly being car-

ried out on a global scale as patients and

test persons must be taken from various

ethnic groups and cultures for scientific rea-

sons, American companies now also carry

out trials in Europe. Munich is in a relatively

good global position as a location for such

studies, even if one hears quite a bit of criti-

cism about the basic conditions for running

clinical trials in Germany (for more details

see a publication by the German govern-

ment, 2. Bericht and Aktionsplan der Task

Force „Pharma“, August 2005).

The sectors in detail – Contract research organizations


The sectors in detail – Contract research organizationsC

LIN

ICA

L R

ESEA

RC

H

| 20

The average revenues per staff member for

CROs are close to 100,000 euro. Total rev-

enues for CROs in the greater Munich region

come to about 87 million euro.

Over half of all CROs judge their current

business situation to be good. 64 percent

or 73 percent of the companies expect that

the situation will continue to improve in the

next year, or the next 5 years. Only 4 percent

or 5 percent respectively expect their busi-

ness prospects to get worse. These evalua-

tions seem to show that the setting for clin-

ical research in Germany is considered quite

positive by those involved (see Fig. 25).

Fig. 24: Geographic distribution of CRO customers

Fig. 25: Business climate as evaluated by CROs


21 |

side from biotech and pharmaceuti-

cal companies and CROs 94 further

life science companies in Munich conduct

business related in some way to the biotech

and pharmaceutical sector. They include 21

suppliers and 27 wholesalers. Defining which

supplier is and which is not a part of the bio-

tech and pharmaceutical industry is not easy.

The suppliers included here are those whose

sales are for the most part (>50 percent)

geared to the specialized needs of the bio-

tech and pharmaceutical industries. Suppliers

of lab equipment were therefore included in

this group, whereas EDP and stationery sup-

pliers were not. The group of biotech and

pharmaceutical wholesalers includes dealers

who reimport foreign-made drugs or carry

out parallel imports.

A further group comprises companies focus-

ing on dietary supplements and other medi-

cal products. Also among the other life sci-

ence companies are providers of veterinary

medicine as well as contract manufacturing

organizations (CMOs) who produce medically

active substances for biotech or pharmaceu-

tical companies. Pure cosmetic companies

were not included in the study, though sev-

eral firms named cosmetics as one of their

lines of business (see Fig. 26).

The other life science companies have a wide

variety of operations in Munich. Research &

development plays a far lesser role in these

firms than it does in the biotechnology and

pharmaceutical companies. Only about a

quarter of these companies conduct research

& development in the Munich region, com-

pared to over half of the biotech and phar-

maceutical companies.

19 percent in this group of life science com-

panies produce goods in the Munich region.

Suppliers, trade, veterinary medicine, and other life science enterprises

A

Fig. 26: Business segments which the other life science companies belong to

Fig. 27: Staff distribution by division

Dealers, who make up a large portion of this

group, do not have any production at all.

Marketing and sales are typical operations

for the great majority of the local firms, and

80 percent report such activities in Munich.

In total, the suppliers, wholesalers and other

life science companies in Munich employ

approximately 2,200 people. Suppliers and

wholesalers represent the largest employers.

Pharmaceutical wholesalers vary widely in

size. There are large pharmaceutical whole-

salers like Sanacorp, Anzag and Phönix, just

as there are small, specialized companies

with less staff. The same is true for suppliers.

Large international groups such as BioRad

share the turf with small, specialized firms

such as, for example, Implen (see Fig. 27).

In correspondence with the main activities of

these companies, more than half of the staff

(54 percent) are in marketing, sales or field

sales, whereas only 8 percent are in research

& development (see Fig. 28).

The largest segment in these firms’ customer

base is categorized as “other” (45 percent).

This group includes public research institutes

and pharmacies, but also doctors and clinics

as well as various other industrial enterprises

The sectors in detail – Other life science enterprises

The sectors in detail – Other life science enterprisesSU

PPLI

ERS

AN

D T

RAD

E

| 22

Fig. 28: Business segments which the suppliers, dealers, and other life science firms belong to.

Fig. 29: Business climate as evaluated by suppliers, dealers, and other life science firms

from lines of business other than biotechnol-

ogy, chemicals, and pharmaceuticals. Further

customers of the other life science firms are

wholesale (14 percent), pharmaceuticals (14

percent), biotechnology (6 percent), special-

ized trade (6 percent), the chemical industry

(4 percent) and individuals (8 percent).

The provenance of the customers of this

group of companies is less international than

for instance in the case of CROs. Wholesal-

ers are usually more regionally oriented than

the producing companies. In pharmaceutical

wholesale it is necessary that vitally impor-

tant drugs reach the patient as quickly as

possible. The wholesale distribution network

must therefore be close-knit and regionally

oriented, as it is in the greater Munich area.

These companies therefore only have 29 per-

cent of their customers abroad, of which 18

percent are within Europe, 4 percent in the

USA, and 7 percent in other countries. An

average 28 percent of these companies’ cus-

tomers are based locally in Munich, as com-

pared to 44 percent distributed across the

rest of Germany.

Revenue in the category of other companies

amounted to roughly 3.9 billion euro in 2005.

This substantial figure is due to the wholesal-

ers, as these typically have a high turnover

while earning low margins.


23 |

he life science sector in the Munich

region includes specialized consul-

tancies. 65 companies provide consulting

services to the biotech and pharmaceuti-

cal industries. However, these consultancies

differ widely from each other with regard to

both their size and the type of consulting

they can offer. The business is typified by a

large number of individuals or micro busi-

nesses with a staff of up to three. On the

other hand, the sector also includes several

large consultancies working internation-

ally and serving various sectors of business.

Since consultancy teams are generally reas-

sembled for each new project, it is nearly

impossible to ascertain how many of those

on staff actually consult to the life science

industry.

Services offered vary from strategic man-

agement consultancy and highly special-

ized consulting regarding clinical trials or

laboratory equipment to financial advising

and support in finding investors. Since these

transactions are subject to different types of

fees, it is not possible to give relevant rev-

enue figures for this sector.

Fewer smaller companies consult to inter-

national clients, although some of them

have specialized in working with American

biotech companies. Most of their customers,

however, are located in Munich, in immedi-

ate proximity to the consultancies.

Nearly all of the consultants say that their

current business outlook is good or at least

satisfactory. Most of them share the prog-

nosis that the positive trend of the past

years which the overwhelming majority of

them have witnessed will continue in the

coming years.

Consultants

T45 percent of the other life science compa-

nies consider their current business situation

to be good. This segment is slightly lower

than the other sectors. But at the same time

only 3 percent consider the situation to be

bad. The companies therefore have a rather

positive attitude both with respect to the de-

velopment over the past years and regarding

future developments (see Fig. 29).

The sectors in detail – Consultants


| 24

FLO

UR

ISH

ING

RES

EAR

CH

LA

ND

SCA

PE

The research scene

he greater Munich region features a

flourishing research landscape in the

life sciences. Next to the faculties at Lud-

wigs-Maximilians-Universität (LMU) and

Technische Universität München (TUM)

there are the three biologically oriented

Max-Planck-Institutes for Neurobiology, Bi-

ochemistry and Psychiatry, the National Re-

search Center for Environment and Health

(GSF) as well as two colleges of applied sci-

ence, namely Fachhochschule München and

Fachhochschule Weihenstephan.

The research scene

T The main areas of research at each of these research institutions cover the full span of the life sciences. They range from molecular

biology and chemistry to nanotechnology,

from oncology and CNS diseases to infec-

tious diseases, from multidisciplinary to ex-

tremely specialized research.

The two Munich universities are excellently

positioned nationally and routinely place at

the top when colleges are ranked. In con-

nection with the „excellence initiative” run

25 |

by the German federal government both

universities were selected among the top

ten finalists for the title „elite university“.

There are nearly 9,000 on staff in the life sci-

ence departments at Munich public research

institutions, according to figures disclosed by

the organizations. Of these about 5,500 are

scientists and almost 3,400 are technical as-

sistants. Despite the generally tight budget this

employment figure is expected to remain steady

in the coming years or even to rise slightly.

Total expenditures for clinical and non-clin-

ical medical research and teaching at the

Munich universities alone amounted to 560

million euro in 2004 (for more details see

the study by Günther Neubauer and Philip

Lewis, Gesundheit als Wirtschaftsfaktor im

Untersuchungsraum München, Institut für

Gesundheitsökonomik, November 2005).

The research scene in biotechnology and

pharmaceuticals provides a particularly live-

ly and viable base for enterprise, as shown

by the number of spin-offs. Munich research

facilities (not including TUM) report that

they have spun off almost 60 companies

with a life sciences focus. The number of

registered life science patents (not includ-

ing TUM) is over 1,100, of which 76 were

registered in 2005.

The spin-offs and patent registrations are

supported by specialized technology trans-

fer centers which have been set up for al-

most all of the facilities. Since as far back

as the 1970s, Garching Innovation has been

responsible for commercializing the inven-

tions made by the Max-Planck-Institute.

Garching Innovation has, for instance, suc-

cessfully licensed out the potential block-

buster medical drug Sutent which is based

on the work of MPI scientist Prof. Dr. Axel

Ullrich and was only very recently granted a

license for the US market. The substance is

marketed by Pfizer, the US pharmaceutical

group. Analysts anticipate revenues of up to

1 billon dollars per year.

Technology transfer in the entire life sci-

ence division of the Helmholtz Association

including the GSF is organized by Ascenion

GmbH. Like Garching Innovation, Ascenion

is also based in Munich. And then there are

the technology transfer centers at the uni-

versities and the Fraunhofer Patent Center.

Third party funds raised by the Munich re-

search institutes in the field of life science

amounted to over 150 million euro last year.

Most of these funds went to LMU, TUM, GSF

and the Max-Planck-Institute for Biochem-

istry.

Collage: Word Wide

the lookout for reinforcement for its own

product pipeline. Since a great deal of the

research and development currently being

done in biotech companies is still in rela-

tively early phases, the large pharmaceuti-

cal companies are forced to „go in for the

kill“ earlier in the game.

White biotechnology, for instance the de-

velopment of enzymes for technical appli-

cations, is seen to hold great potential for

the chemical industry. Although Munich is

not a typical chemical industry region, it

is home to the headquarters of Wacker-

Chemie, the largest Bavarian chemical

company. And Wacker-Chemie indeed at-

taches much importance to white biotech-

nology.

In contrast to red biotechnology, green

biotechnology, as the genetic engineering

of plants is known, continues to be con-

sidered with skepticism by many people in

Germany. However, developments in the

area of “plant made pharmaceuticals”, i.e.

the attempt to produce pharmaceutically

effective proteins in plants, play a differ-

ent role entirely. Here acceptance problems

are much less pronounced. Icon Genetics in

Munich is an example of a company do-

ing research in this area. The company was

taken over by Bayer at the beginning of

2006.

side from witnessing the gener-

ally positive economic trends, the

pharmaceutical sector is facing a few less

favorable developments which have not yet

begun to play a major role in the biotech

sector. For one thing, the healthcare system

is generally under financial pressure, which

is leading to more and more restrictive cost

control policy for medicinal products across

Europe. Then rising demands on the way

iotechnology experienced a marked

upswing in the past year. This goes

with the generally improved situation in

the capital markets. After three difficult

years, substantially more venture capital

was again invested in biotechnology in

Germany. The biotech region Munich en-

joyed a particularly good year: Biotech-

nology companies received more VC funds

than they had in both of the previous years

combined.

Despite improvements in the general fi-

nancial situation, the trend towards a

“dual business model” is continuing. The

companies try to generate revenue as early

as possible by setting up a service-provid-

ing business to accompany their own de-

velopment. Moreover, consolidation in the

business is not over yet.

Biotech companies working on the devel-

opment of medical drugs, especially in the

early phases of development, were long

viewed skeptically by the big pharmaceuti-

cal companies. The risk of failure was sim-

ply too great. This is beginning to change.

Patents are due to run out for many high-

volume drugs, so that the major companies

who produce them are facing the threat

of competition by cheaper copycat ge-

neric drugs. “Big Pharma” is therefore on

Outlook and forecastB

IOTE

CH

NO

LOG

Y O

N T

HE

UPS

WIN

G

| 26

Trends in Biotechnology

B

Several trends in the Munich life science

industry will be described in the following

in order to better analyze the developments

in the business in context, particularly in

biotech and pharmaceutical companies.

This outlook takes the evaluations given by

the experts in the surveyed companies and

research facilities into account.

Trends in the pharmaceutical industry

A


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27 |

find fault with the regulatory parameters

– from legislation on genetic engineering

(Gentechnikgesetz) to financial and fiscal

policies and pharmaceutical licensing pro-

cedures – which are often felt to be ob-

structive. As such policies and regulations

are established at the national or European

level, the Munich region is burdened with

certain disadvantages that are true for all

regions in Germany and in part for the rest

of Europe (see Fig. 31).

For an overview of how the companies eval-

uate the location factors see Figure 32.

Great satisfaction with the Munich region

ompanies and research facilities

in the area of life science are very

satisfied with the Munich region. The find-

ings unequivocally confirm that Munich is

attractive for the quality of life and the ex-

cellence of research in the region. The good

availability of highly qualified personnel in

comparison to other regions is considered

another important advantage (see Fig. 30).

Cost factors such as rents, taxes and human

resources expenses are seen less positively.

The companies and research facilities also

clinical trials are carried out and problems

in productivity have led to a paucity of new

chemical entities (NCEs) being launched on

the market. In 2005, only 29 NCEs were in-

troduced worldwide, the lowest number in

ten years. In the USA the growth rate on

the pharmaceutical markets has dropped

from 11 percent to 5.4 percent in the past

five years (Source: IMS Health; Presenta-

tion at the “Pharma 2006” Handelsblatt

annual conference).

Revenue growth drivers are countries who

have a backlog in demand in public health

such as China, Russia or Turkey. In their

search for new business markets, compa-

nies are increasingly gearing their work to

niche or highly specialized sectors. Onco-

logical research, in particular, is outranking

such “classic” indicators as cardiopulmo-

nary diseases.

The role of generic drugs has increased

considerably in the past years, especially

in Germany. Against the background of the

above-mentioned cost debates, this trend is

expected to continue throughout Europe.

he number of CROs who are planning,

coordinating and carrying out clini-

cal trials for biotech and pharmaceutical

companies has risen constantly in the past

years. The reasons lie in higher demands on

security in the development of pharmaceu-

ticals and the rising degree of complexity of

clinical trials. As biotech companies mature,

CROs can expect to find more customers in

this sector.

27 |

Trends in the contract research organizations

T

C

Fig. 30: Strengths of the Munich region as seen by the companies



| 28


Fig. 31: Weaknesses of the Munich region as seen by the companies

Fig. 32: Overall evaluation of the quality of the business location

The traffic infrastructure receives a strong

rating of just under 2 by the companies in the

Munich region. However, there is a significant

difference between companies within the

city limits and those in the outlying areas:

While the companies within the city limits

are highly satisfied (1.55) with public trans-

portation connections, those on the outskirts

register an average of only 1.97. This pertains

especially to the biotech industry, most of

which has settled in the southwest outskirts

of Munich, especially in Martinsried.

The available office and laboratory space is

given an average rating of 1.76 by the com-

panies, which is more positive than what

they give the traffic infrastructure. Many new

construction projects were completed over

the past few years, so that today life science

companies can now find suitable locations.


high degree of availability of quali-

fied personnel is particularly im-

portant for the biotechnology and phar-

maceutical industries. Highly specialized

experts are needed – both as scientists in

the lab and for carrying out clinical trials.

The high qualification of those employed

by the companies becomes apparent in the

employment structure: Well over half of

all employees in the Munich biotech and

pharmaceutical companies are university

graduates.

The first rate local research facilities already

meet the needs of the companies quite well.

On average the availability of qualified per-

sonnel is given a rating of 2.03. However

there is remarkable fluctuation between

different types of companies regarding this

location factor: For research facilities give

this factor a rating of 1.5, pharmaceuti-

cal companies rate it 1.65, small and mid-

size biotech enterprises register 2.05, and

CROs only give this factor a low rating of

2.44. A relatively large number of CROs are

less than satisfied or dissatisfied with the

available staff. This shows that the need for

specialists in the area of clinical trials is

not yet being met.

While the proximity to suppliers and cus-

tomers is given good marks by the com-

panies, it is also very often registered as

irrelevant. Proximity to suppliers will pre-

sumably play a more important role for

companies producing locally who depend

on timely and reliable supplies of raw mate-

rials. In the case of biotech companies who

are still focusing on research and develop-

ment this is rarely the case. CROs are hardly

dependent on suppliers anyhow, and of the

pharmaceutical companies only a minority

produces goods in Munich. The proximity

to customers is also of minor importance

29 |

Qualified staff available

A

Fig. 33: The location factor “scientific research infrastructure”

in many cases. Pharmaceutical companies

usually supply nationwide using wholesale

or pharmacy channels. Many biotech com-

panies do not have any customers yet, or

only supply to a few big pharmaceutical

companies who are present worldwide.

Munich’s quality as a hub for science is ac-

knowledged by the companies to be a de-

cisive strength. The mark for contact to re-

search facilities is correspondingly positive

at 1.84. 73 percent of the companies are

very satisfied or satisfied. The research fa-

cilities also rate the research infrastructure,

i.e. the contact to other research facilities

and the connected scientific exchange, as

very good (1.5). Moreover the universities

and research institutes continually „pro-

duce“ qualified staff close by (see Fig. 33).

The “soft” location factor life quality also

plays a major role in the business world.

Companies find it easier to get qualified

staff to relocate and customers are glad

to pay a visit to the company when it is

located in an attractive area. Here Munich

is without question in a top position. Of all

of the polled location factors, “arts and lei-

sure activities“ received the highest rating

of 1.58. The research institutes scored even

higher, receiving 1.0.


Satisfaction with cost producing location

factors is quite naturally not particularly

pronounced. The degree of satisfaction with

trade tax and municipal duties is therefore

quite low compared to the other location

factors (2.81). The tax level is seen to be

better on the outskirts of town than within

the Munich city limits, which can be traced

back to the different municipal rates. Of all

location factors, rents for housing scored

worst, at 3.0. However, there were some

voices who commented positively on fall-

ing rents for commercial space and who

| 30


only criticized rents for private housing as

being too high. The salary level received a

score of 2.75, only slightly better than the

tax and rent levels.

A disadvantage of choosing Germany as a

business location is often said to be a low

level of acceptance of biotechnology by the

population. However, public opinion differs

considerably regarding biotechnology in

medical research on the one hand, and in

agricultural sciences on the other, the lat-

ter meeting with greater resistance. Since

31 |

Fig. 35: The location factor “cluster effect”

he evaluation of the cluster effect

shows pronounced differences be-

tween the companies with regard to age,

size, and lines of business. On average the

cluster effect, i.e. the networking of com-

panies with one another and with research

facilities, was rated 2.28. Although cluster-

ing was often named as a special strength

of Munich in open comments, a full 28 per-

cent of the biotechnology companies and

24 percent of the other life science com-

panies are less than satisfied or dissatisfied

with the degree of networking. In addition,

the cluster is considered less relevant by

many of the other life science companies

and by the pharmaceutical companies (see

Fig. 35).

Research facilities were asked to evaluate

the quality of networking with businesses

doing research. They gave this cluster an

average rating of 2.2, or barely good. 25

percent of them were also less than satis-

fied with the cluster effect. In open com-

ments, however, they praised the good

quality of networking between science and

business at Campus Martinsried.

These highly inconsistent evaluations show

that despite the availability of excellent re-

search there is certainly a need for greater

exchange and contact – both from the per-

spective of the businesses and from that of

the research institutes.

Clusters are decisive for young enterprises

Tred biotechnology plays such a major role

in Munich, the majority of the companies

(2.18) and of the research institutions (2.0)

are satisfied with the way biotechnology

finds acceptance (see Fig. 34).

Fig. 34: The location factor “acceptance of biotechnology”

Picture: Josef Wildgruber, FVAmuc

CLU

STER

EFF

ECT

| 32


Picture: Bio M

33 |

The suspicion that networking and cluster-

ing are important especially for research

intensive companies is confirmed by the

findings: Only 17 percent of the companies

conducting research in Munich consider

this factor to be irrelevant, compared to

34 percent of the companies not doing re-

search (see Fig. 36).

More important still for how this location

factor is evaluated than the question of

whether or not research is being done is

when the company was founded. Young

companies obviously profit more from close

proximity to established firms and research

facilities. Only 16 percent of the compa-

nies founded after 1990 said that the clus-

ter effect was not relevant for them. For

the companies established before 1990,

clustering takes a back seat, as almost half

of the companies see no relevance in the

cluster effect (see Fig. 37).

It is consistent with a high degree of satis-

faction with the region in which the busi-

ness is located that a company will not

necessarily wish to relocate any or all of

its operations. Almost three quarters of the

114 companies polled said that they were

not considering relocation. Nearly a fifth of

the companies had already relocated some

jobs to other regions or countries. Firms

who are in fact considering relocation

named East Germany and Eastern Europe

in particular as possible new business loca-

tions (see Fig. 38).

The life science industry sees its future in

the Munich region.

Fig. 36: The location factor “cluster effect” evaluated by companies conducting scientific research vs. those not conducting scientific research

Fig. 37: Evaluation of the location factor “cluster effect” by older vs. younger companies

Fig. 38: Loyalty of the companies to the region

| 34


Base data

This study is based on the companies in the biotechnology and phar-

maceutical industry in the region of Munich who were registered

with the Chamber of Commerce and Industry for Munich and Up-

per Bavaria in November 2005, and the BioM AG address database.

Address information was completed and refined through online re-

search. Companies in biotechnology and pharmaceuticals as well

as other life science companies (especially CROs, pharmaceutical

wholesalers, CMOs, suppliers, and companies in the field of veteri-

nary medicine) were contacted by mail. In addition, 65 consultancies

focusing on life science were polled. Companies in medical technol-

ogy were only considered in individual cases, i.e. when they stood in

close connection with pharmaceutical development or the develop-

ment of biotechnological equipment.

The regional base for this study is the so-called „planning region 14“,

meaning that companies not only from the City of Munich, but also

from Munich County, Freising, Ebersberg, Erding, Starnberg, Lands-

berg am Lech, Fürstenfeldbruck and Dachau were studied. Penzberg

and Bernried in Weilheim County were also included.

After evaluating the returned questionnaires and doing extensive re-

search, 289 companies were identified as belonging to the circle of

life science companies in the greater Munich region. They form the

basic population of this study.

Data collection

The surveyThe analysis took place on the basis of a written complete inventory

count towards the end of 2005.

The 289 companies polled produced a spontaneous return rate of

about 25 percent. This rate was raised by making telephone contact

in January and February 2006 and doing additional research to an

average of 73 percent. The return rate for wholesalers, suppliers and

other life science companies came to just over 60 percent, for CROs

it came to 71 percent and for pharmaceutical companies to 80 per-

cent. Biotech companies produced a return rate of over 95 percent.

In addition the eight research institutes in the region dedicating re-

search to the field of life sciences were included in the survey.

Detailed qualitative information was gleaned through in-depth in-

terviews with 15 company representatives and 4 experts from the

research facilities. This information provided the underpinnings to

interpret the quantitative data and helped identify trends and cor-

roborate developments through concrete examples.

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Foto: ©Comstock

Estimation procedureRevenues and R&D expenses for each category of company were

calculated in the following way:

The number of employees in firms who did not respond and whose

staff figures could not be determined through the Internet was de-

fined as 10, based on the fact that these companies tended to be

small businesses.

Revenue was calculated in relation to staff figures, based on figures

for those companies who had provided information on their staff and

revenues, creating a figure for average revenue per staff member for

each category of company. This average per staff revenue was then

multiplied by the total number of employees.

In the case of collaboration, internationalization, patents etc. such

calculations make little sense; here the available figures were used

without revision.

The small and mid-size biotech enterprises were not subject to such

calculations, as the return rate was over 95 percent. Moreover it

would otherwise not have been possible to present the development

of the sector using historical data from BioM for comparison.

Evaluation

For the evaluation, the companies were grouped into the following

categories:

1) small and mid-size biotechnology companies (biotech

SMEs) and local offices and subsidiaries belonging to inter-

national biotech groups

2) pharmaceutical companies

3) CROs

4) other life science companies including suppliers, dealers,

and companies from neighboring areas such as dietary sup-

plements, veterinary medicine, selected areas of medical

technology or cosmetics

5) consultancies

Some of these categories were subdivided further – e.g. biotech com-

panies were grouped into “therapeutics and diagnostics” (so-called

“red biotechnology”), “agriculture, food, environment”, “equipment

and reagents”, and “biotechnological services”.

Where questions concerned the location of the companies, the data

was evaluated separately for the City of Munich and the greater

Munich region.

Definitions

Biotechnology companies are companies who develop and / or pro-

duce products on the basis of modern methods of molecular biol-

ogy. Since “classical” pharmaceutical companies are also increasingly

applying such methods, it is often difficult to distinguish precisely

between biotechnology and pharmaceuticals. In practice, historical

aspects will often decide – how old the company is, what it produced

originally and how it developed over time. Amgen, for example, is

still considered a biotechnology company despite its relative size,

whereas Roche, although it has a strong biotechnical orientation

in pharmaceutical production (through its subsidiary Genentech)

is considered a pharmaceutical company. This definition is the one

generally used in scientific publications and was therefore chosen

for this study.

Pharmaceutical companies are companies who develop and market

drugs or medicines. This corresponds to the NACE categories 73104*

(research & experimental development in the medical sciences),

24420* (manufacture of pharmaceutical preparations), 241* and 244*


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(manufacture of pharmaceuticals, basic and medicinal chemicals and

botanical products). In several cases companies were categorized as

pharmaceutical companies as they had placed themselves under cat-

egory 51461* (wholesale of pharmaceutical goods).

Contract research organizations (CROs) are companies who carry out

and coordinate clinical trials for candidate drugs under contract to

biotech or pharmaceutical companies. CROs that are not responsible

for trials and instead, for example, advise clients regarding regula-

tory aspects or prepare registration dossiers were placed in the cat-

egory of consultants.

Pharmaceutical wholesale is defined by NACE code 51461* as “whole-

sale with pharmaceutical goods“. Of NACE-category 5185* (dealer

of pharmaceutical goods, medical and orthopedic articles and lab

equipment, medical supplies, dental instruments, hospital and elderly

care supplies) only the pharmaceutical sector was considered.

Other life science companies from neighboring areas such as veteri-

nary medicine, contract manufacturing (CMO), suppliers and certain

sectors of medical technology or cosmetics were assigned to the re-

spective NACE codes and categorized on the basis of what the polled

companies said in the questionnaire their business segment was.

In this study the term life science comprises all above-named cat-

egories of enterprise, comprising all companies who deal mainly with

the production or distribution of pharmaceutical or biotechnologi-

cal products or develop preliminary stages or instruments for the

production of these products. Not included in the life sciences are

all institutions of public health as well as retail trade with pharma-

ceutical products (pharmacies). Likewise the great majority of medi-

cal technology companies were not subject to this study, with the

exception of those closely linked to biotechnology.


Picture: Jürgen Sauer, FVAmuc

Chamber of Commerce and Industry for Munich and Upper BavariaDepartment of Innovation, Research and Technology, Product SafetyMonika NörrMax-Joseph-Straße 280333 MünchenTel. +49 89 5116-0E-Mail [email protected] http://www.muenchen.ihk.de

City of Munich Department of Labor and Economic DevelopmentBernhard EllerHerzog-Wilhelm-Straße 1580331 MünchenTel. +49 89 233-25459E-mail [email protected] http://www.muenchen.de/arbeitundwirt-schaft

Responsible: Beate EisingerStudy conducted by: BioM AGDesign: Word Wide KGPrinting: Weber Offset GmbHApril 2006

Impressum

List of abbreviations

BMBF Federal Ministry of Education and Research

CMO contract manufacturing organization

CNS central nervous system

CRO contract research organization

DNA Desoxy ribonucleic acid

Fig. figure

GDP gross domestic product

GSF National Research Center for Environment and Health

i.e. id est, that is

IHK Chamber of Commerce and Industry

IZB Innovation and Founders Center for Biotechnology

LMU Ludwig-Maximilian-University

MPI Max-Planck-Institute

NCE new chemical entitity

OTC over the counter

R&D research and development

SME small and mid-size enterprises

TUM Technical University Munich

VC venture capital

vs. versus

Biotech and Pharmaceuticals Region Munich 2005 · 2006. 5. 3. · Biotech companies have filed for more than 500 life science pat-ents, with institutions of scientific research fil-ing

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