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European Biopharmaceutical Review

Budding Biotech



Recent years have seen Austria take centre stage for some major pharmaceutical and biotech deals. Extensive activity in the region, a loyal work force and tailored funding opportunities go some way to explaining its appeal.

Austria is one of the leading countries in Europe for sustainable development in its life science industries, taking a lively, creative and highly innovative approach rooted in world-class engineering and science. With both large and small companies in the therapeutic, medical technology and diagnostic sectors, as well as being providers of enabling technologies and related service companies, Austria offers a dynamic setting for scientific business.

Big Players in Austria

The strength of the Austrian life science scene is clear from the number of spectacular licensing deals with Austrian biotech start-ups over the course of the last three years. GlaxoSmithKline concluded three deals with Viennese companies Intercell, AFFiRiS and Apeiron, potentially worth up to €800 million. Boehringer- Ingelheim concluded the biggest ever Austrian licensing deal with Viennese F-star, promising milestone payments up to €1.26 billion. In September 2011, F-star was once more making headlines with a deal with Merck Serono, which could amount to up to €492 million.

License deals aside, major international players in the life sciences have made considerable investments in Austria over the last few years. In August 2011 GE Healthcare took over PAA Laboratories, the Upper Austrian specialist in the manufacture and worldwide distribution of cell culture products. In 2010 B.Braun Austria opened its own development facility in Graz for the development and clinical testing of a new glucose sensor, in close cooperation with Graz University of Technology (TUG) and the Medical University of Graz (MUG). Also in 2010 Fresenius Medical Care, a leading provider of products for kidney dialysis, set up a new research and development site in Lower Austria.

These success stories demonstrate that Austria has turned into a major centre for life sciences. More than 60 multinational pharma companies are already active in Austria. Groups like Sandoz, B.Braun and Boehringer-Ingelheim have set up both production and research sites in Austria. American group Baxter is running the biggest subsidiary outside the US in Austria, with 3,800 employees. Baxter Bioscience has set up its top global research site in Austria. In Styria, the Swiss pharma giant Roche has established the company’s global research, development and production centre for blood gas and elctrolyte analysis systems. Greiner-Bio- One International AG, a global player in the plastics sector with special products for blood, urine and specimen collection, is run from the tiny town of Kremsmünster in Upper Austria. In addition, Jungbunzlauer, one of the world’s leading producers of natural and nature-identical biodegradable ingredients, operates a major manufacturing plant in Lower Austria. These companies take advantage of Austria’s well educated and loyal workforce as well as its proximity to central-eastern and south-eastern European markets.

A Great Location for Biotech Business

Austria has a lot to offer, especially in the area of biotechnology. The sector is viewed as being among the most important for driving forward new developments and for developing economic potential. Over the past few decades a lively scene of innovative biotechnology companies has put Austria firmly on the European life science map.

Austrian biotechnology is young – the average company is just seven years old. Yet the industry has reached a critical mass within a very short period, and has grown into a major economic centre. In 2010, Austrian companies, working either in part or fully with biotechnology, generated more than €3 billion in turnover. These companies employ over 7,000 people in their biotechnology-related arms.

‘Red’ biotechnology, with a focus on active pharmaceutical ingredients, diagnostics and new therapies, and ‘white’ biotechnology, which is occupied with biotechnological processes for industry, generate the strongest turnover. Sixty per cent of the total turnover is attributable to the health sector; turnover in industrial biotechnology in 2010 represented 10 per cent.

Austrian companies are world leaders in the development of innovative vaccines and anti-infectives. Spin-offs such as Intercell, AVIR Greenhills, Protaffin and Nabriva compete internationally. In the cancer research industry, renowned research institutes such as the Institute for Molecular Pathology (IMP) or Oncotyrol are located in Austria. Innovative start-ups are also important players in oncology: the Viennese company Apeiron is developing a treatment for neuroblastoma. Personalised medicine is another research area playing an increasingly important role. The company Biocrates from Tyrol is leading in the development of diagnostic biomarkers, and Graz houses Europe’s biggest biobank – with almost four million tissue samples. In the field of industrial biotechnology, two unique centres – the Austrian Centre of Industrial Biotechnology (ACIB) and the Research Center for Pharmaceutical Engineering (RCPE) – are among others looking into new and revolutionary production methods.

Investors certainly view biotechnology as a promising field for the future. Financing in Austrian biotechnology was at high levels in 2010. Funding totalling around €79 million flowed into the sector last year, including funds from venture capitalists, private investors, grants, loans, and other contributions. Thirty-five million euros came from private investors and business benefactors, while venture capital was the second largest source of financing for biotechnology companies, with a total contribution of €19 million.

The recent success stories in Austria’s life science industry have in part been made possible by outstanding researchers who are willing to take a lot of personal risk, but are also due to a business location that allows young companies to thrive. Favourable tax conditions, an R&D cash premium of 10 per cent, and a corporate income tax at a maximum of 25 per cent are among the factors leading companies to settle in Austria. Multinationals and start-up companies alike can benefit from tailor-made financing measures and a wide range of funding opportunities when setting up a business.

Funding Opportunities

The most innovative ideas can only be useful when they have successfully bridged the gap from lab to market, which is why Austria has a wide array of national and regional funding schemes on offer. Focusing on start-up ideas in life sciences, Austria Wirtschaftsservice, the Austrian national funding bank, provides financial support with its promotional programmes PreSeed LISA and LISA Seedfinancing. This is complemented by sector-specific advice and assistance in the search for investors. The two programmes aim to encourage the implementation of scientific discoveries into businesses and to raise the number of new business ventures in the life sciences.

PreSeed LISA provides funding for the phase before a life science company is set up. Costs related to the scientific implementation and the economic application of a project can be funded; such non-refundable financial support amounts to a maximum of €200,000. After a successful proof-of-concept, a newly established company can also benefit from ‘seedfinancing’. This grant of up to €1 million is only reimbursable when the company makes profits or is sold, and is the major source of funding for highly innovative companies in order to bridge the financing gap from starting the company to the first financing rounds.

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Sonja Polan is International Marketing Manager of Life Science Austria (LISA). She previously worked as Account Manager at the European Commission, in charge of marketing telecommunications policies to the European public, covering campaigns for the newly established roaming regulation and telecom reform. Prior to this, Sonja worked for a major Brussels-based European public affairs consultancy, and also had short stints with the European Parliament and with trade federations. Email: s.polan@awsg.at
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