Biotech and Pharmaceuticals Region Munich 2005

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Dec 1, 2012 (4 years and 9 months ago)

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Bi otech and Pharmaceuti cal s Regi on
Muni ch 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
1 |
Preface
Dr. Reinhard Dörfler
Managing Director of the Chamber of Commerce and
Industry for Munich and Upper Bavaria
Dr. Reinhard Wieczorek
Councillor and Head of Department of Labor and Economic
Development of the City of Munich
BIOTECH AND PHARMACEUTICALS REGION
| 2
Picture: Jupiter Images
Contents
1
4
10
17
19
21
23
24
26
27
34
Munich 2005
Preface
Taking stock: Munich as a region for biotechnology and
pharmaceuticals

The sectors in detail
Biotech 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
3 |
Biotech and Pharma
-
ceuticals Region
N
MUNICH PLAYS IN THE UPPER LEAGUE
Taking stock: Munich as a region for biotechnology and pharmaceuticals
| 4
Picture: Jupiter Images
Collage: Word Wide
5 |
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.
| 6
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
BUSINESS REGION MUNICH
Taking stock: Munich as a region for biotechnology and pharmaceuticals
| 6
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
7 |
number of firms
number of staff
revenues (in
million euro)
R
&
D volume (in
million euro)
total firms
289
16,550 (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 institutes
8 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
COMPANIES IN THE MUNICH REGION
Taking stock: Munich as a region for biotechnology and pharmaceuticals
| 8
Fig. 5: Regional distribution of pharmaceutical and biotech companies (total planning region 14)
9 |
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
Collage: Word Wide
| 10
The sectors in detail – Biotech companies
RED BIOTECHNOLOGY
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
B
Biotech companies
Picture: Jupiter Images
11 |
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
RESEARCH
&
DEVELOPMENT
The sectors in detail – Biotech companies
| 12
13 |
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
| 14
DEVELOPMENTS IN THE SECTOR
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).
Picture: Jupiter Images
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
Bio
M
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).
15 |
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
| 16
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
Picture: Jupiter Images
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
| 18
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
Picture: Jupiter Images
The sectors in detail – Contract research organizations
CLINICAL RESEARCH
| 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
Picture: Jupiter Images
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 enterprises
SUPPLIERS AND TRADE
| 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.
Picture: Jupiter Images
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
T
45 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
Picture: Jupiter Images
| 24
FLOURISHING RESEARCH LANDSCAPE
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 forecast
BIOTECHNOLOGY ON THE UPSWING
| 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
Picture: Jupiter Images
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modolore molore vendign ssequat.
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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
Assessing the quality of the Munich region
Picture: Jupiter Images
| 28
Assessing the quality of the Munich region
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.
Picture: Jupiter
Images
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.
Picture: Jupiter Images
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
Assessing the quality of the Munich region
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
T
red 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 biotechn
ology”
Picture: Josef Wildgruber, FVAmuc
CLUSTER EFFECT
| 32
Assessing the quality of the Munich region
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
Research methodology
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 Bio
M
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 survey
The 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.
35 |
sumsan volum eraese con volobore te conse
35 |
Foto: ©Comstock
Estimation procedure
Revenues 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*
Picture: Jupiter Images
35 |
| 36
(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.
Research methodology
Picture: Jürgen Sauer, FVAmuc
Chamber of Commerce and Industry for
Munich and Upper Bavaria
Department of Innovation, Research and
Technology, Product Safety
Monika Nörr
Max-Joseph-Straße 2
80333 München
Tel. +49 89 5116-0
E-Mail iszihkmail@muenchen.ihk.de
http://www.muenchen.ihk.de
City of Munich
Department of Labor and Economic
Development
Bernhard Eller
Herzog-Wilhelm-Straße 15
80331 München
Tel. +49 89 233-25459
E-mail bernhard.eller@muenchen.de
http://www.muenchen.de/arbeitundwirt
-
schaft
Responsible: Beate Eisinger
Study conducted by: Bio
M
AG
Design: Word Wide KG
Printing: Weber Offset GmbH
April 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