The leading life sciences clusters in Europe have a long history of excellence in medical research, and with highly educated workforces, state of the art infrastructure, and well-established technology transfer organisations, are making significant progress in translation and commercialisation, according to a new Science|Business report that takes an in-depth look at 17 of Europe’s most innovative clusters.
The study, undertaken in partnership with the French pharmaceuticals company Sanofi, draws on quantitative indicators and data gathered from Eurostat, the World Bank, OECD, and other national and regional sources. The hard data was complemented by interviews with people working at the heart of the clusters, giving a comprehensive overview and helping to identify immediate challenges.
The research shows that across Europe clusters thrive where companies, research centres, academic institutes and government agencies cooperate effectively. Sustained financial support from governments for research and innovation, tax credits/exemptions for companies engaged in in-house R&D, and fast approval for clinical trials, are key ingredients for life sciences clusters to grow and deliver innovation to healthcare systems.
Government investment is critical. For example, Sweden is investing €6.5 billion, including €1 billion from the city of Stockholm, in Hagastagen, an urban development that will be host to a new university hospital, the expansion of the Karolinska Institute Science Park and a new cancer therapy clinic.
France is investing €5 billion over 10 years in Paris-Saclay, a project that will be home to 22 higher education institutions and research institutes. €1.3 billion will be dedicated to research and innovation programmes and €2.5 billion to developing new scientific and academic infrastructure.
In London, the Francis Crick Institute is about to open its doors as the biggest centre for translational biomedical research in Europe. The £650 million investment has come from a consortium of six of the UK's leading scientific and academic organisations. When up and running the institute will employ 1,500 staff, of whom 1,250 will be scientists.
What more is needed
Despite success stories, it’s clear that some clusters would benefit from more financial support for basic research projects, as is the case for Vienna. Meanwhile, stakeholders say Switzerland should offer more tax incentives for companies that invest in R&D, and France needs to simplify its administrative systems to allow clusters to operate more effectively.
Other clusters, notably in in Germany, find it difficult to attract new sources of capital. Elsewhere, technology transfer is seen as too fragmented across competing institutions and departments.
And then there is the European-wide problem of finding skilled researchers and management professionals in the life sciences industry.
The cluster model: ‘Attacking an old issue’
Speaking at the event held to launch the report, Pierre Meulien, Executive Director of the Innovative Medicines Initiative said clusters, “Are still attacking an old issue, which is the gap between the knowledge generated in our teaching institutions, and our ability to take that knowledge and apply it in healthcare systems.”
The strains of ageing populations and austerity-era cuts has left healthcare systems around the globe focusing mainly on balancing budgets, and not so much on pulling innovation out of academia. “Governments are reluctant bringing in new technologies, which in their view is an added cost,” Meulien noted.
This is one reason why the gap between academic research and translation into healthcare applications still exists, and governments across the developed world are struggling with this issue. Meulien suggested the cluster model needs to go further in getting more representatives of local governments involved in the process. “They are the deciders,” Meulien said.
Also speaking at the launch event, Patricia Reilly, Member of Cabinet of the Education Commissioner Tibor Navracsics, said local hospitals and local healthcare systems are in some cases involved with European clusters, but not everywhere. “The demand side of innovation is part of the chain, but it’s an incomplete picture,” said Reilly.
Excellence attracts excellence
Although there is no magic formula for creating leading life sciences clusters, when successful they “generate an enormous amount of economic value,” said Reilly.
But that kind of impact has a price tag, and the governments are paying the bill. The study shows that, except Ireland and the UK, the most innovative clusters operate in countries and regions where R&D expenditure is in excess of 2 per cent of GDP.
The most innovative clusters have at least two significant universities at their core, which take up a large chunk of that R&D money.
“Clusters form around universities,” said Tony Hickson, Managing Director for technology transfer at Imperial Innovations, the technology transfer arm of Imperial College London. Universities provide the talent, the research spaces, and the incubators, all of which act as a magnet for business. “Without a university there is no cluster,” Hickson said.
But that does not guarantee that all excellent universities can be the driving force behind an innovative cluster. Gabriela Senti, Head of the Clinical Trials Centre at the University of Zurich said it is difficult to convince researchers to open up to collaborating with the industry. “They are not ready to see how important industry is,” said Senti.
For Sanofi and its fellow pharmaceutical companies, clusters are now a key and much- needed source of innovation. There is an increasing interest in tapping into the innovation potential of life sciences clusters, said Isabelle Thizon De Gaulle, Vice President for R&D Strategy at Sanofi. “We need to have access to networks of innovators,” she said.
Financing high-risk projects
Another problem faced by the life sciences clusters is access to venture capital. “The main challenge is raising growth capital, which can vary from €5 to €20 million,” said Nicholas Davis, head of Society and Innovation and member of the Executive Committee at the World Economic Forum.
It is not that Europe doesn’t have enough cash to fund these projects, but that entrepreneurs cannot make their business plans work in the fragmented healthcare environment in Europe. The EU is “not a single market,” said Davis.
In addition, venture capitalists prefer to steer their money towards less risky investments in IT or energy, and shy away from investing in life sciences companies that require longer exit timeframes. For VCs , choosing less risky sectors is just “simple maths,” said Tom Weaver, CEO of the Cambridge-based genomics specialist, Congenica.
Governments need to fix this market failure, Weaver said. “The EU should work on tax incentives for investing in biotechnology and life sciences.”
How the EU can help
The European Commission can help clusters grow by making it easier for stakeholders to connect and access EU programmes. Currently, they have to navigate through far too many acronyms and other policy gimmicks – with which only a very few policy geeks and perhaps a handful of consultants are conversant. “The Commission is not as seamless as it seems,” said Reilly.
In addition, the Commission should not lose sight of the need to have high-quality people coming from the education system. The EU has a role to play in helping to feed that pipeline of excellent people. “Without it companies cannot stay in Europe,” said Reilly.
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