1 Swedish Industry Published by the Swedish Institute AUGUST 2007 FS 132 C 132 Biotechnology and Pharmaceuticals in Sweden There are two main types of companies that utilize classical or modern biotechnology: mature companies in traditional areas such as pharmaceuticals, food processing or pulp and paper, which have gradually become more innovative users of biotechnology; and modern biotech companies, which often have the mature companies as purchasers of their products or services. In terms of revenues and number of employees, the pharmaceutical companies largely dominate the biotechnology-related industry in Sweden. However, the biotech industry is growing rapidly. Here, drug discovery and development is the clearly dominant sub-sector. It consists of numerous companies, some of them with origins in one of the two large pharmaceutical companies, AstraZeneca and Pharmacia Corporation (since 2003 part of American-based Pfizer). The Biotech Industry Pharmaceuticals, the main application sector, was the first to start commercial activities in the biotechnology field. The first commercial utilization of modern biotechnology in Sweden was based on technology from the U.S. company Genentech, licensed by the Swedish company Kabi in Kabi merged with Pharmacia in Pharmacia later merged with two U.S. companies, Upjohn and Monsanto, to form Pharmacia Corporation. In 2003 Pfizer, another big pharmaceutical company from the U.S., acquired Pharmacia Corporation. The other major pharmaceutical company in Sweden, Astra (now
2 2 fact sheet 132 C AstraZeneca) started using recombinant DNA technology in the late 1980s. In the 1980s and increasingly in the 1990s, new biotechnology companies were founded in Sweden. Most of these new companies were spin-offs from university research and from existing large pharmaceutical companies. Small and medium-sized biotech companies The number of Swedish biotech companies has increased from 136 in 1997 to 213 in During the same period the number of employees more than doubled to a total of more than 8,600 according to data published by VINNOVA (the Swedish Agency for Innovation Systems) in 2005*. The two pharmaceutical companies AstraZeneca and Pfizer are also engaged in biotechnology activities. There are many biotech SME s 1 in this application sector, but also in such industries as food processing and agriculture. The important role of biotech companies Biotechnology companies are often important intermediaries between academia and industry for the purpose of developing and disseminating technology. They are suppliers of technology platforms, knowledge, services, and product embryos to larger companies, such as international pharmaceutical companies or large Swedish companies in the food processing sector. The products they sell may, for example, be drug candidates or microorganisms that have a beneficial influence on health and may therefore be used as food additives. Biotechnology companies also transfer knowledge from academia to their customers using their strong networks. The purpose of these networks is to identify frontline research suitable for commercialization. Their products may also consist of the licensing of patented research findings. In some sub-sectors it is common for companies to develop products and take them to market themselves. This is especially true of the sub-sectors biotech tools and supplies, environmental biotechnology, bioproduction and agrobiotechnology. Concentrated around big cities Biotechnology companies are mostly found in Sweden s metropolitan areas and in cities with large universities conducting a great deal of medical research. Around 390 companies are located in the Stockholm/Uppsala area (including Södertälje and Strängnäs), followed by the Göteborg and Malmö/Lund areas, with 170 and 160 companies respectively. Linköping, Umeå and the rest of Sweden count 25, 20 and 40 companies, respectively. * VINNOVA Analys VA 2005:2 Categories of biotech companies in 2003 Sub-sector Products number Drug discovery & development 60 Drug delivery 13 Diagnostics 19 Biotech medical technology 19 Biotech tools & supplies Services, processes, equipment and 59 instruments for biotechnological use Bioproduction Biomolecular or microorganism 19 production Biotech food Mainly probiotics 10 Agrobiotechnology Plant improvement, biological plant 7 protection, etc. Environmental biotechnology Soil, water, waste treatment and 7 laboratory analysis Total 213 An international industry The Swedish biotechnology industry is heavily involved in international collaboration. The results of a questionnaire of 1999 sent to the presidents of biotech companies underscores this; as many as 64 percent of these companies said they collaborated with foreign academic groups in their research and development activities. The proportion of companies that collaborated with and/or outsourced work to companies abroad was also high, 49 percent. Companies, research institutes, universities and others engaged in biotechnology are extensively involved in international networks and international collaboration. According to a 2003 report on biotech SME s by VINNOVA and IVA (Royal Swedish Academy of Engineering Sciences), Sweden seems to be quite good at keeping biotechnology patents since the same share is being invented by Swedes as is owned by Swedes (52 percent). Regional distribution by number of employees (left) and number of companies (right) The sizes of the circles are proportional to the number of employees/companies. Only companies with fewer than 200 employees are included. The circles are located at the seat of each respective county government.
3 3 SWEDISH INDUSTRY Driving forces of Swedish biotech development A STRONG SCIENCE BASE Today our knowledge of life s basic building blocks, the genes, is increasing dramatically. The human genome has recently been mapped. Our improving scientific understanding of the genetic and molecular mechanisms behind biological processes is an important driver of technological innovation and a foundation for new growth. The development and dynamics of the biotechnology industry are heavily dependent on academic research findings. The Swedish science base is strong in many biotechnology fields and of good quality, due to large investments in biotechnology research over the past 30 years. This has been especially important in ensuring the supply of highly qualified personnel to biotechnology companies. In proportion to population, the volume of Swedish biotechnology publications is currently ( ) the second largest in the world, only Switzerland has a larger production. Sweden contributes with 1.4 percent of the world production of biotechnology publications (to compare with 1.3 percent of all scientific publications). The Karolinska Institute, a medical university in the Stockholm area, is the dominant producer of scientific publications in biotechnology and contributed 25 percent of the total number of Swedish publications in this field, while Lund, Uppsala and Göteborg Universities contributed 8 14 percent each. Intense collaboration between academic research and industry has also been important for the development of the Swedish biotechnology industry. This is also true of collaboration on clinical research with the country s large, mainly publicly operated health care sector. THE PRESENCE OF ASTRA AND PHARMACIA The pharmaceutical companies Astra (now AstraZeneca) and Pharmacia (today part of Pfizer) have stimulated the growth of the Swedish biotech industry, not only in the pharmaceutical and medical sub-sectors but also, for example, in biotech tools and supplies. The two companies have collaborated with Swedish university groups, and in doing so have provided funding and given academia an increased awareness of industrial problems. They have been a source of recruitment of capable personnel for new companies. In fact, some of the new companies are spin-offs from Astra or Pharmacia. IMPROVED CONDITIONS FOR ENTREPRENEUR- SHIP Within academia, a change in attitude has occurred. More academic scientists today have a positive view of collaboration with industry as well as of the prospect of becoming entrepreneurs themselves. Swedish industrial development has led to successful companies, which now serve as good examples for others. This driving force will be increasingly important, as more biotech companies start to show profits. Sub-sectors of the biotechnology industry 2 DRUG DISCOVERY AND DEVELOPMENT Today very few companies develop new drugs without using biotechnological tools. Considerably fewer companies, however, have the development of biopharmaceuticals, i.e. drugs based on large biological molecules such as proteins, as their goal. Instead the large biological molecules are targets for the drugs that are developed. These drugs often consist of small molecules produced by organic chemical synthesis. AstraZeneca and Pfizer are the two dominant companies in this category and by far the largest. Biovitrum (with 577 employees in 2004) focuses on metabolic diseases, obesity, type 2 diabetes and oncology. Other companies are Active Biotech AB (immunology, vaccines, drugs) and SBL Vaccin AB (vaccines), KaroBio AB, A Carlsson Research AB and Medivir AB. Many new ideas originate in the university world
4 4 fact sheet 132 C DIAGNOSTICS AND BIOTECH MEDICAL TECHNOLOGY A great difference compared to companies developing new drugs is that the time required from concept to commercialization of diagnostic products, processes and services is much shorter. Therefore these companies have the potential to show a profit much faster if their products yield positive results. Examples of firms in this sub-sector are Phadia AB (allergy diagnostics), Karocell AB (regenerative medicine, e.g. treatment of severe burns with patients own cultured cells), Q-med AB (hyaluronic acid-based implants) and CMA/Microdialysis AB (microdialysis). BIOTECH TOOLS AND SUPPLIES Sweden is very successful in this sub-sector and is the home of one of the world s leading suppliers of technology for biotechnological research, GE Healthcare. It supplies biotechnology systems, products and services for research into genes and proteins for the discovery and development of drugs and manufacture of biopharmaceuticals. Apart from GE Healthcare AB, there are also smaller companies in the biotech supply area with major potential for growth. One of the largest, Biacore (tools for analysis of biomolecular interaction), a world leader in the detection and monitoring of biomolecular binding, was bought by GE Healthcare in The other large SME s are Biotage (Microwave aided synthesis and DNA sequencing instruments) and Gyros (microlaboratory in compact discs). BIOPRODUCTION Companies producing biological molecules, microorganisms or cells have many of the other biotechnology companies, as well as university groups and the food processing and pharmaceutical industries as their customers. Examples of such firms are DSM Antiinfectives (fermentation) and Polypeptide Laboratories (Synthesis). BIOTECH FOOD In the biotech food industry, biotechnology is mainly found in the area of functional food. The firms are principally active in additives consisting of naturally occurring types of bacteria with beneficial health effects in the gastrointestinal tract. The biggest companies are Biogaia and Probi. All the companies in this field are small, and many of their employees are in Scania. They are often contractors to medium-sized and large food-producing companies like Skånemejerierna (Scania Dairies) and Arla. AGROBIOTECHNOLOGY Two medium-sized companies dominate the sub-sector, the Swedish-German Svalöf Weibull AB, (rapeseed, grain, potatoes, etc) and multinational Syngenta Seed. Both work with plant improvement. The rest of the companies in the group are micro- and smallsized companies. Examples of such firms are BioAgri AB (natural soil bacteria for plant protection) and Plant Science Sweden AB (plant biotechnology). ENVIRONMENTAL BIOTECHNOLOGY Some of these companies work with soil treatment, waste disposal and wastewater treatment. Their customers include municipalities, construction companies and industrial companies needing purification of the water used in their manufacturing processes. They use effective, non-pathogenic, naturally occurring microorganisms and develop improved techniques for their utilization. There are also laboratory analysis companies, which develop testing methods and analyze, for example, sewage to determine levels of toxic substances and microorganisms. The largest companies are Anox Kaldnes and Pegasus Lab. All the companies have fewer than 30 employees, and the companies are spread across the country. The Pharmaceutical Industry The Swedish pharmaceutical industry has grown rapidly during the past two decades, thereby establishing itself as one of Sweden s most important growth industries. During 2005, the industry employed about 22,000 people. More than 90 percent of its sales were exported, for a total of more than SEK 46 billion or 5.0 percent of Sweden s overall exports. This gave Sweden a positive trade balance in pharmaceuticals amounting to SEK 32 billion. During the same period, the pharmaceutical industry has undergone extensive restructuring in the form of mergers and acquisitions, many of them international. The result is that the pharmaceutical industry is now dominated by one large multinational company known today as AstraZeneca. Another company, Pharmacia, used to be a major player in the Swedish pharmaceutical and biotechnology industry. However, following a series of mergers with U.S. firms, a large proportion of the company s activities in Sweden has been spun off or moved abroad. The remaining parts of the previous Pharmacia are now owned by Pfizer and totally dedicated to prescribed pharmaceuticals. Aside from AstraZeneca and Pfizer, there are a large number of small and medium-sized pharmaceutical companies with development and/or production in Sweden. These include biotechnologybased drug discovery firms as well as other less research-intensive companies focusing, e.g., on generics, pharmaceutical formulation, drug delivery or contract manufacturing. Historical background As in other countries, the Swedish pharmaceutical industry was established in the early 20 th century. The first companies often had their origins in pharmacies. They produced standardized products of foreign origin for the local Swedish market. Development of proprietary products occurred only to a limited extent. The modern R&Dbased pharmaceutical industry began to emerge in Europe during the 1940s and 50s, but only in the 1960s did Swedish pharmaceutical companies begin to invest large sums in research and product development. This trend continued during the 1970s, when the R&D intensity of Swedish companies reached international levels (with R&D investments amounting to about 15 percent of sales). Early in the 1980s the pace of expansion greatly increased (to an average of about 20 percent during the next two decades). Ever since then, developments have been innovation-driven and based on a series of products that have been successful in the international market. Examples are the cardiovascular drugs Seloken and Plendil, the asthma preparations Bricanyl and Pulmicort, the growth hormone Genotropin, Healon a substance used to make eye surgery easier and the ulcer medicine Losec. During the 1980s, a large-scale restructuring of the Swedish pharmaceutical industry began. The seven drug companies that existed at the beginning of this period had soon been reduced to three Astra, Pharmacia and Ferring. The latter, a Danish company, has only a marketing company in Sweden today. Although the industry is still dominated by Big Pharma, young biotech companies focusing on drug research have shown vigorous growth in recent years. However, these firms are often heavily dependent on the large companies. The reasons for this are many. First, several firms are direct spin-offs from Astra and Pharmacia. Second, the large companies also function as an important source of skilled labor (mainly researchers and management personnel). Third, these companies often serve as partners or customers of biotech companies. The latter often have as their strategy to sell R&D services or licenses to the established pharmaceutical industry. Some biotech companies have the ambition not only to develop but also commercialize finished pharmaceutical products. The biotech industry can thereby help generate new, research-based pharmaceutical companies, which can become successful niche players. Another interesting development, in the wake of global industry consolidation, is the emergence and growth of specialty pharma companies, i.e., firms acquiring or in-licensing small niche products from
5 5 SWEDISH INDUSTRY large companies. A good example is Meda, which in a few years has changed from being a Nordic agency to become an internationally leading supplier of specialized drugs for small patient groups. From Pharmacia to Pfizer Pharmacia was founded in 1911 and grew organically through development and commercialization of innovative products, often based on academic research results. Starting in the 1980s, the company played an active role in the process of restructuring the pharmaceutical industry by acquiring or merging with a number of companies in Sweden and abroad. Thus KabiVitrum, Leo, Ferrosan and ACO became part of the Pharmacia Group, as did the Italian-based Farmitalia Carlo Erba, acquired in Pharmacia took a big step toward becoming a major multinational when it merged in 1995 with the American-based Upjohn. In 2000, Pharmacia & Upjohn merged with Monsanto to create Pharmacia Corporation. In 2003, this company was in turn acquired by and integrated with Pfizer, which resulted in further spin-offs. As part of the process of focusing on Nexium an improved version of Losec its core business, over the past decade Pharmacia/Pfizer has wholly or partially spun off several business areas, plants and research projects, which have thereby become independent companies. These include Fresenius Kabi (with about 700 employees), which was formed in 1998 when the German health care group Fresenius took over Pharmacia s division for intravenous nutrition technology. Two other major examples are Active Biotech and Biovitrum, which have become two of Sweden s leading biotech firms. More recently Phadia, a world leader in allergy diagnostics, was also spun out. Today, Pfizer s operations in Sweden, engaging some 1,800 employees, consist mainly of pharmaceuticals production, sales in the Swedish market, and clinical research. In 2006, Pfizer decided to locate in Sweden a new plant for biotechnology production. This is a major investment that will strengthen Pfizer s capability to expand globally in the rapidly growing biotechnology field. Also in 2006, Pfizer announced the selling of its Consumer Health Care Business to Johnson & Johnson. This includes a Swedish plant with 700 employees for production of Nicorette, a globally leading product for tobacco dependence. AstraZeneca Unlike Pharmacia, for many years Astra chose to grow only organically. Its growth was very rapid, especially due to the success of Losec (omeprazole), an ulcer medicine which in 1996 became the world s best selling drug (a position it maintained until 2001). Between 1988 and 1997, Astra s sales rose from SEK 6.1 billion to SEK 45 billion. Losec accounted for nearly half of 1997 sales. In 1999, Astra merged with the Britishbased Zeneca Group to form AstraZeneca. With its headquarters in London, it had sales of about USD 24 billion in It is one of the world s leading pharmaceutical companies, with a broad range of medicines designed to fight disease in important areas of health care. Research is carried out in a global network of R&D Centers located in 7 countries and clinical development units at 40 sites around the world. Production takes place in 27 plants in 19 countries. The company has a total of some 65,000 employees, of whom 12,800 are in Sweden. These include 4,900 who work with R&D at one of three research units: in Södertälje, Mölndal and Lund. Swedishbased production is mainly concentrated in Södertälje. Within the framework of Astra- Zeneca s global research organization, Sweden has the main responsibility in several important fields, such as cardiovascular, gastrointestinal and respiratory therapies. A large proportion of the company s 11,900 researchers work in Sweden. In addition, its research activities are headquartered in Södertälje. The largest product is the ulcer medicine Nexium (esomeprazole magnesium), an improved version of Losec launched in response to the competition from cheap generics arising when the patents started to expire. With these two products, Astra Zeneca maintains a world-leading position in the gastrointestinal therapeutic area. In 2005, sales in this area amounted to USD 6.4 billion corresponding to 27 percent of total sales. The company s research profile is among the broadest in the industry. The pipeline consists of close to 100 ongoing projects, including some 80 new chemical entities. In 2005, the company spent USD 3.4 billion on discovery and development activities. Collaboration with universities and biotech companies has become more important as a complement to in-house R&D. AstraZeneca currently has over 1,700 external R&D collaborations and agreements. To strengthen the development pipeline, it is also pursuing targeted acquisition and licensing opportunities when appropriate. As a means of enhancing its
6 6 fact sheet 132 C R&D capability to deliver biological therapeutics, the most rapidly growing segment in the pharmaceutical market, Astra- Zeneca in 2006 acquired Cambridge Antibody Technology, a leading biotech company in the UK with 300 employees. Research and development The innovative nature of the Swedish pharmaceutical industry is the result of far-sighted R&D investments in pharmaceutical companies, but also of the local environment that companies operate in. At an early stage, Sweden began building up an advanced health care system, which was open to trying out new techniques. Large public and private investments in medical research, both in the pre-clinical and clinical fields, have put Sweden in a leading position in medical sciences (it is one of the countries publishing the largest number of life sciences articles per capita). This has benefited Swedish pharmaceutical companies, which have been able to establish collaboration in their own country with internationally prominent research teams. Several major products have thus originated from ideas presented in the academic world, then further developed in company laboratories, often in interaction with Swedish universities and hospitals. Today a number of countries have caught up with Sweden both in terms of the quality of medical care and investments in medical research. Sweden can nevertheless still offer an internationally competitive environment for drug development. The country continues to invest large sums on medical and related research, and Swedish universities are very open to collaboration with the industry. Pharmaceutical research is also undergoing major changes as a result of the genetic revolution. The mapping of the human genome, combined with other biotechnological advances, is creating new opportunities for probing the causes of different diseases and developing effective new therapies. Sweden has various advantages as a setting for the modern genomics-based drug development work that is evolving from the mapping of genomes. These include human biobanks, reliable disease registries and sophisticated epidemiological know-how. Partly as a result of rapid progress in biotechnology, a restructuring process is underway in which the early phases of drug discovery are increasingly being performed by small, specialized research companies. These companies sell services and licenses to large pharmaceutical companies, which then further develop and commercialize products. For example, AstraZeneca collaborates with numerous biotech companies, some of them Swedish. The rapid growth of the biotech industry in Sweden means that despite Pharmacia s/pfizer s cutbacks, there is an expansion in commercially oriented drug research. Most clients and collaboration partners are foreign, with the result that in many cases the research findings of these biotech companies are commercialized outside Sweden. However, there are also examples of foreign companies investing in Sweden. These include the Japanese-based Dainippon Sumitomo Pharma, which has established a joint venture with the Karolinska Institute. The Swedish pharmaceutical industry annually spends around 25 percent of its revenues on R&D. This is a high percentage by international standards, which mainly reflects AstraZeneca s large expenditures in its Swedish research centers (in 2005, roughly one third of the group s total R&D investments of USD 3.4 billion took place in Sweden). SEK 1 (Swedish krona) = EUR 0.11 or GBP 0.07 or USD 0.14 (August 2007) 1 billion = 1,000 million Photos: Hans Bjurling (p. 1), Stockholm University (p. 3), AstraZeneca (p. 5) Footnotes: 1: Small and medium-sized enterprises, i.e. companies with fewer than 500 employees. 2: The biotech industry is changing constantly and data, especially on individual companies, are likely to be outdated quickly. This text is published by the Swedish Institute and can be found on It may not be reused without prior consent from the Swedish Institute. To obtain permission to use the text, please contact: Photos or illustrations may not be used in other contexts. The Swedish Institute (SI) is a public agency that promotes interest in Sweden abroad. SI seeks to establish cooperation and lasting relations with other countries through active communication and cultural, educational and scientific exchanges. Further information about Sweden: the Swedish embassy or consulate in your country, or the Swedish Institute, Box 7434, SE Stockholm, Sweden Phone: