Norway offers an environment where biotech can prosper. In its ambitions for biotechnology, the country is building on firm foundations given its sciencebase, its high level of GDP, and the country’s long tradition of international collaboration, both with Nordic neighbors, and further afield.
4/30/2008 ::
Biotechnology is understood according to the OECD definition as “the application of science and technology to living organisms, as well as parts, products, and models thereof, to alter living or non-living materials for the production of knowledge, goods and services.” Biotechnology is a relatively young industry, spearheaded by medical innovation predominately implemented by U.S. companies in the late 1980s.
Biotechnology uses dynamic living material, and to make a product for commercial use requires much work in terms of standardizing the product and its performance and ensuring safety and efficacy during manufacturing and consumption of the product. The biotech industry is thus highly research- and capital-intensive, characterized by long product development times and a focus on patent protection in order to secure the necessary return on investment.
While typical biotech companies may be small, they often play an essential part in the value chain, serving as innovators of key technology supporting the business of larger pharmaceutical enterprises and companies making fast-moving consumer goods.
EuropaBio operates with three types – or “colors” of biotech: red being medicine, green agriculture and white describing applications in processing industry. In light of Norway’s national traditions, marine biotech has been proposed as a fourth color of the biotech family, blue.
The arctic waters of Norway are ideal for marine bioprospecting
Norway offers an environment where biotech can prosper. In its ambitions for biotechnology, the country is building on firm foundations given its sciencebase, its high level of GDP, and the country’s long tradition of international collaboration, both with Nordic neighbors, and further afield.
United Nations surveys repeatedly rank Norway as one of the best countries in the world in which to live because of its high income per capita, low unemployment (about 2.7 percent), and supportive welfare system. It is sometimes argued that this is at odds with the lean, mean and innovative instincts that are needed to forge high-tech sectors. But there is increasing evidence that such societal attributes encourage entrepreneurial flair – people may be more willing to take a leap to start-up firms because they know all will not be lost if the venture fails. At present, Norway is home to 2 percent of Europe's biotech companies. While low, in relation to GDP, this puts Norway just behind the UK, Europe’s biotech leader, and ahead of much larger countries such as France, Spain, and Italy.
According to Ernst and Young’s Global 2007 Biotech Report, Norway’s public biotech companies rank seventh in Europe in terms of products, with a cumulative total of 17 drugs in development. The country’s private companies currently have 13 drugs in their pipelines.
Promoting cancer research and innovation
Nearly all the companies listed here are part of a local Norwegian ecosystem promoting world excellence in cancer research and innovation. Many of the companies and institutions involved in cancer research and innovation are located around the capital, Oslo, and the Norwegian Radium Hospital.
So Oslo Cancer Cluster (OCC) was formed, also encompassing other companies and centers engaged in cancer research and innovation in Norway. The cluster has more than 40 members, including industrial companies, university hospitals, health initiatives, and support groups in the field of biotechnology with a focus on cancer. The industry members consist of the Norwegian branches of major pharmaceutical companies, established Norwegian international companies and Norwegian start-up and venture capital companies.
Through concerted action and knowledge exchange, the cluster aims to speed up the innovation process from bench to bedside giving patients access to better cancer diagnostics and therapies. OCC wants to be instrumental in moving scientific progress from the world-class research performed inside the cluster companies and supporting university hospitals to the world market. In 2007 there were 63 projects in the clinical pipeline of the Norwegian members of OCC.
To become Europe’s leading biotech cancer cluster, OCC works closely with domestic and international clusters within cancer research and innovation and especially with cancer centers in the U.S. Select university hospitals in Oslo and Norwegian biotech companies already enjoy collaborations with MD Anderson Cancer Center in Houston, Texas and Memorial- Sloan Kettering Cancer Center in New York and New Jersey.
OCC draws much of its momentum from the university hospitals in Norway and particularly the Norwegian Radium Hospital. Now combined with the Rikshospitalet – the national hospital – it is an international center for both lab research and clinical trials which has fostered several spin-off companies, such as Dynal (now part of Invitrogen), PhotoCure and its subsidiary PCI Biotech, Biomolex, GemVax, Optomed, and Algeta. Leading companies such as Affitech and DiaGenic also collaborate extensively with the hospital.
With 400 beds and 2,000 employees, the Norwegian Radium Hospital is the largest comprehensive cancer center in Northern Europe. It admits about 13,000 thousand patients and treats 25,000 outpatients each year. Its focus is prevention, treatment, and rehabilitation of cancer, as well as research and teaching at a high international standard. The Norwegian Radium Hospital has a separate research institution for basal and clinical research: the Institute for Cancer Research. The institute is engaged in basic studies of the biology of cancer and the mechanisms of growth control. The institute employs more than 100 scientists and medical doctors. The institute's new research facilities will open in 2009 adding another 183,000 square feet to its labs. Molecular entities and treatment regimes with signs of promising efficacy are subsequently tested out in the dedicated Phase 1 unit at the Norwegian Radium Hospital.
The institute and the hospital also have access to a large quantity of patient sample material from the Norwegian Cancer Registry. This registry is to the benefit of research and development of new therapeutic regimes and diagnostic tests in collaboration with OCC members and other international partners, like pharmaceutical giant AstraZeneca. Norway’s university hospitals and OCC have a strong commonality in terms of diagnosing and treating cancer through researching, developing, and applying cutting-edge knowledge and science. Because of the members’ strong common intent and collaborative relationships, OCC with its 40-plus member base of fledgling biotech companies and research institutions is able to stimulate and drive translational research from laboratory research to the clinic in a novel and very effective manner.
Dynabeads® from Invitrogen Dynal can be used to isolate stem cells
R&D spending and direction
Public R&D spending in Norway is underpinned by the country’s great wealth of natural resources and economic prosperity. Norway is the world’s third largest exporter of oil and gas, the economy is currently enjoying strong growth with high oil prices, a ubiquitously strong currency, the Norwegian krone, and low unemployment level.
In 2005, total R&D expenditure from public and private sources reached $5.9 billion, or about 2 percent of GDP. This is on the low side compared to Norway’s closest neighbors and the Norwegian government has pledged to increase spending on R&D to 3 percent of GDP by 2010. However, it should be noted that R&D in energy and natural resources sectors is not classified as investment in high-tech sectors, causing underreporting of actual investment.
Most public spending on R&D is directed by the Research Council of Norway. In addition to funding basic research, the Council supports three major programs for nurturing biotech: FUGE, a functional genomics project; PROSBIO, for research in bioprocessing; and MABIT, stimulating marine bioprospecting. While the public research sector has long had a mission to transfer knowledge to industry, it is acknowledged that private-public research links could be strengthened further, for example by making it easier for public sector employees to be seconded to the private sector without loss of benefits. Norway understands it needs to get its national innovation system running efficiently, and a white paper on innovation is due to be published in the spring of 2008.
More funds for company formation
In a recent survey of innovation in Norway, the OECD concluded the government has set ambitious goals and that programs to allocate public support for innovation and tax deductions are “generally well designed and regularly evaluated.”
For example, 2002 saw the setting up of an R&D tax credits system, Skattefunn. In addition, the government has started a number of seed funds, and called for cooperation between public and private investors to provide Norwegian knowledge-based industries with long-term capital.
One example is the Sarsia Seed Fund, a $66.7 million fund financed 50 percent by the government and 50 percent by the private sector. At present Sarsia is Norway’s only seed fund specializing in life sciences.
In most countries it is the medical applications of biotechnology that are most developed, but in Norway marine biotechnology is equally prominent. A handful of Norwegian-based venture capital firms back life sciences companies, including Neomed Management, Teknoinvest, Sarsia Management, Selvaag Venture Capital and SakornInvest Management. And there is growing interest in the Nordic countries from overseas investors, who are increasingly getting involved in early stage deals – though to date they have concentrated on energy and ICT companies. Norway recognizes the need to further increase levels of venture capital, which according to the OECD stood at 0.2 percent of GDP in 2005, compared to 1.2 percent and 0.8 percent in Denmark and Sweden.
Norwegian biotech companies have had good support from local investors, as demonstrated by Affitech, a therapeutic antibody company. In its most recent private round of financing, the company raised $13 million from local venture capital firms, including Teknoinvest, Ferd Venture, Verdane (formerly Four Seasons Venture), Braganza, which is a privately held investment company, and Arendals Fossekompani, an energy company that invests in Norwegian start-ups. The longest established Nordic venture capital firm, Teknoinvest Management, founded in 1984, has been a long-standing supporter of one of Norway’s oldest biotechs, Photocure, established as a spin-off from the Norwegian Radium Hospital in 1993 to develop photodynamic therapies. Photocure is the leader of Norway’s growing band of biotechs that have made it to the public market, joining the Oslo Stock Exchange in 2000. The most recent to join the club was Algeta, a specialist in nuclear medicine, which joined up in March last year. Biomarker-based diagnostics specialist DiaGenic was listed in August 2004, followed to market by Biotec Pharmacon in October 2005, Nordiag in December 2005, and Navamedic and Clavis Pharma in March and July 2006, respectively.
By Nuala Moran, Sander J. Tufte, and Ole Jørgen Marvik from Innovation Norway's Life Science Team