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Ulrich Reese, partner at Clifford Chance in Düsseldorf, explains that Germany’s life sciences industry has returned to prominence in the last decade aſter some years where their competitiveness was threatened by the pre- eminence of US companies. “Tere has been huge and rapid growth alongside Swiss-based companies,” he says. Tere are good reasons for life sciences companies to invest in Germany. Large companies like Bayer have encouraged research clusters, allowing smaller companies to gain a foothold in the market and develop innovative products.

Tis, coupled with a litigation system that is user friendly and economical, gives further impetus to the industry. “Te Düsseldorf patent court has a leading role in Europe, and is an attractive venue because it is relatively low cost and operates at a very high standard,” Reese says.

But there are threats to the country’s ongoing success. “Tere are difficulties with German tax law that make it difficult for start-ups to get a return on their development costs,


there is pressure on government to change this,” he adds. And German attitudes towards some cutting edge technologies may discourage certain kinds of innovation. “Germany is conservative about stem cells. We must be careful not to drag behind on these developments.”

Of course, it is not only Germany that needs to be worried about stems cells. Even though attitudes vary across Europe, IP law does not. A German case

currently awaiting judgment from the

Court of Justice for the European Union could have wide-ranging and damaging ramifications for the European life sciences industry. Advocate General Bot gave an opinion in Oliver Brüstle v Greenpeace that, if followed by the court, would effectively render certain types of stem cells unpatentable in Europe.

Simon Wright, a partner at J A Kemp & Co in Bristol, explains that such a decision could have a significant impact on the industry in Europe. “What will be very interesting will be to see whether the [European Patent Office] takes notice of the decision, and if it remains able to grant patents in this area.” If the decision is adopted and followed, it “could drive research into stem cells out of Europe,” he says.

Te UK is another life sciences jurisdiction with considerable pedigree, and Wright reports that the industry has bounced back well. “Te level of work we have now is about what it was before the recession,” he says. But to maintain its position, more work is likely to be needed. “To encourage research in the UK, there needs to be


more business incentives for biotechnology,” he says. “Te UK government was thinking about introducing tax breaks for patents

that you license, but I think it's very limited in effect.”

our main framework conditions are very good for international companies,” Nielsen says. “We have very flexible labour regulations…[and] the corporate tax rate is quite low—25 percent— there is talk about decreasing it further but that’s a political decision.”


She adds: “It’s very easy to set up a business in Denmark—it can be done in just a few hours, and it’s not costly.” An educated population with good English skills also helps, as does the environment: “it’s very safe and there’s good social security, which makes people feel comfortable,” Nielsen says.

Rising stars

Te big three of Germany, France and the UK look set to maintain their positions as leading life sciences jurisdictions for a while to come, but other countries are providing increased competition as time goes on. Chief among these is Denmark, whose small population (just over 5 million) belies its status as one of the most successful innovative countries in Europe.

Tine Hartmann Nielsen heads the life sciences section of Invest in Denmark, an offshoot of the Danish Ministry of Foreign Affairs responsible for promoting Denmark as a business venue overseas. She explains that the reasons for Denmark’s success are a combination of history, labour profile and government attitudes. “Many of the companies that are strongest in life sciences are based on research origins in agriculture,” she says. Additionally, “there is a huge medical technology industry in Denmark, with more than 1000 companies within the area, and of those approximately 220 are classified as dedicated medical technology companies.”

Te biotechnology industry is particularly strong in four areas—cancer research, metabolic diseases, especially within diabetes, CNS diseases and inflammatory diseases—and there is strong collaboration between companies and excellent universities. Financial and labour conditions also prove attractive for investors. “Some of

Life Sciences Intellectual Property Review 2011

Denmark’s success is linked to another rising star of life sciences. Sweden has a long history of pharmaceutical innovation in particular, with Astra (now part of Astra Zeneca) having been around since 1913. Tese days, many Swedish companies collaborate with Danish colleagues in the Øresund region of Sweden and Denmark, in a mutually beneficial relationship. Sweden boasts many of the same beneficial conditions for labour too. Ulf Dahlgren, a partner at Advokatfirman Lindahl, adds: “We have a solid legal system, that is quick, well- functioning and defensible from a costs point of view...Courts are well educated, well skilled and contain technical members with good subject knowledge”. Politically and culturally, Sweden is very supportive of the industry. A recent

survey by the European

Commission placed public support for stem cell research, for example, at 72 percent, higher than most European countries (the UK had 80 percent support; Germany had 50 percent).

Te same could be said for Switzerland to a large degree. Again, tradition, the quality of universities and workforce, and the financial benefits of headquartering in the country have resulted in strong performance and growth over the years. Te free movement of persons agreement with the European Union has helped in this regard.

The future

Assuming, and it’s a big assumption, there are no court judgments that put the brakes on life sciences research in Europe, the industry looks set to continue thriving. But the rest of the world is catching up—India and China are pushing hard, and, as in so many industries, can operate at a cost that European countries can’t match. So the quality of innovation will be key, and other jurisdictions may emerge as key players—there are already signs that Eastern Europe, where labour costs are low and education levels increasingly high, is going to have a larger part to play in the future. Tis is no time for complacency.

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