BioWorld International Correspondent

MUNICH, Germany - Presenting the German government's annual report on the biotechnology sector's development, Edelgard Bulman, federal minister for research, said the number of biotech companies in Germany rose from 332 to 365 in 2001.

She noted that total sales in 2001 had risen one-third over the previous year to EUR1.045 billion (US$93.4 million), while the number of people employed in the sector had risen 35 percent to 14,408. Since 1999, 86 new biotech companies have been founded in Germany.

"Intelligent promotion of research and increasing financial support are the recipe for success," Bulman said in a prepared statement. She pointed out that over the past three years federal support for biotechnology projects has doubled to an annual level of EUR125 million. The federal government also is supporting a multiyear national genomics research network with investments of EUR180 million. Only the United States government invests more in genomics research than Germany. According to the report, investments in research and development have risen 71 percent since 2000, reaching EUR1.228 billion in 2001. At present, investments still exceed sales in the sector.

"More than half of the turnover, however, comes from the relative few core biotech firms that are publicly listed," said Alfred Müller, member of the board of Ernst & Young Germany, whose firm co-produced the report with the German Federal Ministry of Education and Research. On the positive side, Müller cited public acceptance of medical biotechnology, improved legal conditions and considerable entrepreneurship in the sector.

Bulman said she expects continued strong growth for the sector. She cited estimates that over the next seven to 10 years, the number of people working in biotechnology will increase fivefold. At present, three-quarters of all biotech firms have 30 or fewer employees, and a further 22 percent have between 30 and 100 employees. "Very few companies have reached 100 employees, a critical mass for going public," Müller noted.

The minister cited progress in bringing research results successfully to market. "It is especially pleasant that the report shows 61 new products in clinical testing," she said. German biotech firms sampled in the study reported 183 therapeutic compounds in their development pipelines in 2001, nearly twice as many as in 1999. Three of them were in the final phase of development.

Firms clearly are concentrating on concrete products. According to the study, 46 percent of the companies consider themselves product companies, 41 percent a combination of services and products, and only 13 percent were exclusively service providers. In the product area, the medical area dominated, with 83 percent of the surveyed firms classifying their work as therapeutics, molecular diagnostics, drug delivery systems or tissue engineering.

Along the way to bringing products to market, a certain amount of consolidation is expected. The number of companies continues to rise, but the 10 percent growth in 2001 is only half the level of the previous year. Slowing growth also reflects a number of bankruptcies.

The number of patents and licenses issued reflects the sector's strength. In the last two years, patent applications grew by 88 percent, while licenses issued grew by 173 percent. According to the study, cooperation among firms, technology alliances and product alliances had all doubled in 2001.

Venture capital remains the strongest source of investment for biotech firms in Germany. In 2000, EUR565 million was invested, and in 2001 the amount fell slightly to EUR525 million.

The biotechnology sector also is strongly concentrated in the state of Bavaria, with 88 firms represented in the survey, followed by Baden Wuerttemberg (64) and North Rhine-Westfalia (43). Smaller clusters are developing in the Rhineland, Berlin, Regensburg and Freiburg.