Developments in new biotechnology firms in Germany

Technovation 19 (1999) 267–282

Developments in new biotechnology firms in Germany Stefan Momma a, Margaret Sharp a

b,*

Karolinska Institute, Dept. of Cell and Molecular Biology - UVB, Doktorsringen 2B, S-17177 Stockholm, Sweden b SPRU, University of Sussex, Falmer, Brighton, West Sussex BN1 9RF, UK Received 22 May 1998; received in revised form 25 August 1998; accepted 14 October 1998

Abstract Germany now has a substantial number of new biotechnology firms, with the number steadily increasing. The institutional framework has been slow to develop for this novel form of company, but many are now emerging and will certainly play an important part in the dynamics of the system. At the same time, the science base in this area has gained considerably in breadth and quality. The essential questions that arise from these recent developments are: (i) what prevented these new biotechnology firms from growing earlier and what is the current situation? (ii) What changes have occurred which have stimulated this growth? (iii) How are biotechnology companies going to develop further and what are the implications for Germany’s pharmaceutical industry and wider economy? A database for biotechnology firms in Germany was set up of which a subset was used to analyse the current state of development. The following conclusions were reached: (i) Germany now has a substantial number of new biotechnology firms and the numbers are steadily increasing. (ii) Their collaborations with and proximity to academic centres of excellence suggests they are well embedded in the German research system. However, their sectoral composition sets them apart from their American counterparts, with greater bias towards instrumentation and environmental biotechnology, both areas of German industrial strength. (iii) Since the mid-1980s there has been continuous, if slow, adaptation to the institutional framework supporting biotechnology. These changes have finally resulted in an effective network of industry, academic and government links and have helped to promote both an increasingly strong scientific performance and the development of new firms. The authors suggest that, although these developments do not conform to the Anglo-Saxon entrepreneurial model in which new firms effectively forge new industries, the German evolutionary approach to innovation may still be holding its ground.  1999 Elsevier Science Ltd. All rights reserved. Keywords: Biotechnology; Developments; Germany

1. Introduction Biotechnology belongs to the strategic technologies of the 21st century. Its importance is often compared with that of microelectronics and information technology. While earlier new technologies emerged from the basic sciences of chemistry and physics, it is now the turn of biology to provide the impetus for technological development. Biotechnology will make its impact not only by promoting new products such as drugs, diagnostics or high yield crops, but also by the way it stimulates innovative processes to replace traditional methods of discovery and development in areas like pharmaceuticals and agrochemicals. Advances in the industrial application of biology

* Corresponding author. Tel.: ⫹ 44 (0)1273-678169; fax: ⫹ 44 (0)1273-685865; e-mail: [email protected]

depend on channelling scientific know-how from the academic world, where this knowledge has been accumulated mainly at the laboratory benches of universities and public sector research institutes, into industry. In the United States, the agent of mediation has become the dedicated biotechnology firm (DBF)—small companies, mostly founded by, or affiliated with, brilliant scientists, operating at the cutting edge of research, and, in themselves, pushing forward the frontiers of science as they explore the opportunities for commercialisation (Zucker and Darby, 1995). Innately Schumpeterian in nature (namely a ‘swarming’ of new firms motivated by the prospect of temporarily high monopoly profits to be gained from exploiting a radical innovation), the industrial dynamics do not always follow this model. As Winter (1984) has pointed out, this entrepreneurial mode of advance is likely to be dominant only when there are marked asymmetries of knowledge. To date, the ‘swarming’, entrepreneurial mode has

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indeed been the case with biotechnology. The leading field of application—pharmaceuticals—is a sector with a strong innovative tradition, but that tradition is rooted in synthetic organic chemistry, not biology. To continue to be a lead player in the world of bio-pharmaceuticals, traditional companies had to acquire a new competencebase in both science and technology. To this process, the new biotechnology firms contributed specialist knowledge and skills in the new genetics-based route to drug discovery. On the other side, and here lay the asymmetry, the existing pharmaceutical/chemical companies brought the know-how, scale up facilities, legal and marketing knowledge, and above all the capital, needed to take a potential new drug through the long haul of clinical testing and on to the market. In the terms used by Teece (1982), biotechnology offered a classic example of complementary assets. The DBFs provided the (scarce) new skills necessary for the existing companies to maintain their position in the market, while the large companies deliberately played long, and hedged their bets before investing to build up internal competence. The fast moving frontier of science which, within the last 15 years, has advanced from recombinant DNA, through protein engineering to the new genetic therapies, has maintained the asymmetry of new knowledge between large and small firms. There has therefore been both the demand for, and the ever-ready supply of, these entrepreneurial intermediaries over the same period. Most of them, however, have to date been located in the United States, not Europe, and Germany in particular seems to have lagged behind other countries (Ernst & Young, 1997a, b). Anxiety at over-reliance on foreign capabilities led in the early 1990s to a redesign of government policy. Building on past experience, new ideas of how to promote biotechnology were worked out and new programmes launched. ‘Biotechnologie 2000’ is the most recent example of such a programme. As a result, spending for research on the biological sciences has increased and regulations have been amended. Some reports and newspaper articles now even talk about a “new German optimism” for biotechnology (Ernst & Young, 1995; Edgington, 1995) and forecast an increasing German share of scientific, and especially, industrial output from this sector. The question which this paper seeks to answer is how far this optimism is justified? How far has German biotechnology now broken through and established itself within the German academic/industrial scene? The paper looks why Germany should have been so slow in following the US lead (Section 2), and at the development of competence through the 1980s and 1990s (Section 3). Section 4 then explores how many DBFs now exist in Germany (including in the new La¨nder), when they were founded, what they are doing and where they are located. Section 5 seeks to draw some general conclusions.

2. Why Germany was so slow to develop new biotechnology firms There seem to be a number of reasons which help to explain why Germany was so slow in following the American lead and developing a swarm of new small firms in biotechnology. Historically, the development of the life sciences in Germany has been constrained in a number of different ways. First, the huge loss of human capital that started when Hitler came to power in 1933 and reached its height during World War II with the persecution and murder of Jewish and other ‘unwanted’ scientists and students. The war was followed by a second exodus— this time of young scientists in search of better working conditions—mainly again to the US. A third reason why the biological sciences, in particular, took so long to ‘recover’ from the war was the general public suspicion of a science that could so easily be linked to eugenics.1 The result was that, in biology, there were isolated pockets of excellence rather than the breadth of capability experienced in other science fields in Germany. This led to a dramatic shortage of experienced personnel during the first major expansion of the biological sciences in German universities in the 1970s, at a time when biotechnology began moving ahead fast in America. The decoupling of German academia and industry from the scientific developments in biology therefore helps to explain why Germany lagged behind in the early 1980s. During the 1980s both federal and La¨nder (state) governments increased investment in the underpinning science base for biotechnology, and industry also began to spend heavily (Sharp, 1985). However, there were also other factors delaying the catch-up process—the lack of public acceptance of biotechnology; the lack of knowledge or expertise in government, and the lack of co-operation between industry and university biology departments. The large German chemical/pharmaceutical companies meanwhile invested in American know-how by actively collaborating with American research institutions and universities and by linking up with/or acquiring American DBFs (Sharp, 1996). As already noted, these developments alarmed policy makers and led to a sharp change in policy stance in the early 1990s. Jasanof (1985), however, suggests that there is more to the phenomenon than this—she suggests that in Germany the corporatist decision-making structure in general, with its emphasis on internal changes in existing firms and institutions rather than the creation of new 1 The other sciences, physics and chemistry, also took time to get back to their pre-war position of eminence, but in general they ‘recovered’ more quickly. This could have been due to a higher demand for the respective graduates in industry (chemical companies re-emerging from IG Farben in chemistry, electrical engineering companies such as Siemens, Bosch and the like in physics).

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firms, proved to be too slow to keep up with the pace of rapid developments occurring in the US. This view of German industry—of an innovation system which prefers to develop in-house capabilities and to build up competencies incrementally—is reinforced by a relevant article by Wendy Carlin and David Soskice in the National Institute Economic Review (Carlin and Soskice, 1997): How does Germany technology policy deal with [the technology transfer problem]? First, is the identification and assessment of those new areas in which competencies are needed…Given the identification of new technology areas, the building up of competencies takes place jointly within the relevant technical university departments, the Fraunhofer and industry research institutes and critically, the research departments of companies. (Carlin and Soskice, 1997, p. 67) And then subsequently: If the introduction of new technology is to reach effectively through the industrial sector it must be based on widespread acceptance of the relevant interface standards…Standards are set on a consensus basis in Germany, which takes time and a great deal of negotiation. But it permits—once common standards for the new technology have been developed— the relatively rapid diffusion of the new technology. (Carlin and Soskice, 1997, p. 67) And of the science-based new technology firm, of which the US DBF is a prime example, they note: Companies engaged in German-type innovation strategies had an increasing need in the 1980s to develop long-term relational contracts with key suppliers for the joint development and customisation of components and equipment. (Carlin and Soskice, 1997, p. 67) In other words, if this interpretation is correct, the expected pattern of development of biotechnology in Germany would involve: 1. the continuing dominant role of the large, multinational chemical/pharmaceutical companies as lead ‘players’ in the absorption of the new technology; 2. on their part, first a long period during which they satisfied themselves that the new technology was truly as important and generic (i.e. pervasive of all aspects of their business) as its protagonists maintained, and, subsequently, a period of learning and assimilation as the firms built up internal competencies;

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3. simultaneously, a process of consensus-building between state and industry, with the state accepting responsibility for the development of external competencies (i.e. building up the science and technology infrastructure) and entering into a long dialogue with industry and other interested parties in an attempt to establish ‘interface standards’ acceptable to the general public; 4. the emergence of small firms at the end, rather than at the beginning, of this process, with the main role of the small firm being that of the specialist supplier— whether of reagents, equipment or other services (e.g. research, testing, etc.). If this pattern of development holds, then we might expect the DBFs now emerging in Germany to be rather different creatures from their American counterparts— less thrusting, and, far from aspiring to develop themselves into large integrated companies which can oust existing firms from their leading position, accepting instead a complementary role in the development of the new technology. Given the close links between biotechnology and the science base, it is to be expected that, as in the US, these new DBFs would, in many cases, be spin-offs from the science base, and geographically clustered and networked around that base. As Audretsch has found in his work on German biotechnology (Audretsch and Stephan, 1994), there are distinct “geographically localised spillovers” to be found in locating close to one of the great universities or sources of scientific discovery. With technology transfer as much a matter of tacit knowledge, passed on by word of mouth through informal networking (Faulkner and Senker, 1995), such clustering, already a feature of developments in the US (Zucker and Darby, 1995), is also to be expected in Germany. Earlier work by one of the authors on the way in which Europe’s multinational pharmaceutical/chemical companies assimilated and absorbed new developments in biotechnology (Sharp and Galimberti, 1993; Sharp, 1996) has charted the relationships which developed in the late 1980s and early 1990s between large German companies and the US DBFs. The focus of this paper is on Germany itself and in particular the new DBFs now emerging in that country.

3. Biotechnology in Germany There are two pre-requisites if new biotechnology firms are to take root and thrive in an economy. First, is the presence of a strong, well funded public research sector (necessary both as a source of knowledge and as a source of training for skilled manpower). Second, the presence of a strong chemicals/pharmaceutical sector is necessary to provide a market for the innovative pro-

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cesses and products of these firms. In both respects, Germany is now well endowed. As we shall also see, government policy helped rather than hindered the process of evolution. 3.1. The science base Historically, Germany has not played a leading role in the development of the life sciences. In the 1930s it suffered from a huge loss of human capital when Hitler came to power and this was compounded after the war by the further flight of young scientists seeking better pay and working conditions. In particular, the biological sciences were slow to recover because of general suspicion of a science which could so easily be linked with eugenics. As a result, scientific excellence existed only in isolated pockets and there were dramatic shortages of experienced personnel. As biotechnology emerged as a recognised new generic technology, the universities and research institutes sought to build up expertise. In terms of scientific performance, the Max-Planck Institutes (MPI) are the outstanding representatives of the German research tradition, with 15 Nobel prizes awarded to MPI scientists since the war. They are better funded than university departments and their scientists do not have teaching responsibilities. This favourable environment has also earned them the reputation of an ivory tower mentality, with interest only in pure research. Moreover, in spite of their scientific success, their research efficiency in terms of paper output/money compares unfavourably with their American or British counterparts, or even with university departments within Germany (Kahn, 1995). The Max-Planck Society runs its own company to market its research, the Garching Innovation Company.2 This helps with IPR, licensing arrangements, etc., and consultancy or training contracts. All MPI involved in research in biology are located near local universities, and exchange of scientists and cooperations with university departments is common. Originally, one purpose of the MPI was to serve as a kind of ‘battery recharger’ for scientists coming from universities, to enjoy some years in the highest class of research before returning to the university to make their knowledge available to students and other staff. The universities’ relatively high reputation in research derives from the so-called “Humboldt’s ideal” on which they have been organised and which sees a unity in research and teaching (Keck, 1993). The aim of academic education should be the development of the whole man/woman and the best way to achieve this is by undertaking research. Even though the universities have 2 The Garching Innovation GmbH was reorganised into its current form in 1979. Since then, 1108 inventions have been administered, resulting in 660 contracts with industry yielding 51.6m DM. Currently, approximately 70–80 inventions are filed for patenting each year.

changed markedly in the last century, this principle is still reflected in their high share of scientific research (compared, for example, to the institute-based research in France). University professors are still regarded as antipathetic to entrepreneurial activity. They enjoy the status of civil servants with considerable freedom and security, and are sometimes ironically described as the last remnant of true feudalism in Germany. Nevertheless, some scientists have set up businesses. Manfred Eigen, a Nobel Prize laureate from the University of Go¨ttingen, is a prominent representative with his company, Evotec. Other early start ups, such as the Organogen and Progen, were set up by scientists from the University of Heidelberg. These, however, were exceptions. While consultancy in fields such as chemistry has been common for some time, this is not the case for biology. Zucker and Darby, for example, in their work on “star scientists” found few links around stars in Germany (Zucker and Darby, 1995). In terms of quality, Germany universities are difficult to judge. Unlike in the US or UK, there is no national ranking exercise which assesses research quality. A Science Citation Index (SCI) database search for papers published in Germany, containing keywords related to biotechnology over a time period of five years (1991– 1995) shows the growth in the number of publications for each country in the years 1991–1995 (Fig. 1). The worldwide increase in these years was 82%, with Germany and Japan the only countries with a below trend increase in publication activity (both ⫹ 67%) over the

Fig. 1. Growth in the number of publications containing one of a selection of keywords. The world total has been divided by 5 to make comparisons with countries possible. Source: BIDS Science Citation Index.

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period. Germany has, however, started to catch up fast and in 1994–1995 recorded an increase well above the world average ( ⫹ 24% for Germany compared to France ( ⫹ 13%) or Japan ( ⫹ 10%) and only slightly behind the UK ( ⫹ 27%)). The disadvantage with using the SCI to provide data on the share of publication according to keywords, is that, prior to 1990, the index could only be searched by title. This can be very misleading. The pervasiveness of biotechnology also makes it difficult to select a representative list of keywords or journals that reflect all fields open for commercialisation. Keywords such as vector, cancer therapy, are too common in other sciences like physics or medicine respectively and could not be used either.3 Science Watch (1992) has produced a ranking list by calculating the citations and citation impact of papers by institutions which had an output of at least 200 papers in the years 1981–1991. It has the advantage of combining quality with critical mass of ‘production’, and analysed 70 journals dedicated to molecular biology and genetics (see Table 1).4 A rough ranking can be calculated for each by dividing the total of citations by the number of institutes. The result is shown below. What this suggests is that the quality of the German scientific base in molecular biology in the 1980s was catching up fast with that of the UK. Among the German institutes listed are MPI for Biochemistry at Martinsreid (ranked 5); MPI for Plant Breeding, Cologne (8); the German Cancer Research Centre, Heidelberg (11); the University of Heidelberg (23); MPI for Molecular Genetics, Berlin (26); University of Freiberg (42); University

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of Dusseldorf (45) and the University of Munich (50). The European Molecular Biology Laboratory (EMBL) located at Heidelberg is also counted as a German institution. In addition to the MPI and universities, it is worth mentioning a number of other Germany scientific institutions. In 1976 an existing research centre for molecular biology, founded by the Volkswagen Foundation, was transformed into a National Research Centre (NRC), creating The Society for Biotechnological Research (Gesellschaft fu¨r Biotechnologische Forschung—GBF) at Braunschweig. In 1983, the GBF was further changed to integrate it into the existing institutional network of universities, NRCs, MPIs, and gene-centres. Nowadays, the responsibilities assigned to the GBF include: basic research, developing new biotechnological processes; research into biological security; support of external research and co-operative projects; and the interdisciplinary training of scientists, engineers and technicians. So-called ‘Blue List’ research centres are especially important in the former East Germany, where there has been extensive restructuring of the academies of science. Blue List institutes in this area include the Institute for Molecular Biotechnology (IMB), Jena; the Institute for Neurobiology (IfN), Magdeburg; the Institute for Plant Biochemistry (IPB), Halle/Saale; and the Institute for Plant Genetics and Crop Research (IPK), Gatersleben. A good deal of attention has also been given to the Gene Centres. These are not fixed research centres, but 12–15 year programmes with emphasis on co-operation between different institutions, including industry. Usually, the La¨nder governments or research organisations

Table 1 A ranking of university institutions by citation impacta Country

Number of institutions in top class

% of total

Citations/institution

USA Germany UK Switzerland France Japan

22 9 8 4 3 2

44 18 16 8 1.5 1

21.9 24 28.4 19.25 26 45

Source: Science Watch (1992). ISI. Philadelphia, USA. a Three universities just missed the 200 paper threshold but had a high citation impact: University of Cologne (197 papers; impact 28.07), Brandeis University (193 papers; impact 20.58), University of Oregon, Eugene (197 papers; impact 17.97). The European Molecular Biology Laboratory in Heidelberg has been counted for Germany. Given that it is a centre of scientific excellence as a geographical starting point for start up companies, this seemed to be appropriate.

3 To estimate if the choice of keywords can have a considerable influence on the results, other searches of the science citation index have been performed with different sets of keywords as well as with different numbers of keywords (but all chosen from the biological sciences). The results indicated that the relative positions of countries did not change considerably. 4 Listed by ISI in the molecular biology/genetics subsection of Current Contents/Life Sciences

like the MPI provide the infrastructure. The running costs are then provided by the state and federal government, with research organisations and industry also contributing. The Gene Centre at Cologne is supported by the nearby firms of Bayer and Hoechst; Heidelberg receives money from BASF and Merck; Munich from Hoechst and Wacker Chemie. Berlin enjoys the strongest support from industry with the Schering AG contributing 50% of its running costs (the other 50% being provided by the state government of Berlin).

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3.2. The chemical/pharmaceutical industry in Germany The chemical industry, including pharmaceuticals, is one of the most important industries for the German economy, characterised by large shares of employment, GDP and exports. It is also one of the most research intensive industries, ranking third in OECD in terms of R&D expenditure as a percentage of production (with 9%), after aircraft (26%) and communication equipment (11%) (OECD, 1995 quoted in Sharp and Patel, 1996). Until recently, private sector biological research in Germany was almost all found in the large, traditional, pharmaceutical and chemical companies. These had been founded at the end of the last century (Bayer, Hoechst, BASF, Merck, Boehringer, Schering) and by 1913, had made Germany the largest exporter of pharmaceuticals in the world, with a 30.3% share of world exports. Company innovation relied mainly on advances in medical and chemical research in the universities and its pre-eminence lasted through the inter-war years. After the war, Hoechst, Bayer and the BASF were re-established as separate companies, but their ‘culture’ was that of chemistry, not biology. In particular they excelled in synthetic organic chemistry, with most of the top researchers and managers trained in chemistry having had virtually no contact with academic biology. This situation was exacerbated by the sharp divisions between the natural sciences at German universities. Bayer and Hoechst were the companies with the greatest potential in biotechnology, given their long tradition as producers of pharmaceuticals (especially antibiotics). BASF was much less involved in pharmaceuticals and most of its activities are carried out by its subsidiary, Knoll AG. Apart from these ‘big three’, which still have the majority of their activities based in chemicals, there were a number of smaller, mainly pharmaceutical, companies with some activities in chemicals. These were Boehringer Ingelheim and Boehringer Mannheim, Schering AG, and E. Merck. By contrast, Degussa (with the pharmaceutical subsidiary ASTA-Pharma AG), Henkel and Hu¨ls AG (part of the VEBA group) were more chemically based. None of these companies played much part in the first decade of the new biotechnology. Hoechst, like ICI in Britain, had experimented unsuccessfully with single cell protein (Dolata, 1991; Sharp, 1985). Bayer began to build up in-house research competence in the mid-1970s and developed some links to academia, for example, with the University of Cologne. In the early 1980s, when the potential for biotechnology and genetic engineering began to be recognised, Bayer departed from the tradition of growth through in-house expansion, and moved into the United States through, firstly, the acquisition of the US pharmaceutical company Miles Laboratories (in 1979); secondly, the establishment of a new pharmaceut-

ical research centre at New Haven based on the Miles research laboratories (in 1985); thirdly, by building up links with US universities (e.g. Yale); lastly, by concluding agreements with a number of American NBFs (e.g. Genentech in 1984, Chiron in 1988) (Galimberti, 1993; Sharp, 1995). Hoechst, more than Bayer, represented the classic German research organisation, with a concentration of both R&D and production at their central plant near Frankfurt. But by concluding an agreement with the Massachusetts General Hospital (MGH) in the US in 1981, Hoechst, too, branched out into contract research structures. In contrast to Hoechst and Bayer, BASF and Schering were both slow to develop their interest in biotechnology (Sharp, 1985). When they did so, they too shifted from a centralised research structure, and established complex R&D networks around several centres with a flexible periphery of co-operations and joint-ventures. How far were these moves limited to links with the US or were these overseas linkages part of a general move towards global management? Some factors support the first version—the lack of a strong science base in Germany and the attraction of the innovative small biotechnology firms in the US as a source of new product and process ideas. The strict regulatory framework in Germany is usually also mentioned as a deterrent, although this point has to be treated with caution since the threat of moving investments and production abroad has a long tradition in the chemical industry (Dolata, 1986, Dolata, 1991). Certainly, interest groups hostile to biotechnology (e.g. Green Party, and the Gen-ethic network) had deliberately targeted relatively ‘unproblematic’ projects, like the production line for recombinant human insulin by Hoechst in Frankfurt. However, in spite of this, Germany remained an important location for research, and expansion into the US was not accompanied by a significant reduction in genetic research in Germany.5 Indeed detailed case studies of how these large multinationals were using their overseas laboratories revealed a complementary relationship with the US laboratories undertaking R&D specifically geared, for example, to the US drug regulation requirements or testing crops destined for North American type climates. Contracts with DBFs were normally negotiated from headquarters, and the results were fed back into the main R&D effort, which in most cases remained on German soil (Senker et al., 1998). In recent times, American firms (e.g. Amgen, Genentech) even started to build up subsidiaries in Germany.

5 Checking the science citation index for their publication practices revealed that they were very active and co-operating with German research institutions.

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400

3.3. Government policy and the promotion of biotechnology

350 m DM

300

Germany was one of the first countries in the world to acknowledge biotechnology as one of the key technologies for the coming decades. Its first programmes to promote biotechnology dated from 1972. The then newly created Federal Ministry for Research and Technology (BMFT now BMBF (1996)) was the centre for activities for promoting new technologies, but it delegated the development of programmes to promote biotechnology to an outside organisation, the German Society for Chemical Engineering (DECHEMA, Deutsche Gesellschaft fu¨r Chemisches Apparatewesen eV). The DECHEMA study (1978) emphasised selection and test procedures for industrial micro-organisms, large scale fermentation processes of plant and animal cell cultures, biochemical engineering, waste- and sewage processing (Dolata, 1991; BMFT, 1992). It caused little change in BMFT policy, although more funds went to the GBF in Brunswick to pursue research in these areas. An event that has frequently been mentioned as the prime occasion for rethinking (Jasanof, 1985; Sharp, 1985; Dolata, 1991; indirectly even by BMFT, 1992) was the agreement between Germany’s Hoechst and the Massachusetts General Hospital (MGH) in the United States in May 1981. Hoechst paid MGH US$70 million over a 10 year period for training opportunities for its scientists, exclusive licenses to patents, and the right to receive drafts before publication of papers. By 1983, the BMFT had set up an advisory board for large public research projects6 and in 1984 an expert commission for biotechnology,7 to develop a federal biotechnology programme. As with the DECHEMA study group, these groups consisted only of representatives from industry and academia, reflecting the dominant influence of Germany’s large firms and scientists. Fig. 2 shows that one early goal, the doubling of federal expenditure by 1990, was achieved within 5 years (BMFT, 1992). This paved the way for improvements to the science base. The GBF became the focal point for ‘big science’ biotechnology, with its links to the University of Braunschweig strengthened by establishing joint professorships and the founding of a bio-centre funded jointly by industry and the federal government (BMFT, 1991, 1992) and the gene centres at Heidelberg, Berlin, Munich and Koln were set up at the same time (see above). Together with the GBF they were the main institutional innovations at that time and provided a meeting point for academic research and industry in Germany. Another tool that has increasingly been used to bring

250 200 150 100 82

84

86

88

90

92

94

96

Year

Fig. 2. Expenditure of the Federal Government on biotechnology. Note that these expenditures are only those by the Federal Ministry of Research and Education. The overall expenditure for research and development in biotechnology in 1995 is estimated at DM2.3bn ($1bn) with a 40% share from industry. The budget for 1996 is preliminary. Source: BMBF (1996); BMFT (1992).

together the resources across disciplines in industry and academia has been cooperative research projects, which received financial support from the BMFT. A measure to stimulate the foundation of new biotechnology companies, with subsidies for infrastructure as well as tax incentives, was the TOU initiative (TOU—technology oriented firms). This is seen to have been a moderate success and resulted in the establishment of 34 new companies (BMFT, 1991). Evaluation, however, revealed a continuing lack of new products and production in Germany. Large scale fermentation technology, in particular, was found to be lagging behind that of foreign competitors. The involvement of medium sized companies was also considered to be too low, and this stimulated the setting up of new technology transfer centres. Scientists for their part wanted an institution which could give advice on patents (BMFT, 1991). The ‘Biotechnologie 2000’ programme was the response of the Federal government. It passed through parliament in August 1990 and since then has been revised to meet the needs of unification. Its general aim was “to further strengthen all conditions necessary to sustain Germany as a location for research and production in biotechnology” (BMFT, 1992). Generally, the ‘Biotechnologie 2000’ programme can be seen as a continuation of the already established course of encouraging interdisciplinarity, networking and commercialisation. As well as the gene centres, a further four biocentres have been founded, which include the centres for molecular neurobiology in Hamburg, bioprocess technology in Stuttgart, biocatalysis in Du¨sseldorf and finally a bioprocess centre in the state of Lower Saxony. The latter, however, has since been dissolved. 3.4. The role of DECHEMA

6

Beraterkommission fu¨r die o¨ffentlich gefo¨rderte Großforschung auf dem Gebiet der Biotechnologie 7 Sachversta¨ndigenarbeitskreis Biotechnologie

The DECHEMA has steadily enhanced its expertise by establishing networks with prominent scientists in academia as well as building up links with other inter-

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ested organisations, such as the association of the chemical industry (VCI). Within the DECHEMA, an office that is exclusively dedicated to dealing with matters concerning new biotechnology firms has been established (and is headed by a former Hoechst researcher/manager). This office supervises a new association for biotechnology firms in Germany which was established October 1996 and follows the example of the Biotechnology Industry Organisation (BIO) in the USA. The aim is to give new biotechnology firms a strong voice both before politicians and with the general public. In contrast to the independent BIO in America, this association will remain a part of the DECHEMA, thereby further strengthening its position and influence in policy making. 3.5. The La¨nder programmes Apart from federal programs co-ordinated by the BMFT, the La¨nder have additionally promoted their own local industry. Usually it is at the La¨nder level that large companies are most influential. The extent to which state governments support biotechnology varies widely and data are difficult to obtain since there is no central monitoring of such activities. All 11 La¨nder have programmes to promote high technology firms in general, while, in biotechnology, Bavaria seems the leading supporter. It has channelled part of the DM3 billion raised from the privatisation of state assets into a new biotechnology centre just outside Munich (DM 28 million) and established a risk financing company (DM 50 million) to invest in this sector (Financial Times, 1995). 3.6. Finance The major factor limiting the development of a strong base of DBFs in Germany has generally been seen to be the absence of financing bodies. Compared to the situation in the US, it has been difficult for German companies to obtain venture capital because there is no stock market equal to NASDAQ (the US stock exchange for technology based companies). The established banks had virtually no expertise in dealing with new biotechnology firms and did not understand their needs. A number of changes, however, have occurred in the past few years. At the federal level, the Technologie-BeteiligungsGesellschaft (TBG), a state-owned risk financing company, now invests money in biotechnology firms. At the La¨nder level, in Bavaria, there is the Risikokapital-Beteiligungsgesellschaft Bayern (RKG) and other La¨nder promise to follow suit (Financial Times, 1995). In the private sector, a number of venture capital companies (both foreign and German) now invest in biotech (Atlas Venture, NL; Techno Venture Management, Stuttgart). Nevertheless, the move by Du¨sseldorf-based Qiagen, one of Germany’s most successful biotech companies,

to become listed on NASDAQ (Financial Times, 1996), well illustrates the current situation for firms seeking capital in Germany. This company argued that it could not obtain as attractive a financial deal in Europe as it obtained in the US. 3.7. Regulation and public perception The subject of regulations always had a high profile in Germany. The evolution and handling of biotechnology regulations in Germany from the early 1970s reflects the overall pattern of development of biotechnology, characterised by a slow start, allowing the interest groups to coalesce and then the lengthy process of building a consensus. In contrast to programmes fostering the scientific and technical process and the commercial exploitation of biotechnology, which have been largely initiated and planned by committees of scientists and industrialists, regulation issues have, from the start, been strongly influenced by public opinion. The main anti-biotechnology lobby has been the relatively young Green Party, which emerged as a political factor in Germany in the early 1980s when its share of votes rose to 8%, giving it a presence in the Bundestag as well as in many La¨nder parliaments where, on occasion, it held the balance of power. It was supported by a myriad of other public interest groups, with the Gen-Ethic network (GeN) acting as co-ordinator (Shackley, 1993). In the 1970s, the BMFT set up the Central Commission for Biological Safety (ZKBS), but adherence to their guidelines by industry was voluntary and it was not until 1986 that it was decided the BMFT could not both sponsor and regulate biotechnology, and responsibilities were shifted to the Health Ministry (BMJFG). Two years earlier, in 1984, the Parliament set up the ‘Enquete Commission’ for gene technology, which included people from a wide range of expertise (science, law, theology, etc.) as well as experts from science and industry. They developed recommendations for the handling of the new biotechnologies, but were concerned also with co-ordination between governmental bodies. Conflicts between the La¨nder and the Federal government, and between ministries within the Federal government, about the distribution of responsibilities delayed agreement. It was not until 1990 that the Gene Law was finally passed by Parliament. This has subsequently been modified, partly in response to pressure from German’s large multinationals. It is now judged to provide a tough but workable set of regulations (Edgington, 1995). Connected with the long debate about regulations and influence of interest groups, is the issue of public perception of biotechnology in Germany. In 1978, scepticism towards research in genetics was highest in Denmark, closely followed by Germany and the Netherlands. A survey in 1991 found Denmark still leading the sceptics, again followed by the Netherlands and then Germany.

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The data for Germany, however, only applied to the old La¨nder. People in the former East Germany are amongst the most enthusiastic supporters of gene technology, second only to Portugal. Interestingly, the cautious attitude in the three North European countries has been attributed not to ignorance but to the high levels of information prevalent in their economies, indicating that the public perception of risk does not reflect the degree of the public discussion about biological security so much as a different weighing of risks versus economic benefits.

4. Putting the database together By the early 1990s, therefore, a broad infrastructure supportive of biotechnology was in place in Germany. The question which lay at the heart of this research was how far, given this infrastructure, the economy responded by ‘growing’ entrepreneurial, Schumpeterian firms, or how far the large multinationals remained dominant. The aim was to identify new biotechnology firms (NBFs) emerging in Germany, to find out when they had been started, what they were doing, where there were located and how they were faring. 4.1. Definitions Biotechnology has been given a broad and a narrow definition by the Office of Technology Assessment (1991). The broad definition describes biotechnology as: …any technique that uses living organisms (or parts of organisms) to make or modify products, to improve plants or animals, or to develop micro-organisms for specific uses. (Office of Technology Assessment, 1991, p. 29) This includes traditional branches of biotechnology, such as brewing or the treatment of sewage water. A second definition addresses the ‘new’ biotechnology— that is: …the industrial use of rDNA, cell fusion, and novel bioprocessing techniques. (Office of Technology Assessment, 1991, p. 29) The term “novel bioprocessing techniques” is not defined further, but it is assumed that it refers to all techniques which were discovered or invented about after the Cohen/Boyer breakthrough of 1973 in recombining DNA to obtain new sequences. In developing the database on German biotechnology firms, it was felt right to include firms active in more traditional areas of biotechnology (for example, plant cloning and tissue culture). For the database as a whole,

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therefore, the broader definition was used. In identifying ‘new’ or ‘dedicated’ biotechnology firms (DBFs), however, the narrower definition was used, although this was extended to include firms in bioelectronics. 4.2. Sources of data Two databases served as the initial sources of data: BIOCOM (from BioTechnologie 95/96) which also included Switzerland and Austria, and BIKE,8 provided by the GBF at the National Research Centre of Brunswick. A limitation of both databases was the fact that they listed some companies with only remote links to biotechnology. Additionally, they were not up-to-date, listing companies which had ceased to exist and not listing many of the new start-ups. Additional names and addresses were taken from a variety of sources. They are listed in order of contribution: 쐌 A list of companies was provided by the Berlin office of the TOU (Technologie orientierte Unternehmen— technology oriented companies) programme, a programme run by the Federal government to help technology based start up companies.9 This was especially useful identifying firms in the former East Germany. 쐌 The complete catalogue of institutions supported by the BMBF provided on floppy disc by the public information office in Bonn and searched for companies involved in federal programs (BMBF, 1996). 쐌 Articles in German and international newspapers and journals were searched for data on German companies. A full search was made also via the internet. 4.3. Initial classification of companies In preparation for the mailing out of a questionnaire, companies from these sources were divided into three categories on the basis of information available: Category 1: Companies which were definitely using new biotechnology techniques and were active in research, but excluding large companies. These firms came closest to our definition of a new biotechnology firm or NBF. They were contacted directly by fax or e-mail, often being phoned in advance. Category 2: Companies which were probably more active in traditional biotechnology than in using new techniques, or where it was unclear whether they were just equipment suppliers, or undertaking any research at all. This group was defined very broadly 8 BIKE ⫽ Biotechnologie Informations-Knoten fu¨r Europa, Biotechnology information point for Europe. 9 TOU promotes the founding of high tech firms of all sectors, not only biotechnology.

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and represented the majority of firms receiving the questionnaire by mail. Category 3: Companies which did not appear to be active in biotechnology itself, such as specialist chemical or instrument suppliers. Here it was necessary to distinguish between those with direct links with biotechnology and those with no ‘dedicated’ links. For example, a producer of a gene-sequencing machine would be included and receive a questionnaire, whereas a company making centrifuges would not. Initially it was difficult to select the companies which were of interest from the data available. For some firms no information was given; for some, that provided was insufficient to judge whether they were active in biotechnology or not. In order not to lose any company it was decided when there was any doubt to include them in the mailing. Companies which did not fall into any of these categories were specialised consultancies and software firms. Both require a very high level of technical knowledge and consequently the proximity to a research institution may be vital, yet none use living organisms as such. Their dependency on technical knowledge led to the decision to include them as class 1 companies, but there were very few and their inclusion did not have a major impact. 4.4. The questionnaire The questionnaire was designed to obtain basic data about size, activities, co-operations and such like. The questions were asked as multiple choice questions in order to be able to simplify answers and make them suitable for computer analysis. After four weeks, the rate of return exceeded 30%. The responses did not always answer all the questions, especially those about R&D collaborations with firms. Questionnaires were mailed out to all firms in categories 1 and 2 and to 150 in category 3 where information was lacking. Replies were received from 162 companies. Telephone interviews followed up information from 53 companies.

4.5. Interviews In order to gain insights into recent developments, questionnaires were followed up by telephone interviews. Given the distribution of decision making power which has been apparent from earlier reports (Jasanof, 1985; Sharp, 1985), it seemed to be important to include other actors as well, and not just people working in NBFs. Institutions contacted included the government (Bavarian state; Ministry for economics, Ministry for science, education and culture), NBFs, government research centres (Fraunhofer Institute and Research Centre in Karlsruhe), universities, the DECHEMA, and a large pharmaceutical company (Boehringer Mannheim, manager and scientist). By the time the research was completed (in July 1996), the database contained the names of 675 companies, broken down into the three categories as follows (Table 2). 4.6. Results As indicated, questionnaires were not returned for all the companies, even on the NBF list, yet we wished to include as many companies as possible in the analyses. All companies listed were ones which we knew existed either because they had replied to the questionnaire or because we had other corroborating evidence of their existence. Even where we had a questionnaire response, we did not necessarily get all the data we asked for, which explains why the number of firms listed below varies from category to category. Nevertheless, the relativities are a good indication of trend. The analysis below relates mainly to the first category which we have designated the NBF category. 4.7. Year of foundation Data for year of foundation was obtained for 78 of the 110 NBFs, of which 66 were founded after 1978. Fig. 3 gives an overview about the number of companies founded each year from 1979 to 1995. Notable are the fluctuations in foundations after 1989. The pattern is also observed when the companies of category 2 were included (to check for an accidental result because of

Table 2 Distribution of companies in the SPRU database

Number of firms

Category 1 (NBFs)a

Category 2

Category 3

110

246

319

a To estimate the completeness of our list of companies, interview partners were routinely asked about the total number of NBFs according to their knowledge. The answers uniformly were around 100.

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Fig. 3. Number of NBFs founded each year in Germany.

the relatively low numbers). Similar fluctuations also occurred in the US in the period between 1980 and 1988 when founding activity seemed to reflect the oscillating moods of optimism within the industry, reflected through into initial public offerings and stock exchange launches (Ernst & Young, 1995). Due to the much smaller numbers in absolute terms in Germany, these fluctuations seem more pronounced. A different presentation of the data is given in Fig. 4, where the number of companies has been added up for each year, resulting in a cumulative growth curve undisturbed by the annual fluctuations in firm numbers. Since the survey is based on recent data, it does not include firms which have already gone out of business, e.g. in the late 1980s. This helps to smooth the trend. It also allows us to makes estimates for future developments. If the curve were shifted up the y-axis so that it intersected the x-axis at 110 for 1996, this would represent the actual situation in firm numbers. The trendline shows a slight upward trend towards the end, indicating the departure from linear growth in the last 10 years. If this

Fig. 4. Cumulative growth of NBFs in Germany. Note: For each year, companies have been added up. Points represent real values, a (polynomial) regression curve has been added to visualise the trend in growth.

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continues, the number of companies could double within the next 10 years. The impact of firm growth in terms of employment is not directly discernible because it is also dependent on the increase in the number of employees with the age of the company. Table 3 provides for some data illustrating this link between average employment and the founding year, and indicating also that growth in relative terms is strongest in the first 10 years. The distribution of individual values (not shown) indicates that growth is also relatively uniform among the majority of companies with the exception of a few growth ‘champions’. For the period before 1981, the distribution of firm size varies considerably. The composition of employees in terms of total personnel/R&D personnel (Table 4), shows the extremely high R&D intensity in these companies. Having strong research capabilities in-house, it is interesting to know how strong their connections to universities are—do they justify the notion of being a potential intermediary from academic science to industry? The data in Table 5 suggest that they can be classed as intermediaries. Of the 41 firms listing agreements, a total of 249 agreements are reported, 143 with universities, an average of 4.1 co-operations per company. The distribution between agreements with firms and universities shows the universities to have a slight edge over firms with the average of 4.1 agreements. The standard deviation is 2.45. The average number of agreements with firms is 3.9 (SD ⫽ 2.72) based on the replies from those firms who gave information on agreements.10 Even if this number of agreements was ‘diluted’ by inclusion of more firms without any agreements, it indicates that these companies have strong links with industry and are thus likely to be operating close to the market. Fig. 5 shows the ownership of German NBFs. As is clear, there are practically no publicly-owned companies, the exception being Qiagen, which had to turn to the American NASDAQ stock market in order to get public funding (Financial Times, 1996). This is clearly an exception, and generally the situation is not comparable to the US, where the share of publicly owned, newfounded companies was often as high as 25% (Dibner, 1991). The large number of privately held companies may also reflect the preference of German entrepreneurs to run a business for ‘self-fulfilment’ (and therefore independent) rather than with the aim of becoming rich (an issue that has frequently been raised during the interviews).

10 It has to be mentioned that information about agreements was frequently ignored in the questionnaire and those who answered usually had an agreement, giving a positive bias.

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Table 3 Average number of employees dependent on age of company. Total n ⫹ 63 Founded in year

n Total employees Average

Until 1980

1981–1990

1991–1995

9 1056 117

30 1366 45

24 263 11

Total staff

RD staff

Bio staff

63 2453 39

42 466 11

54 740 13

Total agreements

With firms

With universities

41 249 6.1

27 104 3.9

35 143 4.1

Table 4 Ratio of total employees to research personnel

n Total employed Average

Table 5 Agreements between NBFs and universities or other firms

n Total Average

polymerase chain reaction, PCR ( ⫽ diagnostic). Because of the multiplicity of probable uses, they were classified under services. The distribution of firms according to their market segment (Fig. 6) is, allowing for these differences in classification, similar to the findings made by Ernst & Young (1995) in their report about European biotechnology. They found therapeutics and healthcare (including diagnostics) accounted for about a third of all firms. The share of the plant/agriculture sector is small in both absolute terms and when compared

Fig. 5.

Who owns German DBFs?

4.8. Market segmentation The market segments served by the companies were divided into ten major categories. Clear separation was not always possible, because of the ambiguous nature of the products/technology and insufficient information about the field of application. For example, companies producing customised DNA sequences could either be classified under biochemicals, or be related to gene therapy ( ⫽ drug ⫽ therapeutic), or to the application of the

Fig. 6.

Distribution of German DBFs by sectors.

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to other countries, especially France (which is well known for its strong state support for this field). Comparing this profile with that of US NBFs poses the same problems of classification. The breakdown for the US companies is more disaggregated, which is possible because of the much larger number of firms. For Germany, it did not make sense to include a field in the profile when it was represented by only one company. This explains the high percentage under ‘others’ (12%). In contrast to the US, however, the equipment sector is relatively important (16% in Germany compared to about 3% in the US) and the same holds true for the waste/environment sector (11% for Germany compared to about 4% in the US). Therapeutics and diagnostics, which together account for the largest share in both countries, amounted in the US to approximately 45% compared to Germany’s 28%. Plant/agricultural biotechnology has twice the share in the US as in Germany. (US Figures from Bullock and Dibner, 1995.) 4.9. Geographical distribution of DBFs An attempt was made to locate the identified DBFs geographically in order to assess how far they were associated with known centres of excellence. Centres of excellence are defined as follows: not just one single institution, but rather a critical mass, involving several institutions clustering in one area. This means that all centres of excellence include at least one nonuniversity institute such as a Max Planck Institute laboratory. Non-university research centres are not very numerous and are usually extremely well funded. They tend to be the focus of government attention and therefore act as a ‘crystallisation point’ for any new technology. Obvious examples of centres of excellence are Heidelberg, with the German Cancer Research Centre (DKFZ), the European Molecular Biology Laboratory (EMBL), and the university with three special research units (SFBs); Munich with its two Max-Planck institutes (for biochemistry and psychiatry), the newly built biocentre and two large universities with four SFBs, and Berlin with the Max-Delbru¨ck Centre, an MPI and three large universities with one SFB. Beyond these centres, there are Brunswick with the GBF; Cologne with the MPI for plant breeding and the university (1 SFB), Tu¨bingen (university and MPI) and Freiburg (university, MPI). Most of these locations also have hospitals carrying out research. As we have seen, Cologne, Berlin, Munich and Heidelberg also have gene centres, which are a focus of collaborative research with industry. All these centres have been identified in Fig. 7.11

11 A Sonderforschungsbereich (Special Research Unit) is a focus of several university institutes, with interdisciplinary research in a given field and is funded by the German Research Society (DFG).

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More difficult was the estimation of East German research centres because they have all been founded recently. Here we relied mainly on information given by the BMBF (BMBF, 1996). Finally, the location of Germany’s large pharmaceutical firms is given, with Bayer in Leverkusen and Wuppertal, Hoechst and Degussa in Frankfurt, BASF in Ludwigshafen, E. Merck in Darmstadt, Schering in Berlin, Beiersdorf in Hamburg, Boehringer Mannheim in Penzberg and Boehringer Ingelheim in Ingelheim. Fig. 7 also identifies the broad location of NBFs in the database. There is a clear clustering around areas with a high concentration of centres of excellence/gene centres, universities and large firms, the majority being on the Rhine-Neckar axis, Munich, Berlin and, to a lesser extent, Hamburg and Freiburg. Companies with ‘isolated’ location account for less than 15% of all firms and are mostly located in Lower Saxony and Bavaria. The map is also helpful in recognising a pattern of regional clustering amongst the individual La¨nder. The latter is interesting in assessing the relationship between the support or opposition towards biotechnology by the individual La¨nder governments and the actual number of new biotechnology firms. Even though it is not possible to classify each of the La¨nder on a biotech-supporting scale, according to newspaper articles (Financial Times, 1995) and reports (Dolata, 1991), Bavaria, Baden-Wu¨rttemberg, Berlin, Northrhine-Westphalia and the new La¨nder are among those most supportive of biotechnology activities, while Hessen and Bremen are the least supportive. In fact, there is little discernible correlation between the status of Land as biotechnologysupportive and the number of DBFs. Hessen shows a clustering of firms around Frankfurt and Darmstadt. Bremen has only one company, but it is also weak in terms of research institutions. No correlation could be found between the number of collaborative agreements with firms and proximity to any of the large chemical/pharmaceutical firms. The same holds true for the correlation of proximity to a university with university agreements, although in this case, the number of companies which are not located near a university or research centre giving information about agreements was too low to draw any conclusions.

5. Conclusions The general conclusions that emerge from this study are that Germany now has a substantial number of new biotechnology firms and the numbers are steadily increasing. Like their counterparts elsewhere, these German DBFs display a high research intensity as measured by the proportion of R&D personnel to total employment. Their geographical proximity to centres of scientific

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Fig. 7. German map with the location of centres of excellence and new biotechnology firms. Abbr: MPI ⫽ Max-Planck institute, SFB ⫽ Sonderforschungsbereich, Biotechnology clusters in Germany, BL ⫽ Blue List institute, NRC ⫽ National Research centre. Further explanation/definitions in the text.

excellence (especially Munich, Berlin and Heidelberg), as well as the number of collaborations with research institutions, suggests that they are well embedded in the academic research system and that a thriving science base seems to be a necessary, although not sufficient, factor for the founding of these firms. Given the sectoral areas in which the DBFs operate, however, it is interesting to note the high proportion of firms operating in fields where Germany has shown broad technological strength, e.g. in environmental applications and equipment. Nevertheless, the number found in other areas, such as diagnostics and therapeutics, is also increasing. However, these findings do seem to hint at a stronger role as specialised supplier to the larger corporations or of being more specialised

towards market niches than their US or UK counterparts. Such a finding fits Germany’s institutional comparative advantage in diversified quality production. The other reason why we are seeing increasing numbers of these companies is because there has been a substantial adaptation of the institutional framework. Opportunities for finance are improving, thanks to government backed programmes and the expansion of activity by foreign venture capital firms in Germany. The 1970s problems—lack of capability in the biological sciences and ‘de-coupling’ between the research community and industry—seem to have been largely overcome, among other initiatives by the establishment of research centres with joint industry financing or participation. Indeed it is symbolic that biotechnology is now

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establishing its own industry associations. Although less well organised and influential than ‘Verband der Chemischen Industrie, VCI’ (Association of the Chemical Industry) or the ‘Verband Deutscher Chemiker, VDChem’ (Association of German Chemists), they are nevertheless beginning to take the same function as their equivalents in other sectors, namely to provide a focal point for information about the sector and to work with government on the distribution of funds. In this respect it is notable that in Germany these new firms have emerged towards the end, rather than at the beginning of the innovative cycle, and that they exhibit a tendency to be ‘niche based’ rather than challenging the industry in its mainstream areas of competence, namely pharmaceuticals and diagnostics. As pointed out in Section 2 of this paper, such a pattern fits with a continuing commitment to the German style of innovation system which looks to a relatively slow and measured adjustment to radical new technologies. Indeed, as a whole, the pattern of development of biotechnology in Germany accords well with this model—first the identification of biotechnology as a significant new area of activity; then the building up of competencies both in public and private sector institutions, with linkages between the two, and emphasis on supply-chain linkages and ‘customisation’ of components and equipment in the private sector collaborations; and finally, the establishment of standards (regulations) and the relatively rapid diffusion of new skills once standards have been agreed. Superficially the model holds—and this has interesting implications. It suggests, for example, that far from being side-lined by the Anglo-Saxon model, with its thrusting competitive ethos epitomised by the Americanstyle DBF, there is still life in the German ‘evolutionary’ model of innovation and that this may be able to hold its ground. Nevertheless, it would be foolish to suggest that the data presented here did more than ‘hint’ that this might be the case. More detailed analysis is needed of the type of DBF now emerging in Germany and of the role it is playing in relation to the established giants of the industry before advancing more definitive views.

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member of the House of Lords. She has written extensively on the development of new technologies, and in particular biotechnology, in Europe. Her latest book, Technology Policy in the European Union (written jointly with John Peterson) was published in November 1998 by Macmillan. Stefan Momma completed his Master’s degree in Science and Technology Policy at SPRU in 1996, where his main interests were in biotechnology related issues. After an extended stay at SPRU doing project work, he moved to Stockholm, Sweden, where he is now a PhD student at the Karolinska Institute in the Department of Cell and Molecular Biology.