Biotechnology: A Promising High Tech Sector in Finland

Biotechnology is an important and growing sector in the Finnish society and economy. The biotechnology industry is one of the most promising high technology branches. High level research and know-how in the life sciences, advanced infrastructure, improved risk financing and a relatively positive public attitude together provide a solid basis for development of the country's biotechnology industry. Tens of hi-tech start-ups have been established in the last three years, and new ones are founded monthly.

Biotechnology is an important and growing sector in the Finnish society and economy. The biotechnology industry is one of the most promising high technology branches. High level research and know-how in the life sciences, advanced infrastructure, improved risk financing and a relatively positive public attitude together provide a solid basis for development of the country's biotechnology industry. Tens of hi-tech start-ups have been established in the last three years, and new ones are founded monthly.

Finland's biotechnology industry now ranks sixth in Europe: ten per cent of Europe's biotechnology companies are Finnish. The areas of greatest strength are pharmaceuticals, biomaterials, diagnostics and industrial enzymes.

Growth in research expenditure has accelerated in recent years; real growth in 1995-1997 was 16 per cent annually. Public funding for research has increased substantially, while the contribution of the private sector has grown even faster, now accounting for 68 per cent of the total.

Finland's knowledge-based growth strategy provides strong support to research and development. Investments in R&D have risen steadily since the early 1980s. In this respect, the most important recent event was the decision taken by the Government in 1996 to allocate funds from the privatisation of state-owned companies to funding for science and technology. The goal was to increase national R&D input to 2.9 per cent of GDP by 1999. Owing to rapidly increasing investment by the private sector, this level was already achieved in 1998. Today, the figure, which is made up of public funding and the input from industry, has climbed to 3.1 per cent. This puts Finland second in the world in R&D spending per capita. Of the total R&D investment, 32 per cent is funded by Government and 68 per cent by the private sector.

In its 1998 comparison, the International Institute for Management Development (IMD) awarded Finland first place in technology and research co-operation, technology development and application, and the utilisation of new information technology. Public contribution to education, technology, health care and the infrastructure of the information society, essential to the development of companies, has been particularly well taken care of. As far as patent applications are concerned, Finland is among the top countries in Europe: only Germany and Sweden can boast a higher number of patent applications per capital.

The strong R&D input has given good results: telecommunications and electronics have risen to become a stronghold of the country's economy, alongside the forest and metal industries. The biotechnology industry is considered to be the promising new sector of Finland's future.

A diverse and rapidly growing biotechnology industry

The past decade has seen a dynamic bioscience industry spring up in and around Finland's universities and science parks. There are over 120 biotechnology companies in the country today, 75 per cent of which were founded in the 1990s and about half since 1995. Annual turnover is close to EUR 700 million, with some 4,000 people employed in the sector. With the large pharmaceutical companies included, these figures rise to EUR 1,134,000 million and 8,200, respectively.

Large companies concentrate on the production of pharmaceuticals, diagnostic test systems and industrial enzymes and the application of biotechnology in food processing. Most of the new biotechnology companies are operating in medical and diagnostic fields or biomaterials, while others offer services in clinical research, patenting and marketing analysis.

A strong science base in biotechnology

As a result of the government's efforts to boost biotechnology during this decade there are now some 180 research groups, 14 biotech graduate schools and several science parks and biocentres dedicated to biotechnology.

In December 1998 the Academy of Finland nominated 26 research groups as centres of excellence for the years 2000-2005. Of these, no fewer than eleven are involved in projects related to biotechnology and are receiving considerable public support.

The Academy of Finland is the national organ for science administration operating under the Ministry of Education. The main function of the Academy is to finance high-quality research through individual projects, programmes, centres of excellence, research posts and researcher training. The annual funding volume was EUR 155 million in 1999, which is equivalent to about 12 per cent of the total public R&D expenditure in Finland. Over 80 per cent of Academy funding is directed to researchers and research groups within universities.

Tekes : The main funding organisation for industrial R&D

The National Technology Agency, Tekes, is the principal source of public funding for applied technological research and industrial R&D. Operating under the Ministry of Trade and Industry, it contributes to the competitiveness of Finnish industry and the service sector by promoting research and application in the field of technological development. The funds for financing are awarded from the State budget.

In 1999, Tekes invested EUR 400 million in 2,400 R&D projects. The investment in chemistry and biotechnology sectors amounted to EUR 106 million. Biotechnology and information technology are areas of special interest for Tekes. An extra contribution is made to promising biotechnology start-ups.

The national technology programmes are an essential part of the Finnish innovation chain. Planned co-operatively by companies, research institutes and Tekes, the programmes have proved to be an effective form of co-operation and networking for companies and the research sector.

A total of 65 extensive national technology programmes are currently running. In 1999, Tekes provided EUR 183 million to help finance the programmes. The budgetary size of a single programme varies from about EUR 5 million to EUR 40 million.

The following technology programmes related to the life sciences are currently running or about to commence:

Cell Biology Research Programme, 1998-2001

The programme is focused on the mechanisms of cell division and differentiation, biogenesis of cell organelles and intracellular trafficking and signal transduction.

Diagnostics, 2000-2003

The programme focuses on clinical diagnostics and is divided into four theme groups:

Infectious Diseases, Degenerative Diseases, Development of Diagnostic Methods and DNA Diagnostics.

Drug 2000-Biomedicine, Drug Development and Pharmaceutical Technology, 2001-2006

The programme will span the entire drug development process from the identification and validation of new drug effects to the creation of new medical preparations and the development of new means of administering doses. Projects will concentrate on biomedicine, the development of drugs, pharmaceutical development and essential supporting areas of research.

Biological Functions, Life 2000 (2000-2002) (a joint Academy of Finland - Tekes programme)

The Programme consists of four fields: neurosciences, research on the biological functions of genes, developmental biology and research on ethical aspects and socio-economic impacts.

Capital investors

Conditions for biotechnology in Finland have significantly been boosted by improved risk financing for companies. The situation has become substantially better during the last 2-3 years, and the trend is still upwards. Besides Tekes, early stage financing is provided by the Finnish National Fund for Research and Development (Sitra) and about a dozen risk financing companies.

Sitra is an independent fund operating with a mandate from the Finnish Parliament. It invests capital in high-technology firms and introduces and develops successful new forms of business. Sitra also invests in international technology oriented venture capital funds. Operations are financed mainly through income obtained from endowment investment and project finance.

The restructuring of industries (MBO, MBI) and growing R&D investments, together with the high competitiveness of the Finnish economy, have spurred the growth of venture capital operations. Professional venture capital operations began in the late 1980s and today there are over 30 active venture capital organisations in the country. The private venture capital sector will continue to grow in response to the demand for capital and opportunities in growth financing.

Bio Fund Management Ltd, incorporated in 1997, is a private company making venture capital and private equity investments in biotechnology companies, with health care, nutrition and environment as primary targets. The total fund size under management is about EUR 100 million. Bio Fund finances business development, company investments, company acquisitions, technological development and export drives.

Other Finnish venture capital companies with focus on biotechnology are Conventum Capital Ltd, Eqvitec Partners Ltd, Euroventures Advisors Ltd and Fenno Management Oy. Also pension funds are getting active in the life sciences area. International capital investors have also shown rapidly growing interest in Finnish biotechnology companies.

Centres of Excellence

Competent biotechnology centres have been formed in conjunction with universities with a strong science base in biotechnology. The main centres are located in the Helsinki area and in Turku, Oulu, Kuopio and Tampere. The centres bring together commercial biotechnology enterprises and biotechnology-focused university research.

Helsinki has established the Helsinki Science Park, which also includes the Institute of Biotechnology of the University of Helsinki. This science park provides a creative atmosphere for emerging biotechnology companies as well as top level research groups in cell biology, biochemistry and molecular biology. The several top research groups in the fields of biotechnology, pharmacy, biomedicine, diagnostics, food and environmental technology bring synergy to the science park. The centre also includes an incubator, where companies work in close co-operation with the academic world.

Biomedicum is a newly formed centre for medical research and training on the Meilahti campus of the University of Helsinki. It provides a first-class international research environment where scientists do research on leading edge issues in medical science. Biomedicum offers state-of-the-art facilities to some 1,000 researchers and postgraduate students.

The National Public Health Institute in Helsinki produces human vaccines. The Technical Research Centre, VTT, and the Helsinki University of Technology, both located in Espoo, close to Helsinki, work closely with the biotechnology industry.

Biotechnology has strong roots in the Turku area and with its two universities. BioCity Turku is an umbrella organisation of the academic research on cell and molecular biology and biotechnology carried out at the University of Turku, the åbo Academi University, the Turku University Central Hospital and the National Public Health Institute. BioCity Turku is a multidisciplinary research community consisting of about 50 research groups with some 500 people: researchers, graduate students and assisting personnel. The research groups are organised under six research programs: Receptor structure and function, Reproductive and developmental medicine, immunology, Molecular biology and diagnostics, Biological structure-function analysis, and Microbial and plant molecular biology and biotechnology.

The Medipolis Science Park, based in Oulu in Northern Finland, was founded in 1990 alongside the city's successful electronics and telecommunications science park. Of nearly 50 companies spawned by Medipolis, about a third operate in the biotechnology sector. The park works in co-operation with Oulu University's Faculty of Medicine and Biosciences and the Oulu University Hospital.

The core competence technology fields of Medipolis cover applied biotechnology and process technology. Other strong areas among the medical technologies are in health care business operations and innovative applications of telecommunication and electronics in health care products. The centre also has increasing business potential in developing and producing preventative, treatment and diagnostic methods in cardiovascular, metabolic, autoimmune and connective tissue diseases as well as cancer.

Kuopio Science Park in central Finland is a joint endeavour of the University of Kuopio, Technology Centre Teknia, Kuopio University Hospital, the Geological Survey, Research Centre Neulanen and the Bioteknia complex. Bioteknia is a core research centre focusing on areas where the University of Kuopio has gained world-wide recognition, namely animal biotechnology, molecular medicine and the neurosciences. The Bioteknia Enterprise Centre currently houses 11 technology oriented companies, most of them biotechnology companies. A state-of-the-art biotechnology production unit is available in Bioteknia with its GMP-grade animal cell and microbe bioreactor laboratories.

New units of the University, such as agrobiotechnology, drug design and food biotechnology, will allow for modern research and development in these areas.

Finn-Medi is a centre of expertise in Tampere, specialized in medical research and health care technology. It comprises ten research institutes and forty companies working in the various fields of health care technology, including medical research and education, technological research and education, and health care and health care education. Research and education focus mainly on cancer genetics, AIDS research, genetics related to the origin of rheumatism, diabetes and multiple sclerosis, as well as on bioelectromagnetism, telematics, instrumentation and biomaterials. - About 12,000 people are working within Finn-Medi.

The research on molecular and cell biology, cancer biology, cancer genetics and basic and clinical immunology carried out at Tampere University's Institute of Medical Technology (IMT) has received global recognition. The Biomedical Engineering Research Centre, the biomaterials unit of Tampere University of Technology and biomedical research units of the Technical Research Centre of Finland and Tampere University Hospital are also represented at Finn-Medi.