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Italian Biotechnology

Report

Ernst & Young

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Italian Biotechnology Report - 2013

1Italian Biotechnology Report - 2013

Introduction 3

Chapter 1Executive summary 6

Chapter 2The system of biotech companies in Italy 10

Chapter 3Clusters as the engine of innovationand sustainable growth 18

Chapter 4Red biotech 36

Chapter 5Green biotech 52

Chapter 6White biotech 56

Chapter 7Financing R&D across Europe 60

Chapter 8International benchmarking 64

Chapter 9Methodology 70

Appendix 74

Contents

2 Italian Biotechnology Report - 2013


Introduction

Advances in biotechnological research are synonymous with Italy’s industrial dynamism. Even in the face of grave international difficulties, Italian biotech companies, driven by the spirit of initiative which is a hallmark of our many entrepreneurial success stories, display an exceptional ability to grow and to optimize investment in terms of the creation of value.

The strength of the Country’s biotech firms lies in the extraordinary potential of technologies which, once developed, are implemented in diverse industrial sectors. In order to boost efficiency and increase quality without jeopardizing the environment, more and more businesses, despite operating in “traditional” sectors, have recognised the need to enhance their productive processes with the introduction of biotech products and technologies.

The success of biotech companies is based on business strategies that focus on innovation, research and development, a presence on foreign markets and the quality of human resources, all key elements in the effort to put the crisis behind us.

Ensuring for Italy growth that is sustainable and long-lasting requires an ability to multiply the successes of entire sectors and of individuals, and to make these successes systemic. To this purpose, the Italian government has set out an industrial policy which breaks

with the past and sees growth as a common denominator in every single measure adopted.

Reactivating growth means implementing a broad array of measures, specifically targeted to resolve a multitude of problems: breaking deadlocks, cutting red-tape, overcoming resistance, speeding up the decision-making process, releasing new energy.

We have stepped in to strengthen what can be defined as “key factors in competitiveness” — those elements which are indispensable in the search for success on the increasingly global markets of an innovation and knowledge-rich economy — by focussing on ways to “upsize” businesses, to fill the infrastructural gap, and to encourage innovation and internationalization.

We have also moved to ease the burden of costs that weigh heavily — often intolerably so — on the ability of companies to remain competitive: energy costs, the cost of credit, costs related to bureaucratic procedures.

For the first time, Italian legislation offers a comprehensive framework designed to foster the birth and growth of new, innovative businesses, and thus contribute to the instilling of a culture of innovation and enterprise.

We have reduced the costs of incorporating start-ups, added more flexibility to the labour market and created a more favourable fiscal environment.

We have performed a thorough review of the norms which discipline liquidation and bankruptcy for companies in difficulty.

A country that can guarantee a friendlier environment for start-ups is a country where innovation runs through its entire industrial fabric; a country that can move faster, is more dynamic; a country able to make the most of its home-grown talent and its best energies; a country where there is greater social mobility. It is a country where interaction is maximized, where the complex process of innovation is increasingly reliant on a number of closely related factors: collaboration between companies and the scientific world, between one company and another, and between companies and the nation’s institutions.

We have attempted to simplify the legislative framework but are well aware of the fact that there is still much to be done to support and promote companies’ innovation efforts, starting with specific fiscal policies in the sphere of research.

It is our firm belief that this Country’s destiny is not one of decline and that a return to growth is possible and within reach. We are confident that the most effective promotion of a culture of innovation in Italy can be provided by its small and medium-sized enterprises, which will play a crucial role in giving new impetus not only to Italian innovation but to the competitiveness of the full spectrum of Italian industry.

Corrado PasseraMinister of Economic Development


Introduction

With 175 enterprises operating in the biotech drugs’ industry (integrated in a network of international excellence), with 67 projects currently going through the discovery phase, and 359 products currently being developed, Italy plays an extremely relevant role in the context of biotechnologies for human health.

Besides, biotechnological pharmaceutical research provides a paramount support in treating rare diseases, most of which have a genetic origin.

It’s a “group photograph” showing the companies focusing on biotechnologies – real drivers of innovation in the early development stages – together with pharmaceutical companies, whose expertise and high-standard processes and products allow them to pursue clinical trials until the marketing of the product is authorized.

This successful cooperation stems from the ability to blend a wide range of top-notch excellencies, paving the way for increasingly targeted and tailored therapies, featuring diagnoses and treatments for the individual patient.

Despite a 4.9% drop in the number of enterprises and a slight reduction in the number of employees involved, the sector enjoyed a 3.1% increase in R&D investments, as well as a 5% turnover rise. Such a result was not achieved by chance. Rather, it was achieved owing to the remarkable commitment of 53

pharmaceutical companies operating in Italy, which account for 65% of R&D investments and 83% of turnover in the sector of biotechnologies for health.

The biotech drugs sector is therefore a resource for the entire Country in terms of investments, turnover and employment, and its presence is particularly relevant in Lombardy, Latium, Piedmont and Tuscany.

Nonetheless, this driver of economic growth faces regulatory and legislative hurdles that limit, delay or sometimes even prevent access to innovation, imposing economic restraints whose only goal is that of curbing public spending.

Suffice it to mention that, in order for a new drug to be marketed in Italy, 12-15 months are needed to obtain national clearance (following EU authorization), plus another 12 months for the inclusion in the regional formularies and 2 more months before the drug is actually used in hospitals.

That is far too much time and such a situation obviously yields negative effects, both for the industry operating in Italy and for the patients too, since they end up waiting far longer than in other European countries to be treated with new therapies.

The institutions must therefore undertake a brand new commitment so as to consolidate and draw new investments into the biotech sector, by introducing a stable regulation, by speeding up the

procedures of marketing and payment by the Public Administration and by ensuring the protection of patents.

We need a policy that highlights the innovation capacities of pharmaceutical and biotech companies investing and producing in Italy, for innovation and innovators are a resource for the Country and an opportunity to enhance the quality and sustainability of the National Healthcare Service.

They cannot constantly be deemed a cost to be reduced.

Massimo ScaccabarozziPresident of Farmindustria


Alessandro SidoliPresident of Assobiotec

The Assobiotec–Ernst & Young Italian Biotechnology Report, now at its fourth edition, provides us with an assessment of the ability of the Italian biotech industry to generate innovation and transform it into value. However, and above all, it also highlights how each of us is playing a key role in a system that has become more and more important for our competitiveness in a globalized economy.

These thoughts are even more relevant if we consider that it was exactly 60 years ago that the structure of DNA was defined by Watson and Crick - an event celebrated throughout Europe this year with the European Biotech Week - and considering not only the extraordinary progress that research in the field of Life Sciences has made since then, but also the amazing prospects still associated with that discovery.

Not surprisingly, Europe sees biotechnologies as a truly unique resource of strategic knowledge and expertise able to assure economic growth, the building of a skilled workforce, quality of life and our general well-being. This turns the prospect of making bioeconomy a model of competitive and sustainable growth into a real challenge, not only for our biotech companies but for Italy’s research and innovation industry as a whole.

The objectives set for Europe 2020 provide a framework within which to work towards a series of ambitious economic, environmental and social goals: increasing use of renewable sources of energy, implementing eco-friendly production

processes, creating new non-food markets for our agricultural output. It is on this stage that Italian biotech companies and our SMEs, in particular, want to and can play a crucial role.

In 2012, now behind us, the Italian biotech industry was able to grow and, above all, to stand firm in the face of economic-financial difficulties which forced many of our companies to operate in conditions that too often bordered on the untenable. We thus owe our gratitude to Italian researchers and to their scientific excellence. We also, however, owe gratitude to our entrepreneurs, with their astonishing ability to wring value out of every euro invested and the determination with which they keep believing in the entrepreneurial mission. Now, even more is being asked of them, and it is necessary to pay particular attention to the specificities of the sector.

When I think of the 45% of turnover or operating costs that our pure biotech companies continue to invest in R&D, of the inevitably long amounts of time needed to develop a new therapeutic product and of the high levels of business risk that are part and parcel of our research projects, I ask myself how much real support the measures recently approved by the Italian government to sustain the so-called innovative start-ups, will provide for the many young Italian companies who live on innovation, given not just their need to be able to access significant financial resources from the earliest stages of their development but also the time-scales involved in their investments.

Introduction

Considering the difficulties they face in sourcing venture capital and comparing the experience of the Strategic Investment Fund set up in France, I think of how Italy still lacks financial support schemes deriving from official policy designed to promote research and growth, while minimizing the risk, or exposure, for private investors. In other words, much more must be done on all fronts (bureaucracy, legislation, finance, etc.) so that we can compete on equal terms with companies from the leading countries in Europe.

However, we need to acknowledge the efforts made over the last year to draw up an industrial policy which breaks with the past, and makes growth and innovation a leitmotif of some of the measures introduced.

At this regard, let me specifically refer to the decision of the Ministry of Research to promote and strengthen the potential of innovation in Italy by the set-up of national clusters in specific industrial fields, among which (to name those of most direct interest to us) the sectors of Life Sciences, Agro-food and Green Chemistry.

These clusters will, in fact, seek to offer guidance in the areas of research and industrial innovation policy, where the goals are to raise scientific and technological levels and to increase the size and competitiveness of Italy’s productive system. The birth of these national clusters thus bodes well for the growth prospects of our companies and for renewed interest in Italy as a prime location for new research and production facilities, and new business ventures.


Executive summary

The present edition of the Italian Biotechnology Report, besides containing the principal data for the sector in 2012, aims at highlighting the main trends of the biotech industry in Italy in the context of the broader European scenario with specific reference to a variety of drivers, such as the consolidation of territorial clusters and the EU vision towards the creation of a competitive knowledge-based economical system and the development of bioeconomy as a winning model for smart, sustainable and inclusive growth.

The Italian biotech industry:dynamic growth and challenges...

Once again, this year, the biotechnology industry shows consistent dynamism and promising results, despite the continuing difficult economic situation which our companies have been struggling with for a considerable amount of time.

At the end of 2012, there were 407 companies engaged in R&D in the field of biotechnologies. Among these, more than half (256) fall under the definition of pure biotech company, as adopted by the Ernst & Young Centre for international studies in biotechnology.

Despite a marginal decrease in the number of companies, the Italian biotech industry ranks third in Europe after Germany and

the United Kingdom in terms of number of pure biotech companies, thus representing an extremely competitive reality, able to overcome the cyclic nature which is typical of other industrial sectors.

Total turnover equals € 7,152 million, with a 6% increase compared to the previous year, whilst R&D investments have grown to € 1,832 million, with a further 2.9% increase. The number of R&D employees totals 6,739, with no significant variation compared to 2012.

Fully in line with what has been observed in previous years, the vast majority (75%) of companies that operate in the biotech field are micro or small-sized entities (having fewer than 10 and fewer than 50 employees, respectively). When applying this dimensional analysis to pure biotech companies only, the percentage increases to 87%, thus confirming that the driving-force of the Italian biotech industry mainly consists of innovative SMEs and start-ups, dedicated primarily to R&D activities.

It is, here, worth mentioning the Growth Act (Decreto Crescita 2.0) recently issued by the Ministry of Economic Development (MSE), which provides for a series of facilitating measures for innovative start-up companies, aimed at allowing a more functional management of a number of corporate and labour law requirements, easier access to investment channels, and specific tax incentives for capital investors.

...in distinct application fields

Similarly to what has been observed in other countries, human healthcare is the spearhead segment of the Italian biotech industry. Of the 407 companies recorded, 235 (58%) are active in the field of human health - with specific reference both to therapeutic and diagnostic applications - and 197 of them are exclusively focused on red biotech.

The red biotech sector turnover amounts to € 6,766 million, with an increase (+5%) compared to the previous year. Most of this revenue is attributable to pharmaceutical companies: despite representing 25% of the total number of companies, they constitute 83% of total sales, compared with the 17% which originates from pure biotech companies’ activities.

With a total R&D investment of € 1,691 million, which represents 25% of their turnover, red biotech companies provide significant resources in order to extend and further develop their project pipeline. When breaking down this investment by type of company, pure biotech companies represent 29% of the total, compared to 70% of pharmaceutical companies (37% Italian pharmaceuticals, 33% Italian subsidiaries of multinational companies), but the incidence of their investment on turnover is higher (45%) compared to that of pharmaceutical companies (21%).


1Chapter 1

This commitment is further confirmed by the ratios between the numbers of R&D employees and total employees: Italian pure biotech companies have a percentage of R&D employees in the total workforce (20%) which is double than that of pharmaceutical companies (10%).

As regards the other fields of application, 67 companies are active in the GPET sector (Genomics, Proteomics and Enabling Technologies) although, to confirm the correlation between GPET and human health, most of the multi-core companies which are active in the red biotech field, are also active in GPET.

Even though the market of functional food and nutraceuticals is growing fast, also due to the increasing interest in their potential health benefits for consumers, the Italian green biotech sector has not fully exploited its potential yet. Out of the 85 green biotech firms, a vast majority are micro or small-sized pure biotech companies, mainly operating within science parks or incubators, which are engaged in a variety of projects, ranging from the development of new functional foods to the implementation of new enabling technologies for food safety and integrity, and generally aimed at optimizing typical Italian products.

White biotech is the next evolution for a sustainable and environmentally-friendly chemical manufacturing industry, which will be able to offer us a variety of materials

that have better characteristics than products created with traditional chemical processes. More than two-thirds of the 62 white biotech firms in Italy are pure biotech companies; most of them are start-ups or academic spin-offs located within science parks or incubators, exploiting innovative technologies involved in the process of transformation of biomass as well as in the sustainable production of chemicals, materials and fuels.

True excellence and competitiveness in Life Sciences

Overall, the Italian pipeline boasts a total of 359 products, of which 97 are in preclinical phase, 50 in Phase I, 107 in Phase II and 105 in Phase III clinical trials. If the number of products under development grows by 12%, the number of molecules that have reached Phase I (+13%), Phase II (+9%) and Phase III (+7%) of clinical development has increased too. With regards to their origin, approximately 52% of the projects derive from foreign capital companies - notably multinationals’ subsidiaries in Italy - and 48% from Italian capital companies, including Italian pharmaceutical companies.

Focusing our attention on the pipeline deriving from the Italian biotech companies alone, there are 136 products under development, of which 77 are in preclinical

phase (56%), 17 in Phase I (13%), 32 in Phase II (24%) and 10 in Phase III (7%) of clinical development. In addition to these, there are 67 research projects in the early stage or discovery phase.

Overall, approximately 46% of the projects of the Italian pipeline are biotech drugs, or biopharmaceuticals that include, by definition, monoclonal antibodies (25%), recombinant proteins (13%) and Advanced Therapy (AT) products (8%).

Once again, oncology remains the therapeutic area with the largest number of projects (40%, considering also discovery activities). This percentage reflects the fact that the Italian red biotech companies’ investments are clearly oriented to key medical needs, namely to those diseases, such as cancer, which still lack adequate treatments. In addition to oncology, the Italian biotechnology pipeline also includes a number of projects in neurology (13%), as well as in the areas of infectivology (11%) and inflammation-autoimmune disease (10%).

The Italian biotech companies are strongly committed and perform at levels of excellence in the areas of Orphan Drugs and AT.

Indeed, out of the 49 projects currently managed by the 23 companies in our survey, which are active in the field of Rare Disease, 10 have received an Orphan Drug Designation by the EMA, 5 by the FDA and


Executive summary

34 by both regulatory agencies. Within the 49 aforesaid projects, 17 originate from pure biotech companies, 6 from Italian pharmaceutical companies and 26 from the Italian subsidiaries of multinational corporations.

As regards AT, out of a total of 32 projects – 4 of which have also received Orphan Drug Designation - 17 are based on cell therapy, 8 on gene therapy while seven apply to Regenerative Medicine. Whilst 17 of them are in preclinical phase, 6 are in Phase II and 4 are in Phase III of clinical development.

All of the above figures provide clear evidence of the dynamic pace of the Life Sciences industry in Italy and are even more relevant if we take into account the fact that our analysis was limited only to those projects that are the result of Italian research. Indeed, even in the case of pharmaceutical companies with foreign capital, we only considered those projects which originate from R&D activities mainly conducted in Italy.

Once again, we can see a clear division and a complementarity of roles between pure biotech companies, which are more focused on early-stage research and preclinical development - with almost 70% of their projects ranging from discovery to Phase I, and foreign-capital pharmaceutical companies which are almost exclusively involved in late-stage clinical and regulatory development activities - with 82% of their projects concerning Phase II and III trials. The latter finding further confirms the level of excellence and competitiveness achieved by our Country in the conduct of clinical trials.

However, despite the fact that Italy represents today, at a European level, a point of reference in the carrying out of Phase II and III clinical trials, we still need to strengthen our competitiveness

particularly with regard to Phase I, whose timely management is still conditioned by a number of cultural, regulatory and administrative hurdles. To this purpose, Assobiotec has signed an agreement with the Italian Medicines Agency (AIFA) and the National Institute of Health (ISS), aimed at increasing knowledge and scientific competences in the specific area of Phase I studies, as well as at stimulating biopharmaceutical companies to carry out early stage clinical activities in Italy.

The European benchmark

Notwithstanding its positioning in the European scenario, where Germany and France seem to be the only countries showing considerable growth in terms of the number of companies, the Italian pure biotech industry still bears the stigma of being made up of modestly capitalized micro or small-sized organizations, which suffer limited access to financing compared to their international competitors, particularly with regard to their capacity to attract VC investments.

Although in recent years, policy-makers across Europe have consistently emphasised the importance of innovation and VC as the bedrock for future growth and economic stability, the European VC industry is still relatively young and small compared to the US one.

As far as Italy is concerned, the market of Venture Capital and Business Angels still lacks the funds and specialization that are necessary for the growth of the biotech businesses. Indeed, we are still far behind the other European countries, both in terms of total amounts collected and number of VC deals. In terms of capital raised within the leading European countries, namely the UK, Germany and Switzerland, most comes from VC, and

the number of projects financed is over 20 each. Not surprisingly, in Italy, only two early-stage biotech projects (out of 55), were financed by VC in the first half of 2012. And yet, based on a recent study by the Milan Polytechnic School of Management, a € 300 million investment for the creation of new start-ups could have an extremely positive impact on Italian GDP, and in any case equal to ten times the amount invested.

The worsening of the economic scenario has also led to a significant decrease in the number of IPOs. After having reached its peak in 2005 and 2007 (with 22 and 26 deals), during the last year, only three IPOs relating to biotechnologies were successfully closed in Europe, and none of these involved any Italian company.

Although, in the 2009-2011 period, the potential value of M&A deals had grown in a sustained manner in Europe, both the total amount (almost € 2 billion) and the number of deals (12) decreased significantly in 2012. This trend is also confirmed by our sample: only 3% of Italian biotech companies closed an M&A deal.

A potential alternative to the lack of adequate funding relies on the possibility for biotech companies to establish strategic alliances with other firms, in order to share resources and capabilities. What has emerged from 2012 is a recovery of the potential value of alliances in the industry (€ 8 billion in 2012, compared to € 5.9 in 2011). This recovery is mainly driven by the deal between big-pharma and biotech companies, as the value of the biotech-biotech transactions further decreases, compared to the past. However, if we look at the total number of deals, this has significantly decreased (from 71 transactions in 2011 to 46 in 2012), with only 19% of them involving Italian biotech companies.


Chapter 1

National clusters: capitalizing on Italian strengths...

In a truly innovative field like biotechnology, the flow of knowledge and resources is a critical success factor. But the transfer of science from the laboratory bench to the market involves the development of a complex network of interactions throughout the territory, involving scientists, entrepreneurs and investors, thus allowing the best conditions for dynamic and fruitful cooperation.

Hence, clustering is absolutely central both to the growth prospects of the Italian biotech industry - whose research efficiency and effectiveness have more to do with the intensity of knowledge flow than with structural dimension - and the promotion of the economic development and competitiveness of our territory, both at a regional and a national level. Clusters also play a key role in harmonising and making the best of regional, national and European policies.

Besides a number of initiatives taken at a regional level, the Italian Research Ministry (MIUR) has recently addressed the development and the strengthening of National Technological Clusters, with the aim of capitalizing on the Italian excellence and experience in a number of scientific and technological areas by creating effective aggregations that go beyond the regional borders. In principle, each cluster will involve as constituents the different components of the relevant area: the territories, the industry and the public research institutions.

There are three national clusters that rely on biotechnologies as the key enabling technology for innovation and economic

growth: the National Life Sciences Cluster (ALISEI), the National “Green Chemistry” Cluster and the National Agro-food Cluster (CL.A.N.).

...for the development of new entrepreneurial initiatives

Biotechnologies represent a set of enabling technologies used in various industrial and economic sectors, and no production process can have an impact on the environment less invasive than the natural processes which are applied in the management of renewable biological resources.

It is easy to see why the European Commission looks at bioeconomy as the winning strategy to accelerate the transition towards a new economic model for smart, sustainable and inclusive growth, while at the same time developing a high-value competitive sector capable of supporting economic recovery and generating new qualified employment opportunities. As seen in the previous report, in Europe alone bioeconomy is already worth € 2 trillion and employs around 22 million people, across industries as diverse as agriculture, food, chemicals and energy, accounting for 9% of total employment.

The success of this model is strictly related to our capacity to create a more supportive environment for the development of new ideas and entrepreneurial initiatives. Research and innovation are a true source of long-term growth and profit, and can potentially help the new generations to improve their employment and social status. The opportunities which Europe can offer are huge; the only key point is to exploit them to the full. We should not forget it.


The system of biotech companies in ItalyOnce again, the performance of the Italian biotech companies confirms the key role of this sector for the revitalisation of the entire innovation system, and the competitiveness of the national economy. Active in the fields of human health, agro-food and industrial biotechnologies, our companies still manage to succeed bravely, even in an extremely difficult environment. But in the long term, excellence can make the difference only if supported by adequate investments and a solid innovation culture.

IntroductionFrom our study we have identified 407 companies operating and investing in Research & Development (R&D) in biotechnology in Italy, at the end of 2012 (Table 2.1). Compared to the previous year, the trend regarding the number of companies is slightly negative, while turnover and R&D investments show an increase. These results are even more significant when analysed in relation to the challenges of the current economic

situation, and clearly demonstrate the strength of an extremely dynamic and competitive reality that manages to overcome the cyclic nature which is typical of other industrial sectors, by translating the excellence of Italian research into new products and services.

AnalysisDespite the variations that arose in the sample, the percentages reveal few differences from the previous year in terms

of type of company, area of application, size, origin and location of the companies.

Most of the of companies in the sample (63%) consist of pure biotech companies; the remaining 37% is made up of enterprises belonging to other types, namely Italian pharmaceutical companies (4%), multinationals’ subsidiaries in Italy (13%) and other Italian biotech companies (20%), which include CROs and other companies not covered by the previous categories of our classification. The number of pure biotech companies increases

Table 2.1

Key data of the biotech sector, details of the OECD and pure biotech companies(Source: Ernst & Young)

2012 Report * 2013 Report

Total biotech Pure biotech Total biotech Pure biotech

Number of companies 412 258 407 256

Total turnover € 6,729 million € 1,290 million € 7,152 million € 1,432 million

Total investment in R&D € 1,780 million € 559 million € 1,832 million € 562 million

Total R&D employees 6,748 2,537 6,739 2,482

* Data have been rectified to make sample comparison possible.


by 8 and decreases by 10 units, bringing about an overall negative variation.

As in the previous years, biotechnologies are still an attractive and challenging field, but it is also evident how it is more and more difficult for our companies to remain on the market. This leads to the need to identify new ways to support efficiently the many innovative start-ups and SMEs which constitute the flourishing texture of Italian biotech. A number of examples, particularly clustering as a truly emerging reality, will be discussed in the following chapters.

The analysis by sector of application, according to the classification already adopted in the previous reports, shows that the distribution of companies in the sample is not much different from last year (Figure 2.1).

Almost half of the companies are exclusively active in red biotech (48%), confirming the predominant interest in human health biotechnology, whose market outlet is highly attractive from an entrepreneurial point of view.However, 16% are active in GPET (Genomics, Proteomics and Enabling Technologies), 12% in green biotech and 11% in white biotech, while 13% of the companies operate in more than one field of application, as multi-core (Figure 2.2).

Referring only to pure biotech companies, most of them are active in red biotech (44%), while 17% are multi-core, 17% GPET, 12% green biotech and 10% white biotech companies (Figure 2.3). The evidence shows marginal changes in the composition of the sample compared to the previous years.

Within the entire Italian biotech sector, 63 companies are also active in the field of nano-biotechnology, one of the most promising areas of scientific research: 45 of them are pure biotech companies, 87% of which are small or micro-sized. Furthermore, with regard to their field of application, 22 of them are multi-core (35%), 19 GPET (30%), 18 red biotech (29%), 3 green biotech (5%) and one is a white biotech company (2%).

Basing our analysis on the different business models most commonly adopted by Italian biotech companies (Table 2.2 ) and their field of application, the following can be noted (Figure 2.4):

- more than 50% of both red and green biotech companies are focused on the development and commercialisation of molecules or products that originate

2Chapter 2

Figure 2.2

Analysis by application field (Source: Ernst & Young)

48% 44%

13%

12%

11%

16%

Figure 2.3

Italian pure biotech companies: analysis by application field (Source: Ernst & Young)

17% 17%

12%

10%

Figure 2.1

Analysis by application field, comparing years 2011 and 2012 (Source: Ernst & Young)

2012 Report 2013 Report

450400350300250200150100

500

40754

6743

46

412

197

3966

50

n Multi-core n Green biotech n GPET n Red biotech n White biotech



210

47


The system of biotech companies in Italy

from their internal R&D activities. Said activities imply significant investments in terms of time and allocated resources, but will hopefully represent a significant source of revenues in the mid-long term.

- white biotech companies do not adopt as a rule Product centric models (11%), but are mostly Technology centric (33%) and Know-how centric (56%), focusing on the development of new technologies that permit the creation of alternative and more efficient processes at the production chain level.

In 2011, the Italian biotech industry recorded a total turnover of € 7,152 million, with an increase of about 6% compared to the 2010 sample. The analysis of turnover by type (Figure 2.5) confirms that 75% of revenues are attributable to multinational companies with subsidiaries in Italy, almost all of which are directly engaged in red biotech research activities in our Country, and have a high number of products on the market. The Italian-owned companies represent on the other hand 25% of total turnover, divided between pure biotech (20%), Italian pharmaceutical

companies (4%) and other Italian biotech companies (1%). Overall, pharmaceutical companies, which constitute 17% of the total sample, have an incidence on turnover of about 79%.

The analysis by size confirms that the majority of companies that operate in the field of biotechnology (75%) is micro-sized or small (53% micro and 22% small), having a number of employees less than 50 units (Figure 2.6). Companies that have between 50 and 250 employees (classified as medium) are 13% of the total, while companies that have more than 250 employees (classified as big sized) account for 12%. Segmenting the turnover by company size, big sized organisations constitute 83%, medium sized companies 11%, while small and micro sized companies 6%.

Focusing the analysis by size only to the pure biotech companies (Figure 2.7), micro and small-sized enterprises increase further to reach 87%, confirming the fact that a large part of the companies that fall into this category consists of YIC (Young Innovative Companies), that are specifically dedicated to R&D activities.

Table 2.2

Description of the business models most commonly adopted by Italian biotech companies

Business Model Description

Product centric The company focuses on molecules or products whose development involves significant investment of time and financial resources, but representing a significant source of revenues, or a significant increase in the turnover which originates from other products and services already on the market

Technology centric

The company focuses on developing a wide range of products and services based on proven technologies, applied to accelerate the discovery and preclinical stages, as well as the early stages of clinical development.

Know-how centric The company focuses on exploiting its own expertise in R&D, regulatory, manufacturing and marketing, with a view to making this available to third parties, in the form of services.

Figure 2.4

Italian biotech companies: analysis by application field and business model (Source: Ernst & Young)

Figure 2.5

Italian-capital companies: turnover analysis by type(Source: Ernst & Young)

Red Biotech Green Biotech White Biotech

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

n Know-how centric n Technology centric n Product centric n Multinational subsidiaries in Italyn Italian-capital companiesn Italian pure biotech companies

n Italian pharmaceutical companiesn Other Italian biotech companies

27%15%

33%

11%

53% 54%

20%31%

56%

4%1%

75% 25%20%


Chapter 2

The analysis by origin confirms that the majority (39%) of firms in the Italian biotech industry are set up as start-up companies, 23% as academic spin-offs, 15% as subsidiaries of a multinational companies, 7% as an industrial spin-offs or spin-outs, while 4% originate from Italian pharmaceutical companies

Figure 2.6

Analysis by size(Source: Ernst & Young)

53%

62%

12%

13%

22%

n Big n Medium n Small n Micro

Figure 2.7

Italian pure biotech companies: analysis by size(Source: Ernst & Young)

9%4%

25%


Figure 2.8

Analysis by origin(Source: Ernst & Young)

n Start-up n Italian pharmaceutical companyn Academic spin-off n Multinational subsidiary in Italyn Industrial spin-off or spin-out n Other

23%

39%

12%

15%

4%

7%

Figure 2.9

Analysis by geographic distribution (Source: Ernst & Young)

n > 50n 11 - 50n 5 - 10n < 5

0 20 40 60 80 100 120 140

LombardyPiedmont

TuscanyLatium

Emilia Romagna Veneto

SardiniaFriuli Venezia Giulia

ApuliaCampania

LiguriaSicily

MarcheTrentino Alto Adige

Calabria Abruzzo Umbria

Valle d’Aosta Molise

Basilicata

3

7

87

99

202224

373838

47126

34

111

2

and 12% from others (Figure 2.8).

With regard to their geographical position, our biotech companies are mainly concentrated in northern and central Italy. Lombardy is historically the region with the highest number of biotech companies (126), followed by Piedmont (47),

Tuscany and Latium (38 each), Emilia Romagna (37) and Veneto (24), while the number of companies located in the southern regions is still relatively limited (Figure 2.9).

As to their location, 37% of biotech companies have independent



New measures for the development of innovative start-upsDespite the turmoil and global economic imbalances, which bring about austerity policies and limit the investments of public and private institutions, we need to acknowledge a positive element: national governments are more and more stimulated to take concrete action to promote overall growth within the economic system. The so-called Growth Act 2.0, issued by the Italian Government in December 2012, is the expression of a project aimed at generating sustainable renewal from a structural context of emergency.

Given its objective of promoting sustainable growth, technological development, new entrepreneurship and employment, the Growth Act is certainly a step forward in the perspective of modernizing the Italian industrial system. Indeed, the Act immediately associates this purpose with a concrete renovation element, by introducing for the first time in the Italian law the definition of innovative start-up.

This approach is consistent with the objectives of the 2012 National Reform Programme and with the strategies of smart, sustainable and inclusive development, which have been defined at an European level. It will thus contribute to the spread of a different entrepreneurial culture, much more open to innovation, to the promotion of social mobility, transparency and merit and to the creation of skilled jobs, especially for the young generations.

In fact, the Growth Act provides for a series of facilitating measures, for the first four years of activity of an innovative company, which are aimed at allowing a more functional management of a number of corporate law requirements, and an easier access to investment channels.

Included among the main measures are the following:1) Specific exceptions as regards corporate law such as the possibility to also apply to a start-up company that has been established as an S.r.l. (Limited liability company), those provision which are specifically reserved to stock corporations (S.p.A.). In particular, the free determination of the rights granted to shareholders, through the creation of classes of shares without voting rights or voting rights not proportional to the holding, or the issuing of equity participating instruments. Another exception concerns the right to offer and trade participations in the share capital of the company, regardless

the legal form (S.p.A. or S.r.l.) under which the latter was constituted. The Act also provide for a reduction of the costs for the launch of new innovative entrepreneurial initiatives, through the exemption from stamp and secretariat duties for registration to the Companies’ Registrar, as well as from the annual fee to be paid to the Chamber of Commerce.

2) More flexibility in the use of temporary employment contracts. At this regard, the Act provides for the possibility to enter into a temporary employment relationship, for a fixed term of between six months and four years (renewable several times also without interruption), with a considerable advantage in terms of allowing adequate flexibility in planning the company’s organisation. After expiry of the prescribed time, the employment relationship becomes permanent; it is expressly excluded that the said relationship may continue under the “fictitious” form of an autonomous collaboration.

3) Alternative forms of contributions for employees and suppliers (stock options and work-for-equity): start-ups may transfer their own shares - or a participation in their share capital - to directors, employees, consultants or service providers. Revenues originating from the said securities or rights shall not contribute to the composition of the assessable income, both for fiscal and for social security purposes.

4) Introduction of specific tax incentives to encourage investors to support R&D activities, in connection with the high risk profile which is intrinsic for any start-up company. More specifically, in fiscal years 2013-2014-2015, those individual persons that have invested in an innovative start-up, are eligible for a deduction from gross tax, equal to 19% of a maximum amount of € 500,000; for legal persons, the deduction from the taxable income is 20% of a maximum amount of € 1.8 million. Both deductions are subject to the maintenance of the participation in the company’s share capital for a minimum of two years.

5) New fund raising channels: through dedicated online portals, the management of which is entrusted to CONSOB (Commissione Nazionale per le Società e la Borsa - the public Authority responsible for regulating the Italian securities market), the Growth Act aims at introducing crowdfunding as a new channel for raising capital from a wider pool of small investors.


Chapter 2

headquarters, 46% work within science parks or incubators, while the remaining 17% are located near universities, clinical centres or research institutes. The significantly higher percentage in the number of companies located in science parks or incubators is due to a further refinement of our analysis, which was made possible by the information provided by the Italian scientific and technological parks.

As for the number of R&D employees, which totals 6,739 units, this reaches a fairly high percentage of total employees (26%) in the case of pure biotech companies. In the pharmaceutical companies (multinational companies based in Italy and Italian pharmaceutical companies) and in the so called other Italian biotech companies, the ratio between R&D employees and total employees is 10% (Figure 2.10).

An analysis of R&D investments by type (Figure 2.11) shows how such investments are divided among Italian pharmaceutical companies (34%), multinationals’ subsidiaries in Italy (34%), pure biotech companies (31%) and other Italian biotech

Figure 2.10

Analysis of total employees and R&D employees, comparing pure biotech companies with other biotech companies (Source: Ernst & Young)

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

90%74%

26%10%

n Other employees n R&D employees

Pure biotech Other biotech

6) Increased support for internationalisation: innovative start-ups will benefit from the services provided by ICE, the Italian Trade Promotion Agency, and by Desk Italia, the first interface for foreign investors promoted by the Italian Ministry of Economic Development.

7) Easier access to credit: start-ups will enjoy in a free of charge and simplified way the services of the Central Guarantee Fund for small and medium-sized enterprises, thus benefitting from the application of more favourable conditions in terms of coverage and maximum guaranteed sum.

These measures are applicable to any innovative start-up, that the Act itself qualifies as an Italian non listed company, having, at the time of its constitution - and for the following 24 months - the majority (51%) of shares and voting rights in the hands of individual persons, consisting of not more than 48 months and with its principal place of business in Italy. Furthermore, starting from the second year of operations, total annual revenues should not exceed € 5 million, with no distribution of profits.

The key feature for any innovative start-up is obviously to have as an exclusive or predominant purpose the development and marketing of innovative products and services, with a high technological value. In addition, in order to be considered as an innovative start-up, the company must meet at least one of the following three requirements:

• R&D costs must be equal to or greater than 20%;

• at least 1/3 of employees must be represented by highly educated personnel;

• the company must be the owner or the licensee of a patent.

Overall, the Act represents a significant step forward in terms of stimulus and support for the creation of new business ventures with a high rate of innovation. However, it betrays a part of its purpose, especially in those areas where the results of the R&D investments are located in the medium-long term perspective, as in the case of biopharmaceutical companies for which the development time of a new molecule goes far beyond the four years required by the legislator.

The condition itself, based on which the majority of the share capital must be in the hands of individuals - at least during the first 24 months - is a further issue for biotech companies. In fact, considering the magnitude of the investments that they need to bear since the earliest stages of their development, most of biotech start-ups need access to volumes of risk capital that are incompatible with such a constraint. The main road to follow should rather be to increase the pool of investors with the funds and expertise that are necessary to the growth of the biotech business. Indeed, the Venture Capital, Private Equity and Business Angels’ markets, still remain underdeveloped in Italy, compared to other industrialised countries.



Figure 2.13

Analysis of the main reactions to the challenges deriving from the economic crisis (Source: Ernst & Young)

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

n Implemented n Not implemented

Increasing operating efficiency and reducing cash expenditure

Seeking alternative sources of capital

New business models

Decreasing the number of employees

Sharing resources and structures with other companies

Seeking alliance opportunities

Reducing items in the development pipeline

Increasing recourse to outsourcing

Moving into a new business segment

Seeking M&A opportunities

58%

25%

24%

24%

22%

19%

12%

8%

8%

3%

42%

75%

76%

76%

78%

81%

88%

92%

92%

97%

Figure 2.11

Analysis of R&D investments by type (Source: Ernst & Young)

34%

Figure 2.12

Analysis of the 2011 net financial results by type (Source: Ernst & Young)

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

n Profit n Loss Average of 2009 - 2010

Italian pharmaceutical

companies

10%

90%

Multinational subsidiaries

in Italy

18%

82%

Italian pure biotech

companies

68%

32%

Other Italian biotech

companies

71%

29%

31%

34%

1%

66%

n Multinational subsidiaries in Italyn Italian-capital companiesn Italian pure biotech companies

n Italian pharmaceutical companiesn Other Italian biotech companies


Chapter 2

Table 2.3

Analysis of the main measures that could possibly be implemented in the future (Source: Ernst & Young)

Challenges (%) Very likely Likely Unlikely Very unlikely

Increasing operating efficiency and reducing cash expenditure 49% 23% 12% 16%

Seeking alternative sources of capital 35% 29% 13% 23%

Decreasing the number of employees 19% 9% 27% 45%

Reducing items in the development pipeline 8% 11% 41% 40%

New business models 20% 22% 36% 22%

Seeking alliance opportunities 44% 40% 7% 9%

Increasing recourse to outsourcing 11% 35% 29% 25%

Sharing resources and structures with other companies 11% 35% 19% 35%

Moving into a new business segment 10% 12% 35% 43%

Seeking M&A opportunities 5% 17% 30% 48%

None 20% 13% 13% 54%

Other 50% 25% 0% 25%

companies (1%). The amount of investments totals € 1,832 million, with an increase in the order of 3% compared to the previous year.

Figure 2.12 shows that 68% of Italian pure biotech companies have recorded a profit in 2011. This percentage rises to 71% in the case of the other Italian biotech companies, to 82% for the Italian subsidiaries of multinational companies, to 90% for the Italian pharmaceutical companies. Most companies which registered a profit in 2011 expect to have the same result in 2012, while between the companies which record a loss the expectations are less positive (50% expect a profit, and 50% a confirm of the loss).

This year as well, the questionnaire sought to gather information from the companies on the measures already adopted in 2011, or at least planned for the future, in order to face the adverse economic conjuncture. 58% of companies that replied to the questionnaire, adopted specific measures, among others, to increase operational efficiency and reduce expenditure, while 25% decided upon alternative funding sources (Figure 2.13).

As regards the possible future steps (Table 2.3), increasing operational efficiency and reducing cash expenditure are considered as likely, or very likely, by 72% of the companies surveyed, along

with the option of seeking new strategic alliances (84%), and alternative sources of capital (64%). Equally significant is that the reduction in the number of employees and in the number of items in the development pipeline are not considered among the more viable choices, at least in the short term. The companies in our survey are also divided about the opportunity of sharing facilities and resources with other companies. With regard to possible M&A deals and moving into a new business segment, such options are considered unlikely, or very unlikely, by 78% of the companies who responded to the questionnaire.


Clusters as the engine of innovation and sustainable growth

Technological innovation is considered as being one of the main factors to help economic growth as well as the key to reach competitiveness on a global scale. This is particularly true in the Life Sciences industry where market complexity and social values require excellent scientific skills to succeed.Moreover, the current economic scenario is characterised by global megatrends which have different meanings and implications depending on the context of the specific business segment to which they refer. Table 3.1 highlights and describes the seven key megatrends, which have been identified as the key factors for the Life Sciences sector. Their analysis is a critical step in the definition of industrial strategies and innovation policies. They can in fact be used not only to identify the product and technologies of strategic

In a pioneering field like biotechnology, the flow of knowledge and resources is a critical success factor. But the transfer of science from the laboratory bench to the market involves complex interactive chains of transactions through the territory, among scientists, entrepreneurs and investors, thus allowing the best conditions for dynamic and fruitful cooperation. Hence, clustering is absolutely central both to the growth prospects of the many knowledge-driven companies of the Italian biotech industry, and the promotion of economic development and competitiveness of our territory, both at the regional and the national level.

interest for the development of a specific sector, but also for making appropriate decisions with regard to their impact in terms of organisation of the entire system and its single players (research centres, companies, investors, policy makers, etc.).

Accordingly, in order to allow the Life Sciences industry to provide more and more innovative products and services to assure us the best quality of life and wellbeing, it is clearly important to promote strategies that can best increase the flow of knowledge among the aforesaid players. This is the only way we can afford to provide timely and innovative answers to the social needs and the global market requests, particularly in the healthcare field. Besides this condition, Europe is an area marked by a dramatic rise in the average age of its population (7.76% in 2010;

15.9% in 2020 expected), where 50% of the individuals over 60 are affected by two or more chronic diseases. Such a situation will increase the European healthcare system’s expenditure, in years in which of strict austerity policies are adopted. An equation clearly impossible to sustain.

In the Life Sciences sector, the optimization of the therapeutic processes will assume a fundamental importance and the new technologies, such as nanobiotechnologies, will be the basic tool to do that effectively. Although bearing the highest R&D investments compared to other sectors, the biopharmaceutical industry still generates the highest added value per employee (+155% compared to the manufacturing industry’s average). Thus, investing in innovation and research intensive economies can be a landmark for the future, in terms of economic prosperity and well-being.

It can be recorded that, over the last decades, Europe regarded the research

Global megatrends in the field of Life Sciences: the European perspective


industry as a “strategic player” in the innovation scenario. In fact, the so-called Europe 2020 strategy considers innovation as the best engine to promote smart, sustainable and inclusive growth, which can result in a better economy. Not by chance, the 7th Framework Programme for Innovation (2007-2013), as well as

the following Horizon 2020 (2014-2020), are aimed at creating an integrate and common funding programme (see Chapter 7) to sustain more effective research. A plurality of statements from the European Union urge national governments to develop regional strategies to maximize the results.

A common strategy throughout Europe could also be a method to remove the structural differences in terms of innovation performances which still exist among the Member States. The Innovation Union Scoreboard (IUS), a tool which provides a comparative assessment of the strengths and weakness of the EU 27 Member States’ research and innovation systems, by tracking progress over time, clearly points out why Europe is still not an integrated machine, either in this area. The IUS 2011 consists of the analysis of 24 different indicators, divided in 3 macro-classes (Enablers, Firm Activities, Outputs), and 8 innovation dimensions using the most recent statistics from Eurostat and other internationally recognised sources available. With regard to the dimensions of innovation, these are the following:• “Enablers” capture the main drivers

of innovation performance external to the firm, and cover three dimensions of innovation: “Human resources”, “Open, excellent and attractive research systems”, “Finance and support”;

• “Firm activities” demonstrate the innovation efforts at the level of the firm, grouped in three dimensions: “Firm Investments”, “Linkages & entrepreneurship”, “Intellectual assets”;

• “Outputs” cover the effects of firms’ innovation activities in two innovation dimensions: “Innovators” and “Economic effects”.

3Chapter 3

Table 3.1

The following seven megatrends were identified with reference to the strategies of the National Technological Life Sciences Cluster ALISEI

Megatrend Description

1. New generation The majority of the young population will be concentrated in India and China, while Europe will have 20% of the global total of the over eighty population and women will increase their presence in finance and business

2. Smart cloud It will be possible to integrate public and public clouds and to allocate clouds ad hoc, according to the company requirements

3. Virtual world Simulation environments will be used in a very ambitious way and in particular, in defence, medicine, education, mobility and in business

4. Wireless intellingence and advancement in networks

Connectivity will be mainly wireless, and available devices will increase their interconnection together with their elaboration capacity. The further widening of the band in terms of breadth and availability will influence the development of new generations of applications, services and artificial intelligence

5. Innovating to zeroProduct and process innovation must respond to the socially recognised objective of reducing to zero safety breaches, errors, accidents and emissions dangerous for the environment and for the health of citizens

6. Innovative technologies of the future

A growth in the use of the currently emerging technologies, specifically relating to nanomaterials, flexible electronics, lasers and to “intelligent” materials

7. Cure & prevention in healthcare

A growth in the recognition of health and well-being as social value, with subsequent repercussions in terms of strategies for the development of methods of prevention, diagnosis and cure


Based on their performances, the Member States are divided into four groups: “Innovation leaders”, “Innovation followers”, “Moderate Innovators” and lastly, with the lowest performance, the “Modest Innovators”.

Although a process of convergence is on-going, important inequalities still exist between North European “Leaders” and the peripheral “Followers”. Italy stays in a third group, as Moderate Innovator. This result is due to the fact that the Italian industrial fabric is mainly made of SMEs, whose large majority is essentially active in the traditional sectors, to the low level of R&D investments, which is largely below those of our main industrial competitors, and to the significant discrepancies among our regions. Italy’s competitiveness would obviously benefit from the European strategy against structural inequalities, which is particularly true in the field of Life Sciences.

Even if the idea of a research intensive economy does not appear homogeneously accepted across the European Member States (the evidence of a different percentage of GDP invested in R&D is only an example of this kind of issue), it is also true that macro indicators are often not effective representatives of the real situation of an economy. The fact that Italy invests in R&D less than other countries, but produces a considerable number of scientific papers shows, for instance, how other variables can imply positive results. Thus, paradoxically, it could be just the structure of our industry, combined with the renowned excellence of the Italian scientists, to allow its competitiveness in the field of Life Sciences.

There is clear evidence, indeed, that research efficiency and effectiveness

have more to do with the intensity of knowledge flow than with structural dimension. This has also to do with the current need for the entire Life Sciences industry of “doing more with less”, and Italian scientists have proved to be real masters in this sense. Still, critical mass remains key to survive, and the aggregation of SMEs and institutions is the winning option to succeed. This is what open innovation is all about: grouping together, with the aim of sharing and optimising a small amount of resources and a huge knowledge package.

Open innovation generates economic growth, both for the whole country and the territory. Recent studies1 have showed connections, in a specific geographical area, between the presence of a “highly educated” entities and the creation of new firms. Not surprisingly, Hi-Tech companies tend to locate close to universities, in order to have an easier access to academic knowledge. Facilitating informal knowledge flows between a plurality of subjects, through the improvements in information and communication technologies and other channels, could be a way to economy recovery. And this is exactly what technological clusters do.

Besides being characterised by two important elements - the plurality of actors which are part of a structured network, and the aim to create new development opportunities based on collaboration among the different players - clusters also play a key role in harmonising and making the best of regional, national and European policies. Indeed, a number of concrete actions have been taken in order to support clusters and SMEs growth at national level, as the creation in 2008 of the “European Cluster Policy Group” (ECPG).

National Technological Clusters in Italy

The Italian Government, through the Minister of Education, University and Research (MIUR), has recently addressed the topic of clusters, as the engine of economic development. Notably, the call for the “development and the strengthening of national technological clusters” (issued by MIUR on May 30th, 2012) aims at creating effective aggregations that go beyond the regional borders, in order to capitalise on the Italian excellence and experience in the following eight scientific and technological areas:• Green chemistry• Agri-food• Technologies for living environments• Life Sciences• Technologies for smart communities• Equipment and systems for onshore and

offshore mobility • Aerospace• Energy• Smart industry

The Ministry has committed economic resources that will finance a maximum of four research, industrial development and training projects proposed by each of the eight clusters within the aforementioned areas.In order to respond to the emerging needs within their respective reference sectors, to optimise connections with other Technological districts and other Public-Private aggregations as well as to improve the capability of attracting investments and training a qualified human capital, Clusters were asked to draft and submit a five year time framework Strategic Development Plan. In principle, each cluster involves as constituents the different components of the relevant area: the Territories, the Industry and the Public Research Institutions. This is why a number of Italian


1 Source: Acosta et al. 2011.


Chapter 3

Regions entered the clusters through their coordinating bodies, according to their strategic interest in the technical-scientific area of reference. The three national Clusters that focus on biotechnologies as a key enabling technology for innovation and sustainable economic growth, are the following: • the Cluster Tecnologico Nazionale

ALISEI (Advanced Life Sciences in Italy), National Life Sciences Cluster, aimed at implementing an innovative strategic approach to the creation of new products, services and business opportunities in the field of Life Sciences and human health care;

• the Cluster Tecnologico Nazionale CL.A.N - National Agrofood Cluster (see Chapter 5), whose mission is to protect and increase the competitiveness of the national economic system relating to the agro-food industry, by stimulating innovation, technology transfer and the collaboration among the industry, research institutions and the public;

• the Cluster Tecnologico Nazionale Chimica Verde, National Green Chemistry Cluster (see Chapter 6), aimed at becoming an important partner for local, national and European institutions in the field of green chemistry, as well as providing guidance in the definition and implementation of a national policy on Bioeconomy.

The National Technological Life Sciences Cluster ALISEI

The National Technological Life Sciences Cluster ALISEI has been established in response to the aforesaid Notice of the Research Ministry (MIUR), and following the signing of a Memorandum of Understanding, by the territorial entities representing 13 Italian Regions, the three national trade associations representing Life Sciences companies, the three national

public research institutes and the Italian Trade Promotion Agency (Table 3.2).

Why ALISEI? Besides being the acronym of ”Advanced Life Sciences in Italy”, ALISEI is the name of the “trade winds” which were exploited by Columbus in his voyages to the Indies, which led to the discovery of America and were the most important winds in ocean sailing. Winds that always blow in a certain direction, tracing a path or a trail in the sea that was easy to follow by the ships. Thus, ALISEI becomes the

Table 3.2

Cluster Alisei - Promoting members

name of the Cluster which aims to be a driver of innovation and a trail to address economic and social development in the field of Life Sciences.

ALISEI aims at supporting the systemic economic growth of the territories and the entire national economy, by a process of interconnection and cohesion of the best scientific, economic and territorial production systems. Indeed accelerating industrial development is only possible by starting from those regional entities

Territorial entities

Lombardy Life Sciences Cluster (being set up), represented by the Regional Foundation for Biomedical Research (FRRB) also acting as the temporary coordinator of ALISEI

Tuscany Technological District for Life Sciences, represented by the Toscana Life Sciences foundation

bioPmed - Piemonte Innovation Cluster, represented by Bioindustry Park Silvano Fumero

Technology District for Molecular Biomedicine (Friuli Venezia Giulia), represented by the Consortium for the Centre of Molecular Biomedicine (CBM)

ASTER - Consortium for Innovation and Technology Transfer in Emilia Romagna

Lazio Bioscience Technology District (DTB), represented by FILAS

Biomedical and Health Technology District, represented by Sardegna Ricerche

Technological District Micro and Nanosystems and Sicily Biomedical District

Tecnobionet, Politecmed and SI4Life, represented by the Liguria Technology Life Sciences Cluster (being set up)

H-BIO Puglia - Technological District for Health and Biotechnology

Hi-Tech Cluster of Nanotechnology, represented by Veneto Nanotech

Campania Bioscience

Abruzzo Region (Coordinating body still to be defined)

National Trade Associations

Assobiotec

Assobiomedica

Farmindustria

National Research Institutions

National Research Council (CNR)

National Agency for New Technologies, Energy and sustainable economic development (ENEA)

Italian Institute of Technology (IIT)

Italian Trade Promotion Agency (ICE)



that have best been able to create tools that can activate this virtuous process, and where the industrial component can ensure the competitiveness of the Italian system as a whole, at the international level. This is all the more necessary in the field of Life Sciences which is characterised by particular complexities in terms of approach to the market, and whose industrial success requires an extremely high level of scientific knowledge and technological intensity.

In the light of its current configuration, ALISEI shall sustain and accelerate the transfer of knowledge and technologies in the field of multidisciplinary research to the one of the Life Sciences industry. In this framework, the Cluster shall also promote the attraction of public and private capital by the expression of the best Italian experience (industrial research labs, advanced structures of high added value production and services). Ultimately, ALISEI aims at implementing at the national level the interaction model - which has already been successfully tested in a number of

cases at the regional level - between the research system, the entrepreneurial community, the manufacturing chain and the public administration in the territories.

ALISEI has identified a number of social and health problems whose elements can be found, both in various therapeutic areas and in the various approaches to science and technology. Their impact constitutes the drivers, which have particular importance for the Country’s system:• Personalised approach and therapy and

diagnosis integration which shifts the scientific development of products and services to a perspective increasingly aimed at the patient. Hence, the need for correlation of clinical and diagnostic data with the pathological problems. In this context, rare diseases are an element of interest to SMEs.

• Ageing and chronic diseases that impact negatively on healthcare and social costs, and therefore require a continuous evolution of the preventive diagnostic and therapeutic approach.

• Converging technologies that are the

result of the increased awareness that only a systemic and interdisciplinary approach to problems can lead to their solution, and become the key driver for the development of innovative products.

These drivers are characterised by a unifying element that is represented by costs, also including social health care costs. Costs are both a critical variable for the development of the Italian system, as well as a challenge for the welfare of citizens. In order to maintain the current level of quality of services and solutions, their reduction can only be achieved by means of patient management optimization and of sustainable innovation in the primary interest thematic areas: E-Health, New Diagnostic Systems, Medicine and innovative therapeutic approaches, Prevention.

ALISEI’s actions to achieve these ambitious goals, shall relate to the following operations: • Improving networking between

Academia and industry, as well as


Chapter 3

technology transfer in order to create the conditions for the creation of innovative start-ups and the growth of innovative companies;

• The growth of territorial clusters, the integration between these, and the development of shared tools;

• The impetus towards dynamics of internationalisation, in a logic of system and support to individual public or private initiatives;

• The creation of competitive conditions to attract Venture Capital investments

• Education and training in a different culture of innovation, strongly oriented towards a vision system.

Pursuant to the demand requirements ALISEI has also selected the following four proposals for industrial research and training which, besides being part of international collaboration programmes, have all been approved by MIUR.• IVASCOMAR: Identification, validation

and commercial development of new diagnostic and prognostic biomarkers for complex diseases.

• DNA on Disk: Platform and diagnostic kits for human health in oncology, neuroscience, infectious diseases and poverty-related diseases.

• IRMI: Creation of a multi-regional infrastructure (Italian Regenerative Medicine Infrastructure) for the development of advanced therapies aimed at the regeneration of organs and tissues

• MEDINTECH: Converging technologies to increase the safety and efficacy of drugs and vaccines.

These four projects are the result of a selection, among the 12 project proposals submitted to ALISEI that have been subjected to a process of peer review procedures entrusted to qualified experts at international level and external to the domestic system.

Table 3.3

Key data relating to the biotech sector by Region (Source: Ernst & Young)

* € millions.

Regions Number of biotech companies

Biotech companies: turnover*

Biotech companies:

R&D investments*

Biotech companies:

R&D employees

Abruzzo 3 23 12 38

Apulia 9 3 3 32

Basilicata 1 1 1 50

Calabria 3 1 11 2

Campania 9 6 13 112

Emilia Romagna 37 262 176 475

Friuli Venezia Giulia 20 32 9 152

Latium 38 1,431 271 1,271

Liguria 8 71 1 105

Lombardy 126 3,472 813 2,827

Marche 7 25 6 52

Molise 1 0 12 8

Piedmont 47 644 55 380

Sardinia 22 29 42 73

Sicily 7 111 35 151

Trentino Alto Adige 4 1 2 28

Tuscany 38 830 304 527

Umbria 2 1 1 16

Valle d’Aosta 1 2 2 2

Veneto 24 207 62 438

Total 407 7,152 1,832 6,739

The Life Sciences research system on the Italian territory

The following section aims at providing an overview of the Italian research system in the field of Life Sciences on a Regional basis, with specific reference to the biotech industry as well as to territorial clusters, such as Regional Districts and Science

Parks. Among these clusters, some were actively involved in the constitution of the National Technology Life Sciences Cluster ALISEI.

Table 3.3 reports the key data relating to the biotech sector for each Italian Region, with regard to the following parameters: number of companies, turnover, R&D investment, number of R&D employees.



In Table 3.4 the same data are split with reference the three main application fields in which Italian biotech companies are active, notably red biotech, green biotech and white biotech; in addition, we have also indicated in which of the three above mentioned clusters each Region is involved.

Table 3.4

Key data relating to the main biotech field of application by region (Source: Ernst & Young)

* Regions participating to LS (Life Sciences) - GC (Green Chemistry) - AF (Agro-food). ** Comprising multi-core companies.*** € millions.

Regions* Number of biotech companies** Biotech companies: turnover*** Biotech companies: R&D investments***

Biotech companies: R&D employees

Red biotech

Green biotech

White biotech

Red biotech

Green biotech

White biotech

Red biotech

Green biotech

White biotech

Red biotech

Green biotech

White biotech

Abruzzo (LS-AF) 2 0 1 23 0 0 12 0 0 38 0 0

Apulia (LS-AF-GC) 1 5 1 0 3 0 0 3 0 4 27 1

Basilicata (GC) 0 1 1 0 1 0 0 0.5 0.5 0 25 25

Calabria 1 0 1 1 0 0 11 0 0 2 0 0

Campania (LS) 5 1 1 6 0 0 12 0.5 0 96 16 0

Emilia Romagna (LS-AF-GC) 19 6 5 248 6 8 172 4 0.5 430 21 24

Friuli Venezia Giulia (LS) 10 11 2 23 9 0 3 6 0.5 73 73 6

Latium (LS) 25 2 5 1,429 1 1 269 1 1 1,223 14 34

Liguria (LS) 3 0 3 70 0 1 0 0 1 90 0 15

Lombardy (LS-AF-GC) 86 28 16 3,336 70 66 721 77 15 2,199 467 161

Marche 4 2 2 23 1 1 4 1 0.5 21 13 18

Molise (AF) 1 1 0 0 0 0 11 0.5 0 4 4 0

Piedmont (LS-GC) 24 8 11 447 4 193 41 4 10 172 45 163

Sardinia (LS-GC) 11 6 2 26 3 0 39 3 0.5 46 26 1

Sicily (LS-AF) 5 1 2 110 1 0 35 0.5 0 125 3 23

Trentino Alto Adige 1 1 1 1 0 0 2 1 0 9 7 12

Tuscany (LS) 23 3 5 828 2 0 302 2 0 508 10 9

Umbria (GC) 1 1 0 0 1 0 2 0.5 0 11 5 0

Valle d’Aosta 0 1 1 0 2 0 0 0.5 0.5 0 2 0

Veneto (LS-GC) 13 7 2 195 6 6 55 7 0 385 40 13

Total 235 85 62 6,766 110 276 1,691 112 29 5,436 798 505


Chapter 3

PiedmontThe Piemonte Innovation cluster, bioPmed, is based on a community of more than 7,000 employees from about 360 companies, three universities and a number of research centres, foundations and associations operating in the field of Life Sciences. From May 2009 to date, approximately 80 member organisations of the regional community have joined in, including four universities, one polytechnic, a considerable number of research centres (RCC Candiolo, Bioindustry Park, INRIM, Edo Tempia Foundation, CNR, etc.), as well as several pharma and diagnostic industrial companies of international relevance, and a number of SMEs which were able to attract over € 55 million.

bioPmed enjoys the active contribution of national and international VC investors - including seed capital investment initiatives (Piemontech and Eporgen) - as well as the presence of enabling organisations such as specialised incubators and science parks (2I3t, I3P, ENNE3, Incubator Bioindustry).

In coherence with the European Union recommendations, bioPmed stimulates innovative activity by promoting intensive interactions, sharing of facilities and exchange of knowledge and expertise, and by contributing effectively to technology transfer, networking and information dissemination among the undertakings in the cluster.

The mission of bioPmed is to develop effective research in Life Sciences with

particular reference to high medical need areas, such as oncology, cardiovascular diseases, inflammatory and autoimmune diseases. bioPmed is focusing on molecular and cellular biology, innovative diagnostic tools and imaging (“wet technologies”), as well as on new materials and nanotechnologies (“hard technologies”). Furthermore, the cluster aims at making the best of the synergies among companies of globally recognized excellence in a number of areas, such as electronic (bio-electronics, diagnostics), data processing (bio-informatics), mechanical (bio-mechanics), and environmental.

bioPmed bases its development both on its ability to positively impact on the regional innovation system, and on the implementation of specific strategic

• A. Costantino & C. • Advanced Accelerator Applications (Italy) • Aethia • APAvadis Biotechnologies • Associazione Nazionale dei Biotecnologi Italiani • Associazione Scientifica “Società di Scienze

Farmacologiche Applicate” • Associazione Silenziosi Operai della Croce Onlus • Bioclarma• Bioindustry Park Silvano Fumero • BioMan • Bionica Tech • Biopaint • Biotechware • Bracco Imaging • Camerson• Casa di Cura Villa Igea • Centro Colture Sperimentali Valle d’Aosta • CID • Consorzio Piemonte per la prevenzione e repressione

del doping e di altri usi illeciti dei farmaci • Cooperativa P.G. Frassati • Cori• Creabilis Therapeutics • Crisel Electrooptical System & Tecnology • Crisel Instruments • Cyanine Technologies • Dipromed • Dirivet

• Eltek • Environment Park • Ephoran Multi Imaging Solutions • Eporgen• Eudendron • EuroClone • Fandis Lab • Floramo Corporation • Fondazione del Piemonte per l’Oncologia • Fondazione Edo ed Elvo Tempia Valenta • Fondazione Un Passo Insieme• Genesynthesis • Genovax • Gipharma • Herniamesh • I-See • Im3D Clinic Piemonte• Im3D Clinic • Intrauma • Invento • Istituto Candioli Farmaceutici • Istituto di Scienza e Tecnologia dei Materiali

Ceramici • Istituto di Virologia Vegetale• Istituto Nazionale di Ricerca Metrologica • Istituto Zooprofilattico Sperimentale del

Piemonte, Liguria e Valle d’Aosta • Laboratori Biomicron • Medicomp

• Merck Serono • Metec Innovation Consulting • Microla Optoelectronics• Moxoff• Nanovector • NatiMab Therapeutics • Nisobiomed • Nobil Bio Ricerche • NoToPharm • Ntplast • Nurex • Politecnico di Torino • Politronica Inkjet Printing • Procelltech • R.T.M. • Rotalactis • SiTec Consulting • Sorin Biomedica Cardio (Sorin Group) • Spider Biotech • Stelar • Target Heart Biotec • Tecnolab del Lago Maggiore • Titanmed • Traumavet • Trustech • Università degli Studi di Torino• Università del Piemonte Orientale

“Amedeo Avogadro” • Wisildent

Table 3.5

bioPmed - Piemonte innovation cluster



initiatives, such as the Bioindustry Park, bioPmed, “City of Health” initiatives, as well as on its best international positioning, with reference both to the European R&I planning system, and the close interaction with the neighbouring land areas, such as the Rhone-Alpes district.

The cluster is managed by Bioindustry Park Silvano Fumero, the science and technology park founded in 1998 which, since its creation, worked as system integrator for the development of Life Sciences in this Region.

With reference to the biotech industry, Piedmont hosts a total of 47 biotech companies, thus being the second Region in Italy in terms of density, and among the top five with reference to turnover and R&D investments. The large majority of these are pure biotech companies, active in the red biotech field. Although, it is worth mentioning that Piedmont also hosts one of the major white biotech companies in the Italy, which generates 70% of the total turnover of the entire segment of industrial biotechnologies.

LombardyLombardy is the Region in Italy with the most dynamic industrial fabric and with the highest projection in foreign markets, also thanks to its strict integration with the major European channels of communication. Its widespread entrepreneurial culture has made it the driving force for the development of the whole Country. Lombardy is the Region with the highest number of universities, public and private research centres and, as such, the one which benefits of most advanced scientific and technological specialisation, reaching values which are significantly higher than the national average, both for pharmaceutical and biomedical research.

Indeed, Lombardy is the first Italian Region in the field of biotechnologies, with outstanding results considering all the indicators: 126 companies - 37% of which are active in the red biotech field - whose turnover represents 50% of the total revenues of the entire biotech sector in Italy; attractive technology centres both for Italian pure biotech companies (73, the highest number within Italian Regions) and multinational companies, which have historically settled their subsidiaries in this Region (31, again the majority of the sample). In addition to this, Lombardy is at the centre of a number of interesting networking experiences, which have been extended to a dynamic financial community, as the point of reference for numerous start-up initiatives (30% of the whole total).

A further boost to such a flourishing scenario will come from the next constitution of the Lombardy Life Sciences Cluster, which is aimed at supporting the integration between the Academia, public and private research institutions and industry, thus increasing more and more the competitiveness of the Region at an international level. The Cluster, led by the Regional Foundation for Biomedical Research, shall define and implement specific initiatives of industrial research, pre-competitive development, advanced training and enhancement of research results, with a specific focus on biotechnology for human health, which has been identified as a top strategic priority for the development of this Region.

VenetoBesides having the highest national rate of entrepreneurship, Veneto boasts a significant concentration of companies in those industrial sectors which are driven by nanotechnology. The size of this phenomenon is impressive, and covers automotive, industrial robotics, electronics and environment, as well as consumer goods and medical and dental products. In addition to medicine, the new nanotechniques are also exploited in a number of different applications, including environmental quality control and clinical diagnostics.

The activities of the Hi-Tech Cluster of Nanotechnology applied to materials are coordinated by Veneto Nanotech, which acts as a mediator at institutional level for enterprises and research centres interested in creating new products with high technology content. The Veneto Region has up to now financed and managed specific projects for the development of nanotechnology, including nanomedicine, with a budget in the range of € 54 million.

Based on our analysis, Veneto ranks sixth among the Italian Regions, in terms of number of biotech companies (24). 13 of them are active in red biotech, although the green biotech field looks attractive too. Almost all of these companies were established as start-ups or academic spin-offs, even if it is worth mentioning the

• Banco Popolare Società Cooperativa• CCIAA di Venezia• Confartigianato Veneto• Consorzio INCA• Consorzio INSTM• Federazione Regionale degli Industriali del Veneto• Fondazione Cariparo• MBN Nanomateralia

• Provincia di Rovigo• Provincia di Treviso• Regione Veneto• Università Ca’ Foscari Venezia• Università degli Studi di Padova• Università degli Studi di Verona• Università IUAV• Veneto Innovazione Holding

Table 3.6

Hi-Tech Cluster of Nanotechnology


Chapter 3

fact that two major multinational groups, operating in the red biotech field, have their subsidiaries in this Region.

Friuli Venezia GiuliaFriuli Venezia Giulia (FVG) can boast a consolidated scientific tradition at an international level, together with a regulatory framework that encourages the development of research, innovation and technology transfer. More than 50 institutions located in the Region are part of the “Coordination of Research Agencies” (CRA) network, led by the AREA Consortium and placed under the aegis of the Ministry of Education and the Ministry of Foreign Affairs. The CRA network includes a number of universities, international organisations, national research institutes, science and technology parks, centres for technology transfer, most of which are active in the field of Life Sciences.

Furthermore, Friuli Venezia Giulia hosts a growing number of biotech companies

(20), with a consolidated turnover of € 32 million, total R&D investments in the range of € 10 million, and 152 R&D employees. 60% of these companies are star-ups, while the remaining part originates from academic spin-offs. 10 are active in the red biotech field, whilst 11 in green biotech.

The Technology District of Molecular Biomedicine of Friuli Venezia Giulia was established in 2004, following the adoption of the Framework Programme Agreement between MIUR and FVG Region, and is legally represented by the CBM (Consortium for Molecular Biomedicine), which groups 18 among public and private partners, and is responsible for overseeing the strategic development, the organization of activities and the promotion of initiatives.

The District works on an international scale, and is specifically focused on personalized biomedicine projects, representing almost 1% of Italian market

and contributing to Region’s GDP by 0,7%. Investing in human capital (approx. 1.000 employees), attracting new talents and promoting new entrepreneurship initiatives (40% of firms established after 2000), are among the District’s main drivers.

LiguriaThe innovation system of Liguria benefits from the presence of a number of Academic and national research institutions (CNR, ENEA, INFN, IIT, INGV, IRCCS), as well as of a rich industrial fabric. The dynamism of this Region is further confirmed by the many local initiatives, as well as by a number of strategic choices at the national level, which determined Liguria as being the territory on which to focus Hi-Tech research projects.

Besides hosting the Italian Institute of Technology (ITT), in Genoa, Liguria has seen the development of a number of regional initiatives which led to the creation of major clusters of excellence for research and innovation, such as Tecnobionet, Politecmed and SI4Life, that soon will merge in the Liguria Technology Life Sciences Cluster.

Tecnobionet, the centre for technological innovation accredited to the Liguria Region under the form of a Temporary Purpose Association, aims at connecting the wealth of research institutions, based in this territory and active in biotechnology and biomedical technologies, with one of the most dynamic industrial fabric, both at the national and European level. In order to achieve these ambitious results, Tecnobionet pursues five strategic research lines, which are widely interconnected: 1) Drug Discovery, Delivery and Development; 2) Neuroscience and Neuropharmacology; 3) Stem Cells and Cell Therapy, 4) Advanced Diagnostics and Technology, 5) Imaging Tools and Development.

• Adriacell• Adriatica Ecologie Industriali• Alphagenics • AREA Science Park• Bio Hi-Tech• Biostrands • BURLO Garofolo• CBM - Consorzio per il Centro di Biomedicina

Molecolare• Consiglio Nazionale delle Ricerche - CNR• Cro Aviano• Epigen Therapeutics• Euroclone• Eurospital – Laboratorio R&S• Fedra Lab • Fondazione Callerio (Onlus)• Fondazione Centro Studi Fegato (Onlus)• G&life • Geneticlab• Green Lab• International Centre for Genetic Engineering

and Biotechnology - ICGEB

• Ics Unido• International Centre for Theoretical Physics -

ICTP• Iga Technology Services• Laboratorio Nazionale del Consorzio

Interuniversitario per le Biotecnologie – LNCIB• MOSE - Molecular Simulation Engineering• Nutrigene• Pharmadiagen• Rottapharm Biotech• SB Technology• Sedicidodici• Sigea• Sissa• Sprin • Tecna Lab • TOR (Tissue and Organ Replacements) Napoli• Transactiva• TransPharma med• Università degli studi Trieste• Università degli studi Udine• VivaBioCell

Table 3.7

Technology District of Molecular Biomedicine of Friuli Venezia Giulia



The Tecnobionet centre, is also in charge of managing both the Politecmed and the SI4Life regional clusters.

Politecmed (Polo Ligure delle Tecnologie Medicali) is a cluster of companies and research institutions operating in the sector of medical devices and information technology for healthcare. The cluster was established with the goal of fostering the highly competitive production and research chain, which has been active in Liguria for several years and has its pivot in the activities of Esaote. Politecmed aims at being the driving force of the regional biomedical industry, by promoting and consolidating the aggregation among the partners on specific industrial and scientific issues, with the final goal of developing new technologies.

SI4Life is a new Consortium proposed as a scientific-technological innovation hub, with the aim to improve the quality of life of elderly and disabled people. SI4Life promotes synergies among a number of different territorial realities (currently 16,

in the Liguria Region alone) engaged in high level research in order to develop new tools and aids, to be combined with innovative rehabilitation and educational re-training methods, which will allow improved social integration and achievements, recovery skills, autonomy and quality of life for older people and patients with sensory, neuromotor and cognitive disabilities.

With regard to biotechnologies, the Region of Liguria hosts 8 biotech companies 3 of which are active in the red biotech field, 3 in white biotech and 2 in GPET. 4 firms are Italian pure biotech companies, while 2 are multinational subsidiaries in Italy and 2 other Italian biotech companies.

Emilia RomagnaEmilia Romagna can boast a wide range of research institutions in the field of Life Sciences, including five universities (with more than 65 departments specifically focused on Life Sciences), and the National Research Council (CNR) in Bologna. Besides two GMP Cell Factories, the Istituto

• A.C.R.A.F. – Aziende Chimiche Riunite Angelini Francesco

• Active Cells• Arrow Diagnostics• Biorigen• Btp Tecno• Bureau Veritas Italia• Camelot Biomedical Systems• Carestream Health• CBA • Celin• Cepim-Centro Italiano Down

(Onlus)• Cersaa• Circle Cap• CNRB• Consiglio Nazionale delle

Ricerche - CNR• Elsel

• Eo Galliera• Esacontrol• Esaote• ETT • Fides Medica• Fondazione Don Carlo Gnocchi

Onlus• Ggallery• Gruppo FOS• Ifm Group• Impara• IRCCS S. Martino IST• Istituto David Chiossone Onlus• Istituto di Biofisica del CNR• Istituto G.Gaslini• Istituto Giannina Gaslini• Istituto Italiano di Tecnologia - IIT• Linear• Mastelli

• Medical Coop • Nanomed• Network Integration & Solutions• Nextage• Omega• Oms Ratto• Optics International• Paramed• Relab• Sirius-Biotech• Sitem• Smart Group• Soft Jam• Softeco Sismat • SY.O. Systems and Organization • Telerobot• Tib Molbiol• Università degli Studi

di Genova

Table 3.8

Tecnobionet, Politecmed and SI4Life

Ortopedico Rizzoli, in Bologna and the Centre for Regenerative Medicine “S. Ferrari”, in Modena - respectively focused on bone tissue and epithelial tissue - Emilia Romagna hosts a number of health care facilities which are actively involved in R&D. Not by chance, with its 106 private and public hospitals (including four university hospitals and four IRRCS) Emilia Romagna has contributed, in the last 20 years, for 43,5% (1,969 studies) of clinical trial activities conducted in Italy.

From the Life Sciences industry point of view, Emilia Romagna enjoys the presence of 349 medical device companies - including the biomedical district of Mirandola – with more than 3,500 employees and € 830 million turnover, as well as 15 pharmaceutical companies, with 3,366 employees (of which 470 are dedicated to R&D), and € 180 million in R&D investments, plus a number of pure biotech companies which are active in the red biotech field. Most of them are academic spin-offs or start-up companies, specifically focused nanobiotechnologies, regenerative medicines and e-care.

As such, Emilia Romagna is within the top performing Italian regions in the biotech sector. According to the sample of our analysis, out of a total of 37 companies, 19 are active in the red biotech field, 7 in green biotech and 5 in white biotech; with regard to their origin, 35% are academic spin-offs, 35% star-ups and 10% are Italian subsidiaries of multinational companies.

Life Sciences fall under one of the six thematic platforms developed by the High Technology Network of Emilia Romagna, which includes 82 research laboratories and 13 centres for innovation and technology transfer. The network is coordinated by ASTER, a non-profit consortium among the Emilia Romagna Region, the universities and the national


Chapter 3

• Alfa Wassermann • Ambrosia Lab• Biodec• Biofer• Byflow• Chiesi Farmaceutici • CliREst - Clinical Research Estense• Cyanagen• Ferrari Biotech• Finceramica Faenza

• Gemiblab• Genemore• Genzyme • Greenceutics• Holostem (Spin off di Chiesi)• Lipinutragen • Mediteknology • Nano4Bio• NGB Genetics • Ophera

• Pharmeste • Pincell• Raresplice• ReMembrane• Rigenerand• Silicon Biosystems• Skin Squared • Therabor Pharmaceuticals• Tydockpharma• Ufpeptides

Table 3.9

ASTER - Consortium for Innovation and Technology Transfer in Emilia Romagna

research institutions operating throughout the Region (CNR, ENEA), the Union of the Chambers of Commerce and the Regional entrepreneurs’ associations.

The mission of the consortium includes the development of structures and services related to industrial research and the promotion of innovation. Accordingly, ASTER is actively involved in setting up initiatives to sustain new innovative and high-knowledge business, particularly in their early-stage; in providing qualification pathways for the enhancement of scientific, technical and managerial skills; in supporting the protection and promotion of research results and intellectual property, as well as in facilitating access to innovative financial instruments; in promoting participation in European programmes for research and innovation.

TuscanyTuscany benefits from an extremely advanced training offer thanks to the presence of three major universities, three High Schools (the Scuola Normale and the Sant’Anna School of Advanced Studies in Pisa; the Institute for Advanced Studies - IMT, in Lucca), a number of internationally recognized public and private research centres, as well as a rich and varied R&D oriented entrepreneurial fabric.

The above list only includes those subjects which are active in the red biotech sector

Tuscany counts more than 368 enterprises which are active in the field of Life Sciences, with biotech, pharmaceutical and medical device companies representing respectively 14%, 10% and 6% of total Italian companies. Besides the major contribution of the pharmaceutical industry in terms of turnover (13% of total revenues at national level), biotech companies play a dominant role with reference to both the number of

employees (3,657) and R&D employees (677 units, which account for 40% of the national figure).

Tuscany is indeed one of the most important regions for the red biotech sector, in terms of number of companies (ranked as 4th), turnover (3rd), R&D investments (2nd) and employment (3rd). While the other field of applications are not as relevant, companies dedicated to human health (60%) enjoy a competitive and stimulating environment. 25 out of 38 companies are pure biotech (particularly start-ups), but the relevant figures are made up by 5 important pharmaceutical companies.

The Technology District for Life Sciences is one of five technology districts created by the Tuscany Region to strengthen and rationalise the system of innovation and technology transfer, by integrating skills and knowledge to support projects with a clear impact on the territory. The companies that have joined the District to date exceed

• Agroils Technologies• Anallergo• Azienda Ospedaliera

Universitaria Senese• Biomerieux Italia• Biosynth Research

Laboratories• Biotec• C.IR.M.M.P.

(Consorzio Interuniversitario Risonanze Magnetiche di Metalloproteine)

• Consiglio Nazionale delle Ricerche – CNR

• DI.V.A.L.• Diesse Diagnostica Senese• Diesse Ricerche• Ecobioservices

and Researches• Eli Lilly Italia • Espikem• Eudax• Exosomics Siena

• Externautics• Fondazione Farmacogenomica

FiorGen Onlus• Fondazione Icon• Fondazione Sclavo• Fondazione Toscana Life

Sciences• Fotosintetica & Microbiologica• GALILEO Reaseach• Genedia• Giotto Biotech• Grifols Italia• INSTM

(Consorzio Interuniversitario Nazionale per la Scienza e Tecnologia dei Materiali)

• Kayser Italia• Kedrion• Meristema• Microbiotec• Micron Research Service• Molteni Therapeutics• Next Genomics

• Novartis Vaccines• Philogen• Polymed• Pont-Tech• Regulatory Pharma Net

(RPN)• Sclavo Diagnostics

International• Sclavo Vaccine Association• Scuola Normale Superiore• Scuola Superiore Sant’Anna• Serge Genomics• Setlance• Shire Italia• Sienabiografix• Sienabiotech• Sorta• Tissue Lab• Toscana Biomarkers• Università di Firenze• Università di Pisa• Università di Siena• Vismederi

Table 3.10

Tuscany’s Technological District for Life Sciences



one hundred units, with strong strategic complementary centres in Florence, Pisa and Siena, and a high concentration of R&D employees. Consistently, all of the objectives and strategic actions of the District are aimed at meeting the competitive needs of this heritage of innovative SMEs, at supporting them in their process of internationalization, as well as at attracting the necessary investments.

LatiumThe Chemical-Pharmaceutical Production System of Latium, which is located along the Rome - Pomezia - Aprilia - Latina axis, includes a number of the major national and multinational Life Sciences industries in Italy. In addition, the provinces of Rome, Latina and Frosinone host a consistent and widespread range of SMEs, with an impressive high technological heritage.

Both the pharmaceutical and biomedical industry are the key assets of the Bioscience Technology District of the Latium Region, besides being critical sectors critical to the Country’s competitiveness. Indeed, Italy is the fifth largest global pharmaceutical manufacturer, and Latium ranks second in Italy after Lombardy, for number of companies and employees in these two sectors, and first for their impact on total industry. Moreover, Latium is the first Region in Italy both in terms manufacturing exports (29.0% of the total) and export value (€ 4.7 billion, 31% of the total), followed from Lombardy with € 4.0 billion (26.2% of the total).

Latium is an important reality in the area of biotechnologies, being the second Italian Region both in terms of turnover and number of R&D employees, as well as

ranking third for R&D investments. Almost all of the 38 companies which are based in the Region, are focused on red biotech; 19 of them are Italian pure biotech companies, 11 are Italian subsidiaries of multinational companies.

The specific objectives of the Bioscience Technology District (DTB) of the Latium Region include the following: enable a structured network of relationships and technical-scientific collaboration between the research and the business world; strengthen the planning, operational and prototype capacity of applied research and the industrial system; attract and facilitate investments in dedicated technology infrastructures; promote and support the generation of new Hi-Tech companies; strengthen and improve the visibility of the sector at international level; encourage the growth of an existing professional skills.

• Abbott • Agrifield Biotech • Akros Bioscience• AlgaRes • Allergan• Ambiotec• Angelini• Athena Pharma Italia • Avantgarde• B.M.D. • Baxter• BINT - Bio Info Nano Technologies• Bio Fab Research• Bio Gentetix• Biofutura Pharma• Biogen• Bioindustria Farmaceutici • Biomatica• Biopharma • Bioprogress N.C.P. • Biorna• Bios Fiano • Biotech 4 Società Agricola• Bio-Therapic Italia

• Biotransfertech • Bristol Myers Squibb• C4T - Colosseum Combinatorial

Chemistry Center For Technology• Cephalon• Chemi• Cryolab• Cypraea• Delta Biologicals • DP Lubrificanti• Eco Chimica Romana• Ecobioservices & Researches• Ecoil• Econsens • Elan Pharma Italia • Epitech• Eurobiology Service • Eurovix Biotecnologie Per la Vita• Explora (Costituita nel 2006)• Farmaceutici Caber• Farmaenergy• Farmafin – IFI• Farmir Farmaceutica • Genoma

• Geymonat• HBH Group• I.BIR.N.• Idi Farmaceutici• Imunomod• IRBM Science Park• Istituto Biochimico Nazionale Savio • Istituto Biochimico Italiano

Giovanni Lorenzini • Italchimici• Italdevice• Italfarmacia• Italzama• Laboratorio Genoma • Life Line Lab • Mavi Sud• Menarini Biotech• Merck Serono • Merck Sharp & Dohme - MSD • Metapharma• Micro Biological Survey• Microbo • MoLiRom - Molecular Links Rome• Molmed

• Murotherapy• Noos• Novo Nordisk Farmaceutici • Okairos• Pfizer• Polibiotech • Polifarma • Ramini• RE.D.D.

Research for Drug Development • RTC Research Toxicology Centre• Sancarlo Farmaceutici• Sanofi Pasteur MSD• Servier Italia• Sigma Tau• Syntec

- Synergistic Technologies• Takeda Pharmaceutical Company • Takis • TDA• Tecnogen • Visufarma • Wyeth Lederle• Ylichron

Table 3.11

Bioscience Technology District - DTB

The above list only includes those subjects which are active in the field of Life Sciences


Chapter 3

R&D priority areas are mainly related to pharmaceutical, biomedical device, biotechnology and ICT biotechnology, nanotechnology and agro-food for health.

The project supervisor of DTB is the financing services company of the Latium Region, Filas, which already manages advanced solutions of innovative finance (Venture Capital, specific credit lines to support innovative spin-offs and start-ups) and, in 2011 alone, has surveyed more than 350 companies (GI and SMEs) active in the above mentioned areas.

SardiniaAlthough relatively young, the industrial sector of Life Sciences in Sardinia has rapidly grown in recent years, particularly thanks to the role of catalyst of the regional science and technology park,

Polaris. With more than 60 companies and research centres incubated, Polaris is one of the largest science parks in Italy, and the first for number of biotech companies. The Park is present on the territory with two separate locations: one in Pula and one in Alghero (Porto Conte Ricerche). Both locations provide functionally integrated incubation infrastructures and services for the development of new business initiatives based on innovation.

Polaris is managed by Sardegna Ricerche, to whom the Region has entrusted the direction of the entire Biomedical and Health Technology District of Sardinia. Besides being one of the four Italian Districts dedicated to health care applied biotechnologies recognized by the State, the District is also recognised by the Italian MIUR as a “centre of excellence

• 2B1• 2C Technologies• A.O. Brotzu - Struttura complessa Diabetologia• AIMA Lab - Advanced Imaging and Movement

Analysis • Area 3• ASI - Apparecchiature Scientifiche Innovative• Axomed• BCS Biotech• Benerba• BGT Italia – Biogenomic Technology• Biodiversity• Bioduct• Bioecopest• Bio-Ker• Biomedical Research• Biotype Implant System• BT - Biomedical Tissues• Cellsurf• Centro Sclerosi Multipla - CSM• Chrono Benessere • Consiglio Nazionale delle Ricerche - CNR • Consorzio Biotecno-Mares• Consorzio El Pro

• Consorzio INBB• Consorzio Pharma Gen• CPR-Cagliari Pharmacological Research• CRS4 • Dental Konos• Enigneering • Fase 1• IBM Italia• Inpeco Tih• Intoresearch• Intrachem Production• Isogem• Kemotech• L.S.S. Life Support System• La Biol• La Maricoltura• Laboratori Di Informatica Applicata• Laboratorio ICT Per La Medicina Di Sardegna

District• Lea Nanotech• Microbiol• Mismed• MVT Group - Medical Vegetable Traditional Group• Nurex

• Nutrisearch• Ortsan• Oser• Pharma Gam• Pharmaness - Neuroscienze• Piattaforma Di Bioinformatica • Piattaforma Di Farmacologia (Stabulazione)• Piattaforma Di Genotyping E Gene Expression

Profiling • Piattaforma Di Nanobiotecnologie• Piattaforma Di NMR - Nuclear Magnetic

Resonance• Piattaforma Di Prototipazione Rapida E Medical

Devices• Porto Conte Ricerche• Prigen• Proteotech• Scimex Medical Laser System• SIC - Sardinia Intruments Center• Tech On You• Università Degli Studi Di Cagliari• Università Degli Studi Di Sassari• Virostatics• Xeniabiotech

Table 3.12

Biomedical and Health Technology District of Sardinia

of bioinformatics technologies applied to personalized medicines”.

The Sardegna Ricerche consortium operates in a number of areas including assistance to the regional Administration in the policies and actions for research, innovation and technological development; support to the creation of new entrepreneurial initiatives; provision of services to business, aimed at the introduction of new technologies and production systems, the enhancement of technical and managerial capabilities.

With reference to the sample of our survey, Sardinia hosts 22 biotech companies. Most of them (19) are pure biotech companies, which mainly originate from spin-off and start-up initiatives. 11 of them are active in the red biotech field.



CampaniaCampania was traditionally the most industrialised Region of southern Italy, although in recent decades this competitive advantage among other Regions (notably, Apulia and Abruzzo) is not as notable as it used to be. While the service segment accounts for about 73% those employed (1.1 million units), compared to 66% at the national level, the percentage of people employed in the secondary sector is only 23% (225 thousand units), compared to 30% at the national level. These data reflect a radical trend of deindustrialisation, with a drastic contraction of the regional production basis. The weakness of the industrial sector is mainly determined by the high fragmentation of the production system, although Life Sciences fall under those sectors - agro-industry, aerospace, and automotive – which are recognized as key for the development of the regional innovation system.

Actually, Campania represents the Region in southern Italy with the highest number of biotech companies (9). Most of them are pure biotech companies, active in the red biotech field, with a few originating form academic start-ups or spin-offs.

Campania Bioscience is the newly established cluster representing a large number of pharmaceutical and biomedical companies - including a number of innovative start-ups and spin-offs - and ICT companies, as well as leading universities and other institutions and research organizations which are based in this Region. The District activities shall be mainly focused on specific areas of science and technology which can truly benefit from biotechnologies, notably: nutraceutical and cosmeceutical; pharmaceutical, diagnostics and biomedical technologies.

• Altergon Italia • Arterra Bioscience• Avantech Group• Baxter• Biogem• Bioricerche 2010• Biotecnet• Biouniversa • Blue Engineering • Bouty • Bracco Imaging• BTP Tecno • Ceinge• Celi.Net • Center for Advanced Research

in Space Optics• Centro Laser • Consiglio Nazionale delle

Ricerche - CNR• Damor Farmaceutici • D’Arena

• Dermofarma Italia • Dia-Chem • Dupi Italia • Engineering Ingegneria

Informatica • Esaote • Facos Innovation • Feger • Geoslab • Giaguaro • GSN• Gvs Sud • Healthware • Icab• II Università degli Studi

di Napoli• Industrie Oleifici Biagio

Mataluni • Informatica Medica • Italsime • La Doria

• La Perla del Mediterraneo • Laboratorio Marino • Magaldi Life• Neuromed • Ocima • Okolab • Opera 21 • Penelope • Prius • Santer Reply • S.C.A.I • S.D.N.• Siena Biotech • Tecnobios • Teslab • Università degli Studi

del Sannio• Università degli Studi di Napoli

Federico II• Università degli Studi

di Salerno

Table 3.13

Campania Bioscience

ApuliaThe human health sector in the Apulia Region is characterised by a significant concentration of scientific activities, mainly related to public research institutions. However, despite the fact that the level of interaction between Academia and industry is still below the national average, Apulia is showing an overall positive trend with regards to the creation of new entrepreneurial initiatives in the red biotech field. Thanks to the Region’s long term commitment to the growth of the biotech sector, a strong research system is currently emerging, based on a number of clustering initiatives (Centres of Excellence, National and International Networks, Strategic Projects, Advanced Technology Districts), aimed at making the best of the peaks of excellence which already exist, as well as to teasing the interest of new entrepreneurs and investors.

Based on our survey, Apulia hosts a total of 9 biotech companies, 5 of which are active in the green biotech field. In full consistency with the above described scenario, start-ups and academic spin-offs play a significant role, particularly in the red biotech area.

The District H-BIO Puglia is the Regional Hi-Tech district, institutionally dedicated to Human Health and Biotechnology. Based on an “on field” analysis of the specific skills and capabilities in creating sustainable innovation networks between research and industrial structures, the H-BIO pursues specific research and innovation programmes in the following areas: Personalized Medicine (biomarkers); Advanced Therapy; Technologies and services for advanced (non-invasive) diagnostics; New production process – a specific field in which companies are encouraged to develop innovative processes and products by integrating the skills widely available in the District.


Chapter 3

• AB Analitica • Agritest • Alicebiosources • Amolab • Apuliabiotech • Biocomlab • Biofordrug• Biotecgen • Bio-ve-oil Olimpo • C.I.R.C.M.S.B. Cons. Int.

Ricerca in Chimica dei Metalli nei Sistemi Biologici

• Consiglio Nazionale delle Ricerche - CNR

• Consorzio CARSO Centro di Addestramento e Ricerca Scientifica in Oncologia

• Echolight • Exprivia • Farmalabor • I&T • I.M.S. – Istituto

di Management Sanitario • IRCCS “Saverio de Bellis”• IRCCS Istituto Tumori

“Giovanni Paolo II”• IRCCS Ospedale Casa Sollievo

della Sofferenza• Isbem • Istituto Zooprofilattico

Sperimentale della Puglia• Ital Bi Oil • Itel Telecomunicazioni • Kos Genetic

• Masmec • Merck Serono • Nanomed3d • Neurozone • Politecnico di Bari• PROMIS • Salentec• Sanofi-Aventis • Sincon • Soft Materials

& Technologies • Sparkle • Università degli Studi di Bari

Aldo Moro• Università degli Studi • di Foggia• Università del Salento

Table 3.14

H-Bio Puglia - Technological District for Health and Biotehcnology

Sicily

In recent years Sicily has promoted a greater involvement of the Regional research system in scientific networks, as well as an increasing support to those subjects who were already operating on its territory, also thanks to the adoption of a Strategy for Regional Innovation which is aimed at reducing the constraints imposed by a production structure somehow reluctant to business innovation. Although, the main sector indicators show a growth trend which is in line with that of the other regions of southern Italy. It is worth mentioning that the actions implemented at the regional level, which are aimed at the creation of a network of technological laboratories capable of transferring the research findings to the industry, have not only mitigated the structural delays of the regional research system, but also created better conditions for an easier access to the research offer for the industry itself.

According to the sample of our survey, Sicily hosts 7 biotech companies, 5 of which are active in the red biotech field, 1 in green biotech and 2 in with biotech. Besides 2 pharmaceutical companies,

• Apindustria Catania• Assonautica• Confindustria Catania• Consiglio Nazionale delle

Ricerche - CNR • Consorzio Catania Ricerche• Consorzio Ciclo Fine Vita

Imbarcazioni e Mezzi Galleggianti

• Consorzio Cometa• Consorzio Etna Hitech

• Engineering Ingegneria Informatica

• IBM Italia• InfracomIT• ISMETT• Istituto Nazionale Biostrutture

e Biosistemi - INBB• Istituto Nazionale di

Astrofisica di Catania - INAF• Istituto Politecnico del Mare

Duca degli Abruzzi

• Istituto Tecnologie Avanzate - ITA

• Italtel• Parco Scientifico e

Tecnologico della Sicilia• Regione Sicilia• Sifi• ST Microelectronics• Università di Catania• Università di Messina• Università di Palermo

Table 3.15

Technological District Micro and Nanosystems



• AAT Agroindustry - Advanced - Technologies • Advanced Technology Solution • Associazione Oasi Maria SS Onlus – IRCCS• Casa di cura Musumeci• CCT - ICT sud • Centro G.B. Morgagni • Centro Nazionale per le Risorse Biologiche• COBS - Centro Oncobiologia Sperimentale• Cometa• Consiglio Nazionale Delle Ricerche – CNR• CSATI• Digital Instruments • Energy technology• Engineering Ingegneria Informatica • Etna HiTech • Fidia Farmaceutici • Fondazione Rimed• GE Medical Systems Italia • Hitec2000 • Humanitas • Ignazio Alì • IOM Ricerca • IOM

• ISMETT- Ist. Mediterraneo per i Trapianti e Terapie ad Alta Specializzazione

• Istituto nazionale di fisica nucleare• Istituto Zooprofilattico Siciliano• L.C. LABORATORI CAMPISI • Laboratorio di Ricerche Locorotondo

del dott. N. Locorotondo • Medivis • Nerviano Medical Sciences • Parco Scientifico e Tecnologico

della Sicilia • Parco Tecnologico Padano• RPS Consulting • S.I.F.I. • San Raffaele • STMicroelectronics • Unico • Università degli Studi di Catania• Università degli Studi di Messina• Università degli Studi di Palermo• UPMC Italy • Wyeth Lederle • Xenia progetti

Table 3.16

Sicily Biomedical District

these enterprises are all pure biotech companies, both academic spin-offs and start-ups.

The two main aggregations poles in the Region are the Science and Technology Park of Sicily (PSTS) and the Technological District Micro and Nanosystems. While the PSTS has developed a complex system of relationships between universities, research centres and companies, that share the mission of enhancing the competitiveness of this Region through research, innovation, technology transfer and the wide spreading of a culture of quality and specialized

training, the Technological District Micro and Nanosystems has promoted strong pro-active entrepreneurial attitudes, as well as new models of sustainable growth, in a network logic open to national and international connections. Among the many Life Sciences research initiatives, the District is currently implementing a specific project, Hyppocrates, which is aimed at the development of micro and nanotechnology applications for human health, such as biosensors, drug delivery methods and ICT integrated systems.

In order to further allow the coordination in a broader perspective of the existing

institutional aggregations, as well as the different initiatives of the many players which are active in the Life Sciences area, the Region of Sicily is currently finalizing the constitution of the Sicily Biomedical District.

Scientific and Technological Parks

Scientific and Technological Parks (STPs) are true centres of aggregation of scientists, entrepreneurs and investors, thus allowing micro or small-sized biotech companies to access to a network of excellence and different services. As such, by representing the first level of aggregation at the territorial level, STPs play a key role in successfully projecting the research and innovation network at a higher level, up to broadly structured systems, such as Regional and National clusters.

Italy counts more than 30 STPs, 14 of which are active in biotechnology. Besides acting as communication hubs between knowledge and business, aimed at increasing a productive dialogue between scientific research and the industry, the majority of STPs provides the incubating infrastructures and services for the growth of new enterprises innovatively, functionally and structurally based within their territory.

Table 3.17 gives an idea of the STPs operating in Italy and of the biotech companies located here, while Figure 3.1 shows the geographical location of STPs and incubators.

Incubators

STPs


Chapter 3

Scientific and Technological Parks - Incubators Total number of companies Number of biotech companies*

AREA Science Park (Trieste) 71 9

Bioindustry Park Silvano Fumero (Ivrea) 38 22

Campania Innovazione (Naples) 16 0

Friuli Innovazione (Udine) 16 2

Parco Scientifico Romano (Rome) 30 7

Science and Technology Park of Sicily (Catania) 9 6

Parco Tecnologico Padano (Lodi) 13 7

Pont-tech (Siena) 20 1

Sardegna Ricerche (Cagliari) 52 19

Science Park RAF (Milan) 4 2

Toscana Life Sciences (Siena) 20 12

VEGA Park (Venice) 200 3

Insubrias Biopark (Varese) 20 9

Fondazione Filarete (Milan) 6 3

OpenZone (Bresso – Milan) 7 4

IFOM-IEO (Milan) 2 1

Table 3.17

Number of companies located within STPs or incubators (Source: Ernst & Young)

Figure 3.1

Main Italian STPs and incubators (Source: Ernst & Young)

* within 2013 Report sample

Science Park RAF

Sardegna Ricerche

Bioindustry Park

Parco Tecnologico Padano

VEGA Park

Friuli Innovazione

Area Science Park

Science and Technology Park of Sicily

Insubria Biopark

Pont-tech

Toscana Life Sciences

Parco Scientifico Romano

Campania Innovazione

OpenZone-Bresso

IFOM-IEOFondazione Filarete


This fact, which was somehow anticipated in the previous report, further confirms a significant trend: the red biotech frontier is still large, but with a tendency to shrink and a number of true challenges for those companies that are successfully competing in it.

The total number of enterprises active in red biotech is 235 (Table 4.1), 84% of which is made up of companies dedicated exclusively to human health, while the remaining 16% consists of multi-core companies, namely companies operating

Red biotech

The firms active in biotechnology applied to human health amount to 58% of the total number of biotech companies, but similarly to previous years have a predominant effect both on the overall turnover and the R&D total investments of the entire Italian biotech industry. The number of red biotech companies is lower when compared to the 2012 figure: the loss of 14 companies has not been offset by the 8 new entries. Moreover, 7 firms are no more involved in red biotech activities, while 3 have expanded their business in this field.

Table 4.1

Key data relating to the red biotech sector, details on OECD and pure biotech companies (Source: Ernst & Young)

The red biotech sector represents the new frontier of medicine. New diagnostic systems and innovative therapeutic approaches based on biotech methods are the future response to a variety of unmet medical needs. In every country Life Sciences are an extremely relevant area of innovation, and in Italy is no less. The 359 projects in the Italian biotech companies’ pipeline, almost 60% of which are in late stage development, are the very clear evidence of the levels of excellence and competitiveness of Italian research.

in more than one area of application. Once again, the majority of multi-core companies is operating in the GPET field, intensifying the close connection between these two areas of R&D.

The analysis by type of company reveals how the majority of the sample of red biotech is represented by pure biotech companies (60%), while the Italian subsidiaries of multinational companies make up 19%, other Italian biotech companies 15% and the Italian pharmaceutical companies 6% (Figure 4.1).


Red biotech 2012 Report* 2013 Report



Total turnover € 6,446 million € 1,081 million € 6,766 million € 1,114 million

Total investment in R&D € 1,635 million € 490 million € 1,691 million € 496 million

Total R&D employees 5,478 1,631 5,436 1,543


The 2011 total turnover of the red biotech segment is € 6,766 million, showing a slight increase (5%) compared to 2010. The main part of revenue is attributable to the Italian pharmaceutical companies and to multinationals’ subsidiaries in Italy: representing 25% of the number of companies, they constitute 83% of total sales, compared with 17% originating instead from pure biotech companies (Figure 4.2). Once again, the red biotech sector maintains its leading role in the entire biotechnology industry, accounting for 95% of the total turnover.

With reference to the companies’ geographical distribution, the northern and central Italian regions are those in which the largest number of enterprises active in the red sector is concentrated (Figure 4.3). Lombardy remains the Italian region with

the largest number of companies active in biotechnology for human health (86), followed by Latium (25), Piedmont (24) and Tuscany (23). Moreover, Lombardy and Latium are the most affected by the sample changes, with a reduction of 7 and 4 firms respectively. Among the 8 new companies, 3 were in Lombardy, 2 in Emilia Romagna, and 3 in Tuscany, Latium and Piedmont.

With regard to their origin, 38% of companies operating in the red biotech field originate from start-ups, 20% from Italian subsidiaries of multinational companies, 18% from academic spin-offs, 7% from Italian pharmaceutical companies, and 8% from industrial spin-offs or spin-outs. (Figure 4.4). The considerable amount of start-ups should not be surprising since the majority of the sample is made of pure biotech firms, most of which are precisely

Figure 4.1

Red biotech companies: analysis by type (Source: Ernst & Young)

Figure 4.2

Red biotech companies: analysis of the 2011 turnover by type (Source: Ernst & Young)

4Chapter 4

Figure 4.3

Red biotech companies: analysis by geographical distribution (Source: Ernst & Young)

n > 50n 11 - 50n 5 - 10n < 586

243

0

1

1

4

2

1 1

1

5

5

0

13

10

19

23

25

11

19% 79%81% 21%60%17%

6% 4%15% 0%

n Multinational subsidiaries in Italyn Italian pure biotech companiesn Other Italian biotech companies

n Italian-capital companiesn Italian pharmaceutical companies

n Multinational subsidiaries in Italyn Italian pure biotech companiesn Other Italian biotech companies

n Italian-capital companiesn Italian pharmaceutical companies


those Young Innovative Companies that contribute to the flourishing of Life Sciences innovation in Italy.

Strongly influenced by the reality of pure biotech companies, the analysis by size (Figure 4.5) shows a plurality of small and micro firms. Indeed, 65% of companies operating in the red area have fewer than 50 employees, while 18% are of medium size (between 50 and 250 employees) and 17% are big companies (more than 250 employees).

The entire biotech industry shows in 2011 an increase of the R&D investment, as seen in the previous chapter. The total amount is influenced by the red biotech sector contribution, which represents 92%. With € 1,691 million, representing 25% of their turnover, red biotech companies are providing significant resources in order to extend and further develop their product pipeline, thus strengthening their competitiveness in the global innovation arena.

When breaking down the R&D investments per type of company, pure biotech companies represent 29% of total (Figure 4.6), compared to 70% of pharmaceutical companies (37% Italian pharmaceuticals, 33% Italian subsidiaries of multinationals

Red biotech

companies), but the incidence of their investment on turnover is higher (45%) compared to that of pharmaceutical companies (21%).

In order to support their R&D activities, red biotech companies draw upon different sources of funding. Although one third of the sample claimed to use self-financing forms, as shown in Figure 4.7, almost 28% of the companies that responded to the questionnaire said that they had received public funding in 2011, 20% had recoursed to debt and 13% to Venture Capital or Private Equity funds. Less common however are IPOs (2%) and post-IPOs (2%), as well as strategic alliances (1%) and convertible debt (1%).

From all of the questionnaires it emerges that companies face a clear difficulty in raising adequate financial resources from both private and public funding, although said resources are a prerequisite for pursuing long term research objectives. Provocatively, a number of firms have stated that nowadays an innovative idea is no longer sufficient to attract investors, because of risk aversion of financial institutions and limited availability of capital, compared to the total number of candidates seeking to receive funds.

Figure 4.4

Red biotech companies: analysis by origin(Source: Ernst & Young)

9%

18%

7%

8%

38%

20%

Figure 4.7

Red biotech companies: analysis of financing sources in 2011 (Source: Ernst & Young)

35%

30%

25%

20%

15%

10%

5%

0%Grants

28%

Self-financing

33%

VC/PE

13%

Debt

20%

Alliances

1%

IPO

2%

Post IPO

2%

Follow-on offering

0%

Convertible debt

1%

PIPE

0%


Figure 4.5

Red biotech companies: analysis by size(Source: Ernst & Young)

40%

25%

18%

17%

Figure 4.6

Red biotech companies: analysis of the 2011 R&D investments by type (Source: Ernst & Young)

33% 67%

29%

37%

1%

n Multinational subsidiaries in Italy n Italian-capital companiesn Italian pure biotech companies

n Italian pharmaceutical companies

n Other Italian biotech companies

n Start-up n Multinational subsidiary in Italyn Academic spin-off n Italian pharmaceutical companyn Industrial spin-off n Other or spin-out


Chapter 4

Pure biotech and pharmaceutical companiesIn line with our methodology, the distinction between pure biotech companies and pharmaceutical companies is based on their core business. Pure biotech companies are focused on the development of new therapeutic or diagnostic products exclusively based on biotechnology, whilst for pharmaceutical firms, although included in the broader OECD definition of biotech companies, the development of biotech drugs is complementary to the development of more traditional synthetic products.

Moreover, while pure biotech companies are heavily engaged in the initial phases of the R&D process (particularly, discovery and pre-clinical development), pharmaceutical companies are mainly active in the subsequent clinical and regulatory stages leading to the commercialisation of the product, which are generally managed under licensing agreements or sale of patents. Such a complementary

collaboration, which is typical of the red biotech sector, allows to make the best of the specific expertise, capabilities and strengths of the pure biotech companies, on one hand, and of their industrial partners, on the other, in the framework of dedicated agreements.

This flow of know-how and sharing of expertise and resources is the true strength of the sector, and leads to the creation of extensive networks and clusters among all potentially involved players, including universities, pure biotech and big-pharma companies, national and supranational regulatory and government bodies, and the financial community. Chapter 3 has already stressed the importance of clusters for the growth of the Life Sciences industry.

Although our analysis does not show any dramatic changes with respect to the previous years’ scenario, it still provides an important picture of the market and its potential evolution.

With particular reference to the origin of companies, half of the pure biotech companies are formed as start-ups,

Figure 4.8

Red biotech: analysis by origin, comparison between Italian pure biotech and pharmaceutical companies (Source: Ernst & Young)

Figure 4.9

Red biotech: analysis by location, comparison between Italian pure biotech and pharmaceutical companies (Source: Ernst & Young)

Figure 4.10

Localization of micro and small Italian pure biotech companies and STPs (Source: Ernst & Young)

n > 30n 15 - 30n 5 - 15n < 5 STPs biotech

n Independent headquartern Universities/Clinical Centres/Research institutesn Science park or incubator

Italian pure biotech companies Italian pure biotech companiesPharmaceutical companies Pharmaceutical companies

56%

24%

20%

4%8%

88%

69%

6%2%

23%

50%

11%

11%

2%

26%

n Start-upn Multinational subsidiary

in Italy

n Academic spin-offn Italian pharmaceutical company

n Industrial spin-off or spin-out

n Other


Red biotech

26% as academic spin-offs and 11% as industrial spin-offs or spin-outs. Conversely, 69% of pharmaceutical companies are subsidiaries of multinationals groups, and 23% Italian pharmaceutical companies (Figure 4.8).

With regard to their location, almost all of the pharmaceutical companies have autonomous headquarters (88%); more than half of the pure biotech companies operate within science parks and incubators, while 20% at universities or within clinical centres or research institutions (Figure 4.9). Once again, the analysis of the location of micro or small pure biotech companies shows a clear correlation between their size and their proximity to science parks or incubators (Figure 4.10). Indeed, the regions with the highest concentration of micro and small pure biotech companies, such as Lombardy, Piedmont, Tuscany, Veneto, Friuli Venezia Giulia, Latium and Sardinia, are those which host science parks or incubators.

As expected, the analysis by size shows that the Italian pure biotech companies are mostly of micro or small size (81%), while the majority of pharmaceutical companies (76%) are big or medium sized (Figure 4.11).

Furthermore, the relationship between employees in R&D and total employees (Figure 4.12), shows that the Italian pure biotech companies have a percentage of R&D employees on total (21%), which is higher than that of pharmaceutical companies (10%).

Revenue forecasts for the financial year 2012 are optimistic: both Italian pure biotech companies and pharmaceutical companies responding to the questionnaire do not expect a contraction of total turnover (Figure 4.13). The situation envisaged by pure biotech companies is promising: 28% expect an increase in turnover, 70% a consolidation of 2011 results and only 2% a drop. Within pharmaceutical companies, 19% of them expect revenues to be in line with the previous year, while only 5% expect a decline; 76% are confident in an increase of their turnover. If the “tip” of the companies in our survey is reliable - as proved to have been in the past years - their optimistic feeling would hint at a strong and positive prospect for the future of the Italian red biotech industry, even if the Italian pharmaceutical market is slowing down.

The red biotech company’s activities were segmented based on the different fields of application according to Ernst & Young methodology (see Chapter 9 – Methodology – for definitions).

Figure 4.11

Red biotech: analysis by size, comparison between Italian pure biotech companies and pharmaceutical companies (Source: Ernst & Young)


6%

13%

30%

51%

9%

15%

25%

51%

Figure 4.12

Analysis of total employees and R&D employees, comparison between Italian pure biotech and pharmaceutical companies (Source: Ernst & Young)

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

90%79%

n Other employees n R&D employees

Italian pure biotech companies



Pharmaceutical companies



10%21%

Italian pure biotech companies Pharmaceutical companies

Figure 4.13

Red biotech: estimated turnover for 2012 (Source: Ernst & Young)

100%90%80%70%60%50%40%30%20%10%

0%

13%

n Contraction n Stable n Growth

19%

76%

70%

28%

2% 5%


Chapter 4

Diagnostics

Innovation in the red biotech sector is also addressed through biotechnological diagnostics. In a scenario characterised by limited resources, new tools will allow managing in a more efficient way the emerging issues, in particular, patient management and cost cutting. A fast and preventive diagnosis of diseases has, in fact, a dual impact: the benefits of an early and precise diagnosis are tangible not only for patients (immediate intervention and medicine personalised on patient characteristics), but also for the entire economic pattern. Healthcare expenditure is under pressure and decreases in almost all developed countries, while high quality of care is another constraint; an imperative, therefore, is to predict as soon as possible the disease of the patient, in order to avoid the worsening of his health conditions and the consequent higher expenses the entire system would unavoidably bear.

The number of companies which are active in the biotech diagnostic field, is 63

(27% of the entire red biotech segment). The large majority of them (73%) are pure biotech companies, whilst multinationals’ subsidiaries in Italy and other Italian biotech companies both account for 13% of the sample (Figure 4.14).

Once again, the Italian pure biotech companies contribute to the most part of the turnover which stands at € 656 million. As regards investments in R&D, these are estimated at € 178 million, while the number of employees dedicated to research activities amounts to 705 units.

Analysing the size of companies, more than 74% have less than 50 employees and consequently fall within the category of micro or small enterprises, while more than 10% are classified as big.

As regards the geographical distribution of diagnostic firms, little has changed with reference to the 2012 comparable sample: the north area and centre area still remain the most attractive territories (Figure 4.15)

73%

13%

13%1%

Figure 4.14

Diagnostic companies: analysis by type (Source: Ernst & Young)

n Italian pure biotech companiesn Multinational subsidiaries in Italyn Other Italian biotech companiesn Italian pharmaceutical companies

Figure 4.15

Diagnostic companies: analysis per geographical distribution (Source: Ernst & Young)

0 5 10 15 20 25

Lombardy

Tuscany

Piedmont

Friuli Venezia Giulia

Sardinia

Veneto

Campania

Sicily

Emilia Romagna

Latium

Marche

Molise

Calabria

Trentino Alto Adige

2

4

4

5

2

2

2

2

1

1

1

6

10

21


Red biotech

New frontiers for Diagnostic Imaging

Molecular Imaging is the new frontier of Diagnostic. Indeed, the convergence of preclinical knowledge, clinical imaging and biotech culture, is switching from the classic non-specific Media of Contrast, to Diagnostic Probes, which are true “biotech diagnostics” specific for a given disease.

In a diagnostic probe the biotech component gives the molecule the ability to convey the signal with “molecular” precision to the area of the body to be detected with the imaging techniques in use (MRI, Ultrasound, Nuclear and Optical).

Today, monoclonal antibodies, fragments thereof, or macromolecules of various sizes, connected through a suitable linker, act as carriers with high tissue specificity for paramagnetic complexes, micro and nano bubbles, and radioactive or fluorescent molecules. Obviously, the specificity of the biotech component of the molecular probe must correspond to a high efficiency of signal in all imaging modalities considered.

As a matter of fact, we are in front of a mandatory path of technological improvement that is now beginning to beat its fruits, and in which Italian research is very active and that many companies - first of all, Bracco Imaging - have made their own.

At an exploratory level, all the modalities of diagnostic imaging have been considered; the most promising results were obtained with ultrasound, within which micro bubbles linked to a peptide are now under clinical development for the early diagnosis of prostate cancer.

At the same time, interesting preclinical results are starting to be obtained conveying, through specific integrins, fluorescent molecules that allow the physician to verify the complete removal of the tumour: an approach that opens up a new line of application defined as “interventional imaging.”

Finally, as regards Magnetic Resonance Imaging where, in the past, a high spatial resolution of the images corresponded unfortunately to low sensitivity, it is now possible to obtain the first images able to reveal pathological alterations of cellular metabolic pathways, by identifying marked 13C and hyperpolarized biotech molecules.

These are just some examples of a rapidly changing world, where new knowledge will allow safe and early diagnosis, for the benefit of patients and their Quality of Life, as well as a significant savings for the healthcare system through a more careful management of therapies.

Fulvio Uggeri - Head of Bracco Research Centre, Milan


Chapter 4

Advanced Therapies

Healthcare biotechnology has a huge impact for patients, with reference not only to those drugs and diagnostics which are developed and manufactured by using biotechnology methods and processes, but also to the use of gene or cell therapies and tissue-engineered products.

Advanced Therapy medicinal products are the basis for a new revolutionary approach to the treatment of various diseases or injuries, as well as for an extremely innovative and challenging market for the Italian biotech industry.

The use of genes, obtained in the laboratory, bringing together DNA from different sources, can treat a variety of diseases including genetic disorders and cancer. Cells and tissues manipulated to

adapt their biological characteristics to those of patients can even regenerate or replace tissue. But, the field is still producing new forms of biodegradable devices, thus reducing the production impacts on the environment. Interesting perspectives are also emerging from the use of stem cells in medicines which could treat Parkinson’s disease, multiple sclerosis, heart disease, liver disease, spinal cord damage or cancer. In this latter case, while the effectiveness of stem cells has been proven there is still uncertainty over the possible drawbacks of their use as drugs1.

The companies developing products for Advanced Therapy (AT) are 39, representing 17% of the total number of red biotech firms. 56% of these are Italian pure biotech companies, 8% Italian pharmaceuticals, 21% Italian subsidiaries of multinational companies and 15% other Italian biotech (Figure 4.16). In comparison to last year,

Figure 4.17

Advanced Therapies companies: analysis per geographical distribution (Source: Ernst & Young)

0 2 4 6 8 10 12 14

Lombardy

Emilia Romagna

Latium

Tuscany

Piedmont

Veneto

Friuli Venezia Giulia

Campania

Sicily

Liguria

Sardinia

7

12

2

3

7

2

2

1

1

1

1

as many as 3 firms have started research projects in this innovative field, compared to 4 that are no longer involved.With regard to the size, more than half of the companies that operate in AT falls under the category of micro and small enterprises (64%).

Considering the total turnover of the 39 companies active in AT, this amounts to € 1,040 million, with an 18% increase over the previous year. R&D investments account for € 358 million, and R&D employees for 1,817 units.

The analysis by geographical distribution (Figure 4.17) further confirms that Lombardy is the region with the highest number of AT companies (12), immediately followed by Latium (7) and Emilia Romagna (7).

1.Source: www.ema.europa.eu

56%21%

15%

8%

Figure 4.16

Advanced Therapies companies: analysis by type (Source: Ernst & Young)

n Italian pure biotech companiesn Multinational subsidiaries in Italyn Other Italian biotech companiesn Italian pharmaceutical companies


Red biotech

Advanced Therapies: the next technological revolution

The growth of health care costs related to treatment of diseases that still afflict humanity has now reached in some countries unsustainable levels. In the U.S., for example, spending on health care has exceeded 17% of GDP, while in Italy we spend about 9.3% of GDP, of which about 7.1% are of public funds, well below the OECD average and among the lowest levels of the EU-15. Italy would thus have the opportunity to spend not only better but also a little more, for example by investing in prevention, research and basic infrastructure and technological modernisation, especially in the area of Information and Communication Technology (ICT).

While investment in prevention allow savings which are three times higher than the future costs of prevented diseases, Advanced Therapies offer the opportunity to develop effective therapeutic strategies. The central objective is to prolong the healthy life expectancy in the absence of chronic degenerative diseases, which today are associated not only with a lowering of the quality of life, but also with an increase in the unsustainable economic costs that are now associated with them.

The recent biotech revolution has opened new horizons in the fields of personalised medicine, treatments for defined sub-groups of patients, molecular biological therapies, tissue engineering, gene therapy, cell therapy. In this direction, Advanced Therapies and regenerative medicine could be the next big technological revolution, after those related to the development of software, communications and renewable energy.

Today, Italy can boast true excellences in the field of regenerative medicine and Advanced Therapies, which I have had the privilege to interact and to work with. Biotech companies such as Holostem Advanced Therapies and MolMed, both of which are fully dedicated to the development of cell processing technologies and to the production and distribution of cell and gene therapy, are starting to emerge.

On the academic front, a growing number of centres of excellence are offering new opportunities for collaboration and synergies, both in terms of public-private and international partnerships, also thanks to the development of Telescience networks which surmount any geographic barrier to scientific collaboration.

New therapeutic horizons in the fight against cancer will be possible thanks to targeted and selective approaches, such as the techniques of radioisotopic receptor therapy developed at the European Institute of Oncology - EIO of Milan. The Istituto Mediterraneo per i Trapianti e Terapie ad Alta Specializzazione – ISMETT, and the Ri.MED foundation in Palermo are developing advanced therapy protocols aimed at restoring the function of tissues, organs or systems affected by functional insufficiency, through stem cell progenitors or functionally activated differentiated cells.

Adoptive immunotherapy already enable the use of virus-specific cytotoxic T lymphocytes and natural killer (NK) cells activated for the treatment of viral

Camillo Ricordi, M.D. President, The Cure Alliance - Director, Diabetes Research Institute and Cell Transplant Center - University of Miami, Florida


Chapter 4

infections in immunocompromised patients and for the treatment of various types of tumours. In fact, cytotoxic T cells have already been used in clinical trials to treat Epstein-Barr Virus infections (EBV), post-transplant lymphoproliferative disorder (PTLD) and Cytomegalovirus (CMV) resistant to antiviral drugs, while similar techniques – based on the use of NK cells - are in the experimental phase, to prevent the recurrence of hepatitis C (HCV) following liver transplantation.

Tissue regeneration and repair protocols have already been tested in clinics through the use of in vitro expanded progenitor cells of mesenchymal stem cells, such as those of placental origin or derived from adipose tissue. Transplantation of insulin-producing cells (pancreatic islet transplantation) for the treatment of the most serious type 1 diabetes forms are now on the point of being registered by the FDA, in the U.S., and have already been approved in Canada, England and Switzerland. Italian centres engaged in this direction, associated with the Diabetes Research Institute (DRI) Federation (www.diabetesresearch.org) and The Cure Alliance (www.thecurealliance.org), include the San Raffaele and Niguarda Hospitals of Milan, the ISMETT Institute of Palermo, the San Raffaele Pisana Hospital of Rome and the Saint Orsola Hospital-University of Bologna. New protocols of Immune tolerance induction are now also focusing on the possibility to correct autoimmune pathologies and to carry out organ, tissue and cell transplants without having to resort to the chronic use

of immunosuppressive drugs. Collaboration of academic centres, such as the DRI Federation and The Cure Alliance, with Italian industrial partners, such as Dompé and Giuliani Pharma, are enabling the development of new advanced therapies in the field of diabetes, inflammatory and autoimmune diseases. These are just a few examples of a growing Italian reality, networking with the rest of the world.

However, despite the great opportunities for innovation in the field of Advanced Therapies and regenerative medicine, there are still major obstacles to the timely development of new treatment, which derive from the ever-growing complexity of regulations - with the relevant implications in terms of cost and time - which are becoming more and more unsustainable not only for the academic centres, but also for the biotech SMEs.

Unfortunately, this situation is now also a deterrent to invest in the sector, and one of the major challenges that scientific, industrial and regulatory communities will have to face and solve together. Patient safety, as regards the fundamental guidelines, must remain central, but risk reduction cannot be the only decisive element. We should give careful consideration also to the costs associated with the slowing down of the development of care. I do not only mean economic and financial costs, but also those related to mortality and morbidity that have an impact on all of us, for each year during which the development of adequate therapeutic solutions is slowed down.


Red biotech

Therapeutics: focus on the Italian pipelineAnalysis by development phase

Similarly to what observed in other countries, human healthcare is the spearhead segment of the Italian biotech industry, with an extremely significant number of companies heavily investing in the development of highly innovative drugs. In particular, with reference to the 256 red biotech companies of our sample, we could analyze the pipeline of 58 pure biotech companies, together with the ones of 7 Italian pharmaceutical companies, 18 multinationals’ subsidiaries in Italy, and 4 other Italian biotech companies, for a total of 87 firms.

Overall, the pipeline developed by Italian pure biotech companies boast 136 products under development, of which 77 are in the preclinical phase (56%), 17 in Phase I (13%), 32 in Phase II (24%) and 10 in Phase III (7%). In addition, there are 55 early stage research projects, which are still in the discovery phase (Figure 4.18). Two new drugs entered Phase III, and 10 Phase II, in 2012.

Drug development is a very lengthy and risky process. Besides the time needed to go from the discovery phase to marketing approval2 (10-15 years), only 1 molecule out of 10,000 succeeds in reaching clinical development, and only one out of 10 molecules that have reached the clinical phase, succeeds in entering the market. Therefore, a decrease in the number of projects is generally observed, the closest you get to market. A trend not observed for Italy (Figure 4.19).

This different development approach is justified by the evolution of the business model adopted by the Italian companies, and by the lack of attractiveness of the Italian regulatory and administrative context with regards to the earliest stages of clinical development.Indeed, beyond a clear tendency for which discovery and preclinical projects are more and more often externalized, with the direct involvement of academic or public research centres, it is almost a fact that a substantial number of projects “expatriate” once they have concluded the preclinical phase, with Phase I clinical trials being outsourced to foreign specialized clinical institutions or CROs. Despite our Country represents today, at European level, a point of reference to carry out clinical Phase II and III, Italy needs to strengthen its competitiveness even with regard to Phase I clinical trials, whose timely management is still conditioned by a number of cultural, regulatory and administrative hurdles. At this purpose Assobiotec has signed an agreement with the Italian Medicines Agency - AIFA, and the National Institute of Health – ISS, aimed at increasing knowledge and scientific competences in the specific area of Phase I studies, as well as at stimulating biopharmaceutical companies to carry out early stage clinical activities in Italy. With particular reference to biotech projects, the said Agreement provides dedicated fast tracks with regard both to evaluation process and reimbursement, for those companies that are willing to carry out Phase I and II in Italy, together with tax duty exemptions for those firms that do not yet have any product on the market.

Extending the sample of our analysis to those biotech companies that fall under the broader OECD definition,

2. DiMasi JA. New drug development in the United States: 1963–1999. Clin Pharmacol Ther 2001; 69 (5): 286-96


Chapter 4

Italian-capital companies

Pure biotechcompanies


Other biotech companies

Foreign-capital companies

Totalproducts

Preclinical 77 6 7 7 97

Phase I 17 7 1 25 50

Phase II 32 11 0 64 107

Phase III 10 5 0 90 105

Total 136 29 8 186 359

Table 4.2

Product analysis by development phase and type of company (Source: Assobiotec)the Italian pipeline boasts a total of 359 projects (Table 4.2), including 186 from foreign-capital companies and 173 from Italian-capital companies (136 by pure biotech, 29 by Italian pharmaceuticals and 8 by other Italian biotech companies). Additional 67 projects are in the discovery phase.

Compared to the 319 products recorded last year, there is an increase both at the preclinical level - with 17 new projects which originate from pure biotech companies - and at the clinical level - with 23 new products deriving from the activities of multinationals’ subsidiaries in Italy (+43), Italian pharmaceutical companies (-2), Italian pure biotech companies (-16) and other Italian biotech companies (-2).

These figures are even more relevant if we consider that our analysis was limited to those products and projects that are the result of Italian research. In fact, even in the case of pharmaceutical companies with foreign capital, we only considered those products and projects originated from R&D activities mainly conducted in Italy.

Once again we are in front of a clear division and a complementarity of roles: on one hand pure biotech companies are more focused on early-stage research and preclinical development, with almost 70% of their projects ranging from discovery to Phase I; on the other hand foreign-capital companies are almost exclusively involved in late-stage clinical and regulatory development activities, with 82% of their projects concerning Phase II and III trials. This latter finding further confirms the level of excellence and competitiveness achieved by our Country in clinical trials.

0 50 100 150 200

Figure 4.19

Product analysis for R&D stage, pure biotech companies* (Source: Assobiotec)

60%

50%

40%

30%

20%

10%

0% Preclinical Phase I Phase II Phase III

* In grey an approximation of the theoretical drug’s development kinetics

Figure 4.18

Product analysis by development phase and type of company (Source: Assobiotec)

Other

Italian pharmaceutical

companies

Pure biotech companies



n Preclinical n Phase I n Phase II n Phase III


Red biotech

Analysis by therapeutic area

Once again, oncology remains the therapeutic area with the largest number of projects (40%, considering also discovery activities). This percentage reflects the fact that the Italian red biotech companies’ investments are clearly oriented to key medical needs, namely to those disease, such as cancer, which still lack adequate treatments. (Figure 4.20 and Figure 4.21). In addition to oncology, the Italian biotechnology pipeline also includes a number of projects in neurology (13%), as well as in the area of inflammation and autoimmune disease (10%), including Rheumatoid Arthritis, Lupus Erythematosus and Psoriasis.

It is also worth mentioning, as a further proof of the Italian leading position in the field of gene therapy, the entry in Phase II of a new product for the treatment of ADA-SCID - a genetic disease that damages the immune system and causes severe combined immunodeficiency - developed by GSK in the framework of a cooperation agreement with the Telethon Institute - TIGET and the San Raffaele Hospital (HSR) in Milan. Based on the protocols developed by the HSR-TIGET scientists, it is possible to restore the proper function of cells thanks to the replacement of the correct form of the mutated gene.

Figure 4.21

Product analysis by therapeutic area and by type of company – the discovery phase is included (Source: Assobiotec)

n Italian pharmaceutical companies

n Italian pure biotech companies

n Multinational subsidiaries in Italy

n Other Italian biotech companies

180

160

140

120

100

80

60

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Figure 4.20

OECD biotech companies: product analysis by therapeutic area and development phase (Source: Assobiotec)

0 20 40 60 80 100 120 140 160 180

Respiratory diseases

Gastrointestinaldiseases

Musculoskeletaldiseases

Dermatology

Cardiovascular diseasesand hematology

Infectious diseases

Metabolic, hepatic and endocrine diseases

Inflammatory andautoimmune diseases

Neurology

Oncology

n Preclinical n Phase I n Phase II n Phase III


Chapter 4

Analysis by type of products

Approximately 46% of the Italian pipeline’s projects (including discovery) are biotech drugs, or biopharmaceuticals (Figure 4.22) including, by definition, monoclonal antibodies (25%), recombinant proteins (13%) and Advanced Therapy (8%). Indeed, the percentage of biopharmaceuticals has progressively increased from 35% in 2009 up to 46% in 2012 - whilst the contribution of small molecules moved gradually from 46% to 31%. Accordingly, the number of regenerative projects have also increased (+30%), as well as the number of monoclonal antibodies currently developed in Italy, which represent more than 40% of the foreign capital companies pipeline.

Orphan Drug

Rare diseases are serious diseases, almost all of genetic origin, that affect a small number of individuals (5 out 10,000, in Europe), and most of which do not yet have an effective treatment. For this reason, the EU authorities have introduced a specific regulation that stimulates the development of new therapeutic products for rare diseases, by establishing the criteria for Orphan Drug labelling, and providing for dedicated fast tracks and pricing-reimbursement policies, aimed at rewarding orphan drug companies.

Many biotech drugs fall under the definition of orphan drugs. Based on our analysis, the number of products that have received

Table 4.3

Analysis of orphan drug designations granted (Source: Assobiotec)

at least one Orphan Drug Designation either from the U.S. or the EU regulatory Authorities, has increased by more than 50%: 49 designations in 2012 vs. 32 designations in 2011 (Table 4.3). This increase is also due to the higher number of orphan drug projects which originate from the 23 companies active in this field. Moreover, the number of designations obtained by foreign capital companies has reached 26 (+160%),and that of the projects which obtained a dual designation has reached 34 (+80%).

With regard to the therapeutic areas, 60% of the products have oncological indications whilst 12% inflammation and autoimmunity, followed by neurology, metabolic disease and infectious disease.

Figure 4.22

Analysis of product candidates by type (Source: Assobiotec)

n Small moleculesn Recombinant proteinsn Natural productsn Regenerative medicinen Gene therapy

n Monoclonal antibodiesn Peptidesn Cell therapyn Vaccinesn Other

31%

25%

6%

5%

4%2%

2% 8%

13%

4%

Orphan Drug DesignationDrugs for the treatment of rare diseases can receive the label of Orphan Drug on the basis of the following criteria, which have been defined at the UE level: • the product is intended for an indication with a prevalence of no more than 5

out of 10,000 people, in the European Union;• the disease is fatal, seriously debilitating, or a serious and chronic condition;• no satisfactory method of diagnosis, prevention or treatment has already

been authorised in the European Union. In the case a method is already available, the new drug will have to prove that it provides a considerable advantage compared to the already existing drug.

EMA FDA Both Total


Pure biotech companies 4 1 12 17

Pharmaceutical companies 1 0 5 6


Italian subsidiaries of multinational companies 5 4 17 26

Total 10 5 34 49


Red biotech

Advanced Therapy

The scientific community has been recently focusing on research and development of a new class of biopharmaceuticals, based on cells, gene and tissues that have been proved effective in treating a variety of diseases.

Table 4.4

Analysis of Advanced Therapy products by type and development phase (Source: Assobiotec)

Cell therapy Gene therapy Regenerative medicine Total

Discovery 1 1 2 4

Preclinical 8 5 4 17

Phase I 0 1 0 1

Phase II 5 1 0 6

Phase III 3 0 1 4

Total 17 8 7 32

These drugs have very special characteristics and, because of them, their production and clinical testing are tightly regulated at the international level. Specific criteria and selective acts are imposed in order to ensure the safety of the final product.

Since Advanced Therapies are developed substantially through collaboration between the hospital where the biological sample is taken, and the private laboratory where it is processed before returning to the patient, these represent a cornerstone of translational medicine.

The number of projects originating from the 12 biotech companies active in the field of Advanced Therapy is 32, equally divided between allogeneic and autologous therapies. Among these, 17 are cell therapies, 8 gene therapies and 7 are products for Regenerative Medicine. 4 of them have obtained an Orphan Drug Designation, including 3 products in Phase III and 1 in Phase II. Half of these products have oncological (25%) and dermatological (25%) indications.

Rare Diseases, a priority in the field of Public Health

The European Regulation introduced in 2000, defines as “rare” such diseases that affect fewer than 5 in 10,000 people. While this number may seem small, it is estimated that there are about 29 million people suffering from a rare disease, in the 27 Member States of the European Union.

Rare diseases are often chronic, progressive, degenerative pathologies, characterised by a high morbidity and mortality. When more than 22 years ago I embarked upon the path of research into rare diseases, the basic motivation was to participate in a kind of “collective scientific paternity”, that could give therapeutic hope to these “orphan” patients. Since then an adventure has begun that has led to the development and approval of what can be defined as the first therapy for orphan diseases, the enzyme imiglucerase for curing Gaucher disease; an adventure that has transformed the lives of many patients - as well as mine - both from a professional and personal viewpoint. I am deeply convinced that research into rare diseases is a

priority for Public Health, not only due to undoubted ethical reasons, but also because the pathophysiological mechanisms responsible for rare diseases have led to huge advances in the knowledge of other syndromes with a much higher prevalence. Speaking of today, many patients are benefiting from the investments made in research on rare diseases. Difficult words as idursulfase, alglucosidase alfa, eculizumab, clofarabine, just to name a few, represent a valid therapeutic response to diseases such as mucopolysaccharidosis type II, Pompe disease, paroxysmal nocturnal hemoglobinuria, acute lymphoblastic leukemia in children. They are words that mean a new life expectancy for these patients, and a hope for many others who cannot even give a name to the therapy for the disease from which they suffer.

What to expect in the near future? Not only a therapy, but also a cure; thanks to gene therapy this is now conceptually possible, at least for some diseases. The commitment of all of us, “friends of rare diseases”, is to make this hope a reality.

Carlo Incerti, M.D.Senior Vice President, Head Genzyme Global Medical Affairs - Genzyme, a Sanofi Company


Chapter 4


Green biotech

Although the Italian green biotech industry has not experienced big upheavals in 2011, a number of initiatives such as the recently established Agro-food national cluster - CL.A.N. provide clear evidence the segment can be further exploited with specific reference to the improvement of the nutritional value of animal and plant productions, as well as the sustainability of the Italian food chain.

Based on our survey, 85 green biotech companies have been identified in this report (Table 5.1). Compared with 1 newly established company and another 2 that have extended their business to the green segment in the period, 1 company must be counted as being no longer active, due to liquidation, together with 2 companies who have abandoned any activity in green biotech. A more thorough analysis of the sector has permitted

Green biotech covers a range of modern techniques with various potential applications, including molecular pharming, the improvement of specific plant varieties for the production of biofuels, and agro-food. The global market for functional food and nutraceuticals is actually growing at a significant rate, due to the increasing interest in their potential health benefits for consumers. Agro-biotech sustains the uniqueness of the Italian products in terms of variety and authenticity, thus further strengthening the success of a nutritional model which is appreciated all over the world.

to identify 8 companies already active and fully operative, as well as 5 whose activities were considered as not relevant to our analysis. Due to these alterations, the 2012 sample has been modified for homogeneous comparison purposes. Therefore, the total number of green companies is unchanged.

As in previous years, the sample shows that the majority of companies operating

Table 5.1

Key data relating to the green biotech sector, details of OECD and pure biotech companies (Source: Ernst & Young)


Green biotech 2012 Report* 2013 Report



Total turnover € 109 million € 41 million € 110 million € 44 million

Total investment in R&D € 115 million € 43 million € 112 million € 40 million

Total R&D employees 777 443 798 458


in the green biotech sector is made up of pure biotech firms (74%), while the remaining 26% is almost fully composed by other Italian biotech companies (22%). In fact, Italian subsidiaries of multinational companies are only 4% of the sample. Our outcomes show that the companies completely dedicated to green biotech are the majority (54%), while multi-core companies are 46% of the sample.

The total turnover for 2011 amounts to € 110 million, compared - at homogeneous samples - with a slightly lower 2010 turnover of € 109 million. It is important to point out that, as in 2011, a significant part of the turnover of the green sector (41%) is generated by the local subsidiaries of multinational companies, although numerically they represent only

4% of the sample. With regards to Italian pure biotech companies, these contribute 40% to the total turnover, while other Italian biotech companies represent 19% (Figure 5.1). It is also worth mentioning that Italian pure biotech companies have experienced a valuable increase of their related turnover up to +7%, due to new entries.

In terms of size, the predominance of SMEs within the green sector is confirmed again: the small and micro companies are 18% and 68% of the sample respectively, followed by medium (8%) and big sized organizations (6%) (Figure 5.2). Focusing only on pure biotech companies, the percentage of micro and small enterprises rises to 89%.

As regards the number of employees in R&D, these have been estimated at 798

Figure 5.1

Green biotech companies: analysis of the 2011 turnover by type (Source: Ernst & Young)

n Italian pure biotech companiesn Multinational subsidiaries in Italyn Other italian biotech companies

Figure 5.2

Green biotech companies: analysis by size(Source: Ernst & Young)

6%8%

40%

19%

18%

68%

41%


4%34%

1%

7%

17%

37%

Figure 5.3

Green biotech companies: analysis by origin (Source: Ernst & Young)

n Start-upn Multinational subsidiary in Italyn Academic spin-off

n Industrial spin-off or spin-outn Othern Sale of corporate assets

5Chapter 5

units (10% of the total), compared to 777 of the previous year.

Also in this sector the origin of companies is mainly attributable to start-ups (37%), academic spin-offs (34%), industrial spin-offs or spin-outs (7%), and to subsidiaries of multinational companies (4%) (Figure 5.3). It is worth pointing out that, limiting the analysis to pure biotech companies alone, the percentage of organizations that originate from academic spin-offs rises to 44%, which further confirms what was observed in the previous years.

With regards to their localisation, 43% of the green biotech companies operate within Scientific and Technological Parks and incubators, while just 14% are located


Green biotech

The National Agro-food Cluster - CL.A.N. has an historical vocation as regards the Italian systems of agricultural production and food industry, becoming the point of reference for the many excellences of the sector. The cluster is organised along the lines of a federal model that sees at the forefront the leading Italian regions, including Emilia Romagna, Lombardy, Abruzzo, Molise, Apulia and Sicily, as well as their regional districts. CL.A.N. is coordinated by Federalimentare, the federation that represents the Italian agro-food industry, and ASTER - the consortium between the Region of Emilia Romagna, local universities and research institutes (CNR and ENEA), the Regional Union of the Chambers of Commerce and the regional business associations1.

The cluster aims at defending and increasing the competitiveness of the national economy with reference to the entire food chain in all its components - ranging from agricultural production and processing, to the relevant industrial sectors (packaging, logistics, etc.), together with distribution and consumption - by stimulating innovation, optimization of research results as well as collaboration between research institutes, companies, institutions and the public administration.

The planned measures are consistent with the UE strategies (Horizon 2020, Flagship Initiatives), with specific regard to the needs of the final consumer in terms of genuineness, authenticity, high quality and value added products, the prevention of the many Diet Related Diseases (DRD), as well as the demand for environmental sustainability by producers.Once again biotechnologies show all their potential, as key enabling technologies, within all of the objectives and projects of the cluster.

CL.A.N. has seen the approval of three strategic projects, which were selected in response to the recent MIUR Announcement concerning the Development and Strengthening of National Technology Clusters, and whose objectives reflect the main trends in industrial research and in the market, with a subsequent driving effect on the competitiveness of the national entrepreneurial system.

Below is a brief description of the projects approved:

PROS.IT - Promotion of Consumer Health by developing new functional foods to improve nutrition of Italian food products.

The project, which is part of the thematic area of Nutrition and Health, aims to:• Develop processes for the improvement of primary plant and animal production,

with repercussions on the quality and nutritional value of new food products;• Understand the functional role of specific components of the diet, by applying

the most advanced methods of study;

CL.A.N. - National Agro-food Clusterat universities or research institutes (Figure 5.4). Scientific and technological parks maintain, therefore, an important role for green biotech companies too.

R&D investments in 2011 amounted to € 112 million, with a € 3 million decrease – at homogeneous samples - compared to 2010, which is substantially due to a cut in investments by pure biotech companies. Once again, Italian subsidiaries of multinational corporations represent the largest share of investment in R&D (55%). The Italian pure biotech companies (36%) and the other Italian biotech companies (9%) are followers (Figure 5.5).

43%

14%

43%

Figure 5.4

Green biotech companies: analysis by location (Source: Ernst & Young)

n Independent headquartern Universities/Research institutesn Science park or incubator

55%

36%

9%

Figure 5.5

Green biotech companies: analysis of the 2011 R&D investments by type (Source: Ernst & Young)

n Italian pure biotech companiesn Multinational subsidiaries in Italyn Other italian biotech companies


Chapter 5

• Support the industrial development of innovative functional foods that optimise the typical Italian products and offer added value to the consumer’s health.

Below, the five lines of action the Project consists of:• Nutritional improvement of primary production (cereals with

high fibre value and enrichment of micronutrients and vitamins; improvement of the nutritional value of meat and milk);

• Bioactive compounds, probiotics and nutraceuticals (selection of bioactive components with antioxidant and anti-inflammatory action; extracts from plants or derived from by-products of the food industry);

• Isolation and characterisation of probiotics with selection of new microbial strains;

• Innovative functional foods that optimise the local territorial production (functionalised innovative products such as pasta, dairy products and preserved vegetables);

• In vivo validation of the beneficial effects of prototypes of functional foods (conducting clinical trials to prove any health claim).

SAFE & SMART - New enabling technologies for food safety and integrity of the agro-food chain in a global scenario.

The project, which is part of the Food Safety thematic area, aims at improving food security through preventive and control measures, technological innovation and training, in order to optimise materials and products with a low content of chemical and biological contaminants. In order to optimise and effectively direct the actions planned, these will be developed in a logical chain starting from primary production to final consumers, whose involvement is a key element to establish a virtuous circle of supply and demand of increasingly safe products, and to strengthen the image of Italian products and consumer confidence.

The project consists of three lines of action:• Systems of diagnosis and rapid and reliable monitoring,

allowing the identification of contaminants throughout the entire food chain, so as to be able to timely implement corrective action and avoid the aggravation of the risk;

• A multi-channel, multi-device Information platform aimed at ensuring the integrity of the supply chain, able to interface

with real-time monitoring processes and alerting devices installed along it;

• New packaging with high functional characteristics, able to improve the shelf life of products, and equipped with label-sensors capable of interfacing with domestic conditioning systems or multi-channel ICT tools, such as tablets and smart phones.

SO.FI.A - Sustainability of the Italian Food Chain

This project, which falls within the theme of Sustainability, is a key starting point to look ahead and face the Horizon 2020 challenge. Its purpose is to approach in an integrated manner, throughout the entire Italian agro-food chain, the following issues: • The improvement of the sustainability of various typical

products (cereals, winegrowing, olive oil) through genomic interventions designed to optimise the quality and adaptability characteristics of crops, agronomic innovations in precision farming, the impact analysis for the certification of environmental and product quality;

• The recouping of by-products and waste from the food, dairy and meat industries, for processing high value-added transformations, and obtaining new sources of energy;

• The development of an integrated management of the information relating to domestic foodstuffs - quality and suitability of food - according to the different dynamics of transport and storage.

The project is therefore based on the following three lines of action:• Adaptation to climate change: sustainability of primary

production through crop selection, precision farming, energy and environmental certification of the main Italian agro-food chains;

• Recovery and reuse of by-products and waste from industrial food;• Innovative methods of management and preservation of

foods, to reduce waste in the supply chain, from the producer to the consumer.

1. The numbers of CL.A.N.: 87 Companies (Big and SMEs) in the agri-food sector, 5 research centres, 16 consortia and consortium companies majority privately owned, 5 Scientific and Technological Parks, 45 Universities, research institutions and research organisations, 17 Associations/organisations among which ASSOBIOTEC itself.


White biotech

Compared to the sample of the 2012 Report, the number of white biotech companies in Italy remained substantially unchanged, as only one new company entered the group. Accordingly, the sample consists of 62 enterprises (Table 6.1), with 4 companies having been newly established, an additional 4 which have extended their business to the white sector, one which is no longer active and 6 which have abandoned any activity in white biotech. A further analysis allowed

us to identify 7 companies which were already active in the white field, that for homogeneous comparative reasons, were added to the 2012 sample.

About two thirds of the companies operating in industrial biotechnology consist of Italian pure biotech companies (66%), while the majority of the remaining third relates to other Italian biotech companies (29%). The remaining 5% consists of Italian subsidiaries of multinational companies

White biotech is the next evolution for a sustainable and environmentally-friendly chemical manufacturing industry, which shall offer us a variety of materials which have better characteristics than products created with traditional chemical processes. The use of living cells and their enzymes is the way to create industrial products more easily degradable, with energy saving and waste reduction. By using biomass as a feedstock, for instance, goals such as energy efficiency and environmental safety have been achieved better than by traditional means.

Table 6.1

Key data relating to the white biotech sector, details of OECD and pure biotech companies (Source: Ernst & Young)


White biotech 2012 Report* 2013 Report



Total turnover € 174 million € 168 million € 276 million € 274 million

Total investment in R&D € 30 million € 27 million € 29 million € 26 million

Total R&D employees 493 463 505 481

which still focus their core business on white biotech. The percentage of multi-core companies active in the sector of industrial biotechnology is 32%.

The whole white biotech turnover can be attributed to Italian pure biotech companies. Total revenues reached € 276 million, representing a € 100 million increase compared to 2010, although this outstanding result stems from the growth in revenue of one single pure biotech company.


6Chapter 6

The largest majority of white companies (90%) are micro-sized or small, in a percentage that is even higher than in the red and green sectors. (Figure 6.1). This is not surprising, since the white segment is comprised for more than two-thirds of Italian pure biotech companies.

Despite an almost zero-growth rate with regard to the number of companies, the number of R&D employees is slightly growing with 505 units involved, which represent 23% of the total number of employees of the entire white biotech sector.

The industrial biotechnology segment is exactly in line with the main features of the whole biotech sector and with the findings of the previous years. The fact that 49% of the white companies originate from start-ups, 26% from

2%

Figure 6.1

White biotech companies: analysis by size(Source: Ernst & Young)

8%

26%

64%


Figure 6.2

White biotech companies: analysis by origin(Source: Ernst & Young)

7%

26%

2%

49%

16%

n Start-up n Industrial spin-offn Multinational subsidiary in Italy or spin-outn Academic spin-off n Other

Figure 6.3

White biotech companies: analysis by location (Source: Ernst & Young)

22%

33%

45%

n Independent headquarter n Universities/Research institutesn Science park or incubator

academic spin-offs and 7% from industrial spin-offs or spin-outs appears to be consistent with what was observed in the other sectors (Figure 6.2).

With regard to their location, 33% of the white biotech companies have autonomous headquarters, 45% operate in scientific parks or incubators, and 22% at universities or research centres (Figure 6.3). Most of the companies are settled in northern Italy with Lombardy (16) and Piedmont (11) being the most densely populated regions.

Investments in R&D in year 2011 amount to € 29 million, thus showing a € 1 million decrease - at homogeneous samples- compared to 2010. These investments are almost all attributable (90%) to Italian pure biotech companies.


White biotech

Industrial biotechnology and the “Green Chemistry” Cluster

Conventional chemistry and industrial biotechnology converge with the possibility of using biomass to chemical substances in partial replacement of traditional raw materials of petrochemical fossil origin. The sector is experiencing at this moment a profound process of renewal on all three levels that characterise it: technology, biorefineries and bioproducts.

Industrial biotechnology is being applied as an innovative technology involved in the process of transformation of biomass and other raw materials, and in the sustainable production of chemicals, materials and fuels. The main areas of research, development and innovation have been identified as: new enzymes and micro-organisms, microbial and bioinformatic genomics, metabolic models and their engineering (cell factories), study of the operation and optimisation of biocatalysis, process design of functional biocatalysis, fermentation processes and their engineering, design of integrated industrial systems both sustainable and innovative.

In the context of chemistry from biomass, and by analogy to the concept of refining in the petrochemical industry, the concept of biorefineries has been defined as a production system that obtains biofuels and other products made from raw materials from biomass derived from different sources. The purpose of the biorefinery is to produce more types of products using renewable bio-based resources, as carbon sources, and using biological and biotechnological processes, together with the processes of conventional chemistry. The biorefinery process adopts waterfall processes, from which products with the highest possible added value can be obtained, extracting energy from end of life materials, and taking into account the practices of environmental mitigation measures, particularly with regard to greenhouse gas emissions, the concept of “zero waste” and the efficient use of resources.

Chemistry from biomass offers the possibility to create new value chains involving agriculture, the food industry, forestry,

fishing and aquaculture. The products resulting from biomass supply chains are to be considered bio-based products, since they are similar to the conventional chemical industry products as originating from biological materials (plants, algae, crops, trees, marine organisms, organic waste derived from domestic activities, the food industry and animal feed).

Considering the products already entered into common use, and other more recently introduced, including chemical derivatives from biomass, the following can be included: fuels, lubricants, solvents, polymers, plastics, fillers, basic chemicals (building blocks), surfactants and detergents, pharmaceuticals, cosmetics, agrochemicals, and other fine chemicals.

The application of biotechnology to biomass chemistry fits perfectly into the vision proposed by “A Resource-Efficient Europe”, one of the Flagship initiatives launched as part of the Europe 2020 strategy, which starts from the assumption that the use of renewable resources is no longer an option in the development of the European Union. At the heart of this vision lies the fundamental role of bioeconomy, in 2012 the subject of a specific Commission document, which identifies it as a tool for innovation and sustainable growth: the use of renewable bioresources can be, in fact, directed towards the production of goods with significant added value.

The “Green Chemistry” Cluster was established in response to the recent Call of the Ministry of Education on the Development and Strengthening of National Technology Clusters, according to which the cluster must be understood as being “organised groupings of companies, universities, other public or private research institutions, other bodies including financial entities active in the field of innovation”, having the function of “drivers of the sustainable economic growth of regions and the entire national economy”, and where the best of experience and expertise availability can converge.


Chapter 6

The “Green Chemistry” Cluster, whose purpose is the development of technologies for transforming biomass, is promoted by three large industrial companies and by Federchimica, the association that represents the entire Italian chemical industry and its vocation to sustainability and innovation. The promoter companies - Chemtex Italy S.r.l., Novamont S.p.A. and Versalis S.p.A. - are largely involved in the technological development and manufacture of products with high added value, deriving from various types of biomass and from the application of highly innovative industrial processes.

Besides those Regions which have already formally expressed their support to the cluster (Piedmont, Lombardy, Veneto, Emilia Romagna, Sardinia, Umbria, Basilicata and Apulia) more than 120 entities have joined in, which highlight the four key features of this national grouping:

• The number of actors, demonstrating the strong and widespread interest in this technological opportunity;

• The substantial unanimous endorsement by major industrial players;

• The high participation of research institutions, both private and public;

• The heterogeneity of the subjects that well represents the reality of the supply chain.

The industrial sectors represented are mainly three: production of biopolymers and biochemicals deriving from different biomaterials, technologies for exploitation of the lignocellulose masses and oleochemical. These activities arise naturally in the production chain by integrating the agricultural and environmental upstream with the use of the downstream products, and by implementing the biorefinery concept as capacity for enhancement of biomass to products with higher added value.

The action of the cluster has been consolidated in this initial phase of its five-year cycle, with the drafting of a strategic

plan consistent with the objectives proposed by the Call, and the definition of four operational projects of research, development and training directed towards biorefinery, as an example of responsible and sustainable chemistry, able to provide products of high added value.

Below is a brief description of the projects approved:

Alternative Lignocellulosic Biomasses for Elastomers (ALBE): the project is aimed at radically innovating the production of synthetic elastomers (SE) and natural rubber (NR), by using raw materials from renewable sources, alternative to those traditionally used.

Third Generation Biorefinery integrated in the territory: the project, coordinated by Novamont, intends to develop a Third Generation Biorefinery for the production of bio-based chemicals with high added value and energy. The plant shall be fully integrated in the territory, by using crops that are not in competition with food.

Biochemicals from Biomass - integration of bioconversion for the production and application of biochemicals from Third Generation Biomass from renewable sources (REBIOCHEM): the project is aimed at technically demonstrating, both on a pilot and industrial scale, the possibility to obtain biochemical, such as 1,4-butanediol (BDO) and energy from second generation biomass, not in competition with the food chain.

Development of second generation technologies for the conversion of organic derivatives of green dicarboxylic acids, as bulding blocks of renewable origin for the synthesis of chemicals and polymers (LIDIA): by means of a public-private partnership, making the best of high level experiences in the field of renewable energy and second generation technologies, the project aims at enhancing all of the scientific competences of the entire biorefinery chain, in order to create a leading centre for production of chemicals, which can also act as a technology provider both at an European and international level.


The EU vision towards the creation of a knowledge-based economy translates into specific EU policies that emphasise the potential of biotechnology. The mechanism of strategy definition is based on long term planning, designed by the EU executive bodies. The result lays down a number of specific programmes covering each geographical level, that boost ideas and innovation. The options which Europe is offering are huge; making the best of them is a vital necessity, in order to allow the Italian biotech sector to fully exploit its potential.

Member States in order to allow a fast and robust economic growth in the European Union. This chapter provides an overview on public R&D financing programmes across Europe.

The 7th Framework Programme (2007-2013)

The Lisbon strategy aims at making the Community the most dynamic and competitive knowledge-based economy in the world. To succeed in this ambitious goal, the key factor identified by the EU organisation is a “knowledge triangle”, where each tip represents an area that must be potentiated: Research, Education, and Innovation.

Within the numerous initiatives that the EU has carried out to support innovation and growth, the Seventh Framework Programme for research and technological development (FP7) has represented undoubtedly, until today, the strategy’s leading pillar. With an over € 50 billion budget (+41% compared to previous FP6) for years 2007 – 2013, the programme

has played a crucial role in improving the quality of research as well as creating employment and competitiveness.

With its four connected programmes - Cooperation, Ideas, People, and Capacities - the FP7 has encouraged the creation of European poles of excellence. The core of FP7, that represents two thirds of the overall budget, is the Cooperation Programme that fosters collaborative research across Europe and other partner countries, through projects by transnational consortia between academia and industry. The relevant research activities cover ten key thematic areas.

Particular relevance has been given to biotechnologies, which are considered by the EU as a new engine for competitiveness. The FP7 has also identified the priority areas of intervention to enhance the so-called European Knowledge Based Bio-Economy (KBBE)1, already mentioned in the 2012 Report. These have to do with a greater involvement of the different companies, in order to open new ways for technology

Financing R&D across Europe

The European commission has stated that the main pillars for the European growth are: investments in innovation – focusing on six priority areas; better market conditions – improvements in the functioning of the Internal Market and opening up international markets; access to capital – mobilising public resources and unlocking private funds; improving human capital and skills – equipping labour force for industrial transformations.

The six priority actions to boost productivity, growth and the creation of new qualified job opportunities concern advanced manufacturing technologies, Key Enabling Technologies (KET), bio-based products, clean vehicles and vessels, sustainable construction, raw materials and smart grids.

It goes without saying that biotechnologies play a primary role in this challenging perspective.

Creating a more supportive environment for the development of new ideas, and thus more opportunities for high-tech entrepreneurship, especially in countries such as Italy, should be the mission of all

1. Source: CORDIS, Community Research and Development Information Service.


7Chapter 7

2. Source: CORDIS, Community Research and Development Information Service.

3. Source: European Commission, Regional Policy – Inforegio.

transfer, as well as with specific projects concerning a more sustainable production and management of biological resources (i.e. lands, forests, aquatic environment, etc.) and, nevertheless, a better control of the agro-food chain, together with new policies concerning the improvement of procedures for non-food products (i.e. chemicals). A € 1.9 billion budget has been allocated for these themes.

The European Union’s interest for biotechnologies has not been limited to these topics: € 6.1 billion have been dedicated to the improvement of the health of European citizens2; the FP7 has aimed at offering new solutions regarding the treatment of particular diseases (specifically, those linked to ageing), trying at the same time to ameliorate the healthcare systems by promoting new sustainable and efficient models. The FP7 expects to see first results in a shorter time frame, primarily for all those research programmes concerning new drugs and treatments. It is worth pointing out that European-funded health research has mainly focused on biotechnology and innovative therapies, highlighting the key role of SMEs as the “main economic drivers” in the fields of medicines and healthcare.

We can clearly conclude that, with its different actions and strategies, the FP7 has enabled the European regions and their people to strengthen their capacity to invest in and carry out research activities,

through regional projects which can maximise, in the long term, the success of the EU research system. The final goal of FP7’s was to make Europe an attractive continent for researchers, knowledge-based companies (particularly SMEs) and research centres, through clustered projects (which were often co-financed) aimed at improving the wellbeing of citizens and increasing the economic growth.

The EU cohesion funds

Based on the clear commitment of the European Union to the implementation of a new model of knowledge-based economy, a multitude of tools and ideas were provided, demonstrating the central role attributed to R&D. The EU Cohesion funds are doubtless part of this strategy3.

With an amount of € 347 billion for years 2007-2013, which equals 35.7% of the total EU budget for that period, the EU Cohesion funds have aimed at reducing the significant economic, social and territorial disparities that still exist between the different European regions, by investing in innovation, new products and new production methods.

Within the tri-partition of the different funds (the ERDF - European Fund for Regional Development, the ESF - European Social Fund and the CF - Cohesion Fund respectively), almost 20% of the total

Figure 7.1

Research and Technological Development (R&TD), innovation and entrepreneurship funds, breakdown per objective

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n Convergence n European Territorial Cooperationn Regional Competitiveness and Employment

amount (€ 65.7 billion out of € 347 billion - only the funding of sustainable Transport is higher) has been dedicated to Research and Technological Development (R&TD), innovation and entrepreneurship activities, the main objectives being Convergence, Regional competitiveness and employment and European territorial cooperation. Figure 7.1 shows the breakdown of funds dedicated to Research and Technological Development (R&TD), innovation and entrepreneurship per objective.

76% of funding (out of € 65.7 billion) was dedicated to projects specifically addressed to territorial areas with a low GDP per capita, in the framework of the


Financing R&D across Europe

so called Convergence programmes, which constitute a unique opportunity, particularly for those regions located in the south of Italy that should make the best of this significant liquidity (Calabria, Campania, Apulia and Sicily are eligible).

As regards the analysis of total funding by objective (€ 347 billion), € 55 billion have been dedicated to Regional competitiveness and employment, mainly promoted by ESF and ERDF. The aim was to create jobs by promoting competitiveness and making the regions concerned more attractive to businesses and investors. This objective applies to all the European regions not already involved in the above-mentioned Convergence programmes.

With regard to the amount of funding, the breakdown of available funds by theme shows that the percentage dedicated to R&TD, innovation and entrepreneurship within the Regional competitiveness and employment objective was higher, even when compared with the one dedicated to Sustainable Transport. This confirms then a strong correlation between R&D activities and regional projects. It also asserts the importance of entities such as regional R&D clusters, confirming the their key role in promoting innovation.

The funding opportunities which Europe offers seem to be quite encouraging, but the procedures to effectively obtain funds appear rather intricate. Even the European Commission realises that it will take a long time for the pay-off of these programmes, although the efforts will be more than compensated by the benefits (i.e. the EU funds create an important leverage effect by often encouraging other partners to get on board).

With regards to the amount allocated for every EU Member State for R&TD

innovation and entrepreneurship projects, Italy is in the 4th position.

Figure 7.2 shows the amount of funding, not divided by theme, effectively paid by the Commission. Unfortunately, Italy is the country with the worst results in terms of actual capacity to access to the funding: in fact, although we could access to the third largest amount of the established funds (more than €27 billion), we manage to use only 28% of these. A disappointing result, indeed, that should lead us to much reflection, as Italy could enormously benefit from the European strategy. Both the northern regions and, most of all, the southern ones could actually multiply the benefits applying for both the Convergence and the Regional, competitiveness and employment funds.

We clearly need to adopt appropriate measures to improve the attractiveness of Italian players, and make the best of all opportunities which may arise from the 2014-2020 forthcoming policies. R&D projects can be a source of long-term growth and profit, and potentially help the new generations to improve their employment and social status. Italian and foreign entrepreneurships should not forget it.

The plans for the future (2014-2020)

While facing a public debt crisis and recession, the European Union has decided to promptly stabilise the financial and economic system, by also taking measures to create the economic opportunities for the future. As a logical pursuance of what has been done during the FP7, research and innovation are once again at the centre of the Europe 2020 strategy, aimed at promoting a smart, sustainable and inclusive growth.

The new funding programme for research and innovation, Horizon 20204, will cover all research and innovation funding currently provided through the FP7 (€ 53 billion), the innovation related activities of the Competitiveness and Innovation Framework Programme (CIP) and the European Institute of Innovation and Technology (EIT), which have, respectively, assured the availability of € 3.6 billion and € 309 million, in order to stimulate Innovation in knowledge and Innovation communities.

Horizon 2020 will also strengthen the complementarity between the EU framework programmes for research and innovation (such as FP7), and the Cohesion funds allocated to R&D and innovation projects. Currently there are already substantial interactions between the EU’s research and innovation policy and its Cohesion policy: as in FP7, investments in excellence and innovation capacity are made through the “Regions of Knowledge”, “Research Potential” and ”Research Infrastructures” actions. Horizon 2020 will reinforce Research and Innovation (R&I), mainly by improving specific policies, aimed at building smart specialisation strategies in full cooperation with the Cohesion policy. On the other hand, the latter will support research as one of the top investment priorities, in full accordance with the Horizon 2020 strategy and the Innovation Union Flagship Initiative, which seeks to secure European competitiveness by generating new growth and jobs. The Innovation Union plans to make Europe a world-class science performer, to remove obstacles to innovation and to revolutionise the way the public and private sectors work together.

The programme will start in 2014, with a prospective budget of € 80 billion (+46% compared to previous FP7), as the negotiations for the EU 2014-2020


Chapter 7

Figure 7.2

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budget are still ongoing5. In any case, by the end of 2013, the Parliament and the Council are expected to adopt the legislative acts concerning the strategic plan and the related financings. However, the programme is currently expected to provide € 24.5 billion to boost the EU’s position in science; € 17.9 billion should support industrial leadership in innovation (this includes major investment in key technologies, greater access to capital and support for SMEs); € 31.7 billion should help to address a number of major sensitive issues such as climate change, developing sustainable transport and mobility, making renewable energy more affordable, ensuring food safety and security, or coping with the challenge of an ageing population. As it often happens for the new policies or strategies adopted by the European Union, Horizon 2020 is metaphorically structured in three circles, indicating three different objectives to be pursued, which are closely related one to another: Competitive industries, Excellent science and Better society. With regard to biotechnologies, the first circle represents the most relevant

one. In fact, the Competitive industries objective aims at making Europe a more attractive location to invest in research and innovation. To succeed, the programme will provide major investment in key industrial technologies, will maximise the growth potential of European companies by providing them with adequate levels of financing, and will help the growth of innovative SMEs into world-leading companies.

Indeed, Horizon 2020 is thought as a new dedicated instrument for SMEs, to encourage their participation by filling the gaps in funding early-stage, high-risk research projects, as well as by stimulating breakthrough innovation. Consistently, this new integrated strategy should allocate € 6.8 billion to SMEs, which equals around 15% of the total funding.

Furthermore, in order to simplify the intricate bureaucratic procedures for to the payoff of the funds, Horizon 2020 specifically aims at reducing the administrative costs for the participants, accelerating all processes of proposal and grant management, as well as decreasing

the financial error rate. These objectives will be achieved by combining structural simplification, through a simpler programme architecture which should bring together all research and innovation funding in one programme, and with the implementation of simpler funding rules, which will make the preparation of proposals and the management of projects much easier. Said simplifications should also lead to reduction in the number of financial errors.

Horizon 2020 will enhance the European leadership in “enabling and industrial technologies” across a range of sectors, still maintaining a strong focus on Key Enabling Technologies, with a dedicated budget of € 5.8 billion. Both Nano-technologies and Biotechnologies are therefore likely to benefit from the Programme, by allowing the companies within these fields an easier access to new sources of funding.

4. Source: European Commission, Research & Innovation – Horizon 2020.

5. These data are updated at the time we are writing (January 2013); the outcome of negotiations between the European countries is still uncertain and may lead to different decisions in the very near future.


Italy ranks third in Europe for number of pure biotech companies, although these are on average modestly capitalized and suffer limited access to VC investments, compared to their international competitors. In order to achieve the necessary critical mass to generate innovation, Italian companies are seeking for strategic alliances, particularly with industrial partners. This further confirms the clear complementarity of roles between biotech and big pharma, as an alternative to maintain efficiency and competitiveness in an ever growing market.

confirmed by the data presented below, which clearly show a reduction in the number of pure biotech companies: from 258 in 2011 to 256 in 2012. As regards the European scenario, the situation varies depending on the country: Germany and France seem to be the only countries showing a considerable growth; UK, Switzerland, Spain and The Netherlands are marginally growing, while Italy, Sweden and Denmark show a slight decrease compared to the previous year. (Figure 8.1).

International benchmarking

The 2013 Report, as a tradition, ends with an analysis of the key financial indicators that characterise the biotech sector in the main European countries. This comparison also allows us to ascertain where the Italian biotech companies stand, and what they are doing in order to cope with the current European scenario.

This benchmark was made possible also thanks to the data annually published by the Ernst & Young Global Biotechnology

Centre, in order to portray the state of the sector at an international level. The comparison of the Italian data with the ones presented in the “Beyond Borders” report is made possible because of the use of the same Ernst & Young definition of “biotech company”.

As already highlighted in the previous chapters, the Italian biotech industry is suffering from a slight decrease in terms of number of companies. This trend is

ItalyUKGermany France Sweden Switzerland Spain Netherlands Denmark

Figure 8.1

Number of pure biotech companies in the main European countries (Source: Ernst & Young)

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8Chapter 8

Venture Capital (VC) is typically defined as the investment by professional investors in young and innovative firms. VC funds have typically a finite life (10 years is the most adopted period) and a fixed fund size, determined before starting the investment operations. VC is particularly relevant for young companies in high-tech sectors (such as Biotech, Energy, Nanotech, Other R&D and Pharmaceutical). The common feature of these enterprises is their difficulty in fund-raising operations due to their high-risk consideration for traditional intermediaries, such as banks. The index on SMEs access to bank lending, indeed, shows Italy under the EU average. VC may be useful during different phases, for example for high-potential start-up companies, growing entrepreneurial and innovative SMEs, spin-offs, etc.

The VC form of financing is particularly relevant for biotech companies, as international literature shows evidence of a positive correlation between VC and various funding performance aspects, such as growth and quality of generated innovation.

Over the past years, policy-makers across Europe have consistently emphasised the importance of innovation and VC as the bedrock for future growth and economic stability. The European VC industry is however still young, small and heterogeneous compared to the US one, due to the presence of different



types of VC investors (independent, bank-controlled, corporate and public sector-related) and to the different policies and industrial structures of the Member States. Moreover, cross-border fundraising and investing are possible, but complex and costly due to legal burdens. Even the European “passport” for VC managers

A recent study from the Milan Polytechnic School of Management forecast that a € 300 million investment for the creation of Italian start-ups could have an extremely positive impact on Italian GDP, and in any case equal to ten times the amount invested.

Figure 8.2 shows how Italy is far behind the other European countries, both in terms of total amounts collected, VC capital raised and number of VC deals. Most of the capital raised within the leading countries (UK, Germany and Switzerland) originates from VC, and the number of projects financed per country is over 20.

Based on the results of our survey, 23% of the pure biotech companies in our sample seek co-development and co-promotion, while about 14% pursue out-licensing deals. This draws our attention on another very important source of funding for pure biotech companies, as a potential alternative to the lack of adequate VC investments. The possibility of establishing strategic alliances with other entities is both a financing source and a business strategy, allowing both the sharing of resources and capabilities. Collaboration is a way to pool the efforts more efficiently. Specialisation in a specific R&D phase is a way to focus on what the company does better, but in the long term R&D process, which are typical of the biotech field, playing alone may be detrimental, particularly considering financing difficulties.

Figure 8.2

Capital raised by European countries in 2012. Size of bubbles shows number of financings per country(Source: Ernst & Young)

and funds seems to be insufficient to settle these issues, especially as regards double taxation.

Focusing on the Italian environment, only 2 biotechnology projects1 in early stage (out of 55) were financed by venture capitalists in the first half of 2012.

1. Source: Aifi.Venture capital raised (€m)

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Chapter 8

Figure 8.3 compares the overall values of the strategic alliance agreements reached by the European pure biotech companies, namely with pure companies and with pharmaceutical companies, for the years 2010, 2011 and 2012. What has emerged from 2012 is a recovery of the potential value of alliances in the industry, driven by the agreements between big-pharma and biotech companies. The value of the deals between biotech companies still show a further decrease, comparing the 2012 outcomes to the past. Overall, the total number of deals is decreasing; actually, in 2011, among all of the strategic alliances analysed at the European level, only 19% of them involve Italian biotech companies.

However, based on our analysis, 57% of the Italian pure biotech companies consider a strategic alliance to be an achievable option for next year, which is a percentage significantly higher than the 44% originating from the answers of the companies of the entire sample (not just the pure biotech ones).

Seeking for alliances is not the only strategy the companies are adopting to strengthen their business, as they may also look at an IPO in order to raise money on the public markets. It is clear that the amount of the capital raised with this kind of transaction and the number of deals are strictly related to the macroeconomic context. Therefore, it is not surprising that the number of biotechnology IPOs in Europe reached its peak during 2005 and 2007, while in recent years, with the worsening of the economic scenario, the

number of deals dramatically decreased. Accordingly, if in 2005 and 2007, 26 and 22 IPOs were carried out respectively, during the last year only 3 IPOs were successfully closed in Europe.

In the 2012 Report we were able to show that, in the period between 2009 and 2011, the potential value of Merger and Acquisition (M&A) deals between biotech companies had increased in a sustained manner. Conversely, in this report we need to acknowledge that the market presents significant changes in its structure: on one hand, there is a reduction of the biotech-biotech M&A potential value while, on the other hand, the agreements between big-pharma and biotech companies show better results (Figure 8.4). Generally speaking, however, both the total amount (almost € 2 billion) and the number of deals (12) decreased significantly. This trend is also confirmed by our sample: only 3% of the companies surveyed closed an M&A deal.

Due to the fact that the economic situation is still perceived as quite uncertain, and being an M&A a somewhat complex and challenging process, the M&A option is currently considered as being unlikely (30%) or very unlikely (48%) by the companies of our sample.

Figure 8.3

Number of deals and potential values of alliances in the biotech industry in Europe. Values in millions of Euros(Source: Ernst & Young)

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Company 1 Company 2Description of alliances

Name Country Name Country

Newron Pharmaceuticals

IT NeuroNova SE Newron Pharmaceuticals S.p.A. has completed the acquisition of up to 100% of the shares of Stockholm-based privately owned NeuroNova AB. Shareholders of NeuroNova received 2,375,000 newly issued Newron shares and now hold 21.3% in Newron. On closing of the transaction, Newron benefitted through cash and commitment by € 16 million. Key new shareholders are Investor AB and HealthCap.

Cosmo Pharmaceuticals

IT AIMM Therapeutics

NED AIMM Therapeutics B.V. has signed an agreement with Cosmo Pharmaceuticals S.p.A. to develop oral diagnostic and therapeutic antibodies for gastrointestinal diseases, including colon carcinoma. Under the terms of agreement, Cosmo Pharmaceuticals will formulate novel human monoclonal antibodies generated by AIMM Therapeutics in an extended release form, by exploiting its proprietary MMX® technology.

Zambon Company

IT Newron Pharmaceuticals

IT Newron Pharmaceuticals S.p.A. executed a strategic collaboration and license agreement with Zambon Company S.p.A. for Newron’s lead compound safinamide. The compound has completed Phase III clinical development, as an add-on therapy to dopamine agonists and levodopa, in patients with Parkinson’s disease. Overall, Zambon investment in Newron will total € 20 million, also covering the completion of clinical development of safinamide, and the preparation of the application for marketing approval in Europe and the US.

Philogen IT Actinium Pharmaceuticals

US Actinium Pharmaceuticals Inc. has signed an agreement with Philogen S.p.A., under which, the partners will explore feasibility and uses of adding actinium 225 (225Ac) as a payload to Philogen's L19 antibody constructs. In the approach known as antiangiogenesis, L19 targets newly formed blood vessels that allow cancer to grow.

Cosmo Pharmaceuticals

IT Undisclosed Company

US Cosmo Pharmaceuticals S.p.A. signed a license agreement with a leading U.S. public pharmaceutical company, granting it exclusive world-wide rights for the development and commercialization of Cosmo’s new chemical entity CB-03-01, an investigational anti-androgen drug targeted at certain topical skin applications. The license agreement provides for the payment of $ 25 million up-front, regulatory and commercial milestones and royalties on sales.

Mediolanum farmaceutici

IT Genovax IT Genovax S.r.l, signed an agreement with Mediolanum Farmaceutici S.p.A., under which Mediolanum acquires global rights to GX301, Genovax's therapeutic vaccine to treat various types of cancer. New Clinical studies are scheduled to be initiated, as well as development and commercialization activities led by Mediolanum. Under the terms of the agreement, Genovax is entitled to upfront and milestone payments, as well as royalties.

Nerviano Medical Sciences

IT Genentech US Under the terms of an agreement between Nerviano Medical Sciences S.r.l. and Genentech, Inc., the latter acquired exclusive rights to a chemical series of compounds discovered and owned by Nerviano, that potently inhibit an undisclosed target. Nerviano shall transfer the compounds and the related know-how, and will provide to Genentech the assistance required to implement their use. Genentech will have exclusive responsibility to further research, develop and commercialize such compounds, and shall pay to Nerviano a one-time license fee as well as royalties on a product-by-product basis.

Dompé IT Anabasis IT Dompé S.p.A., entered into a definitive agreement becoming the sole shareholder of Anabasis S.r.l., a Milano based biopharmaceutical company dedicated to the development of innovative therapies for the eye. Earlier in 2011, Dompé had acquired a 49% stake in Anabasis, and the worldwide right for the development and commercialization of NGF for neurotrophic keratitis.

Gentium IT Swedish Orphan Biovitrum (Sobi)

SE Gentium S.p.A, signed an exclusive ten year distribution agreement with Swedish Orphan Biovitrum AB (Sobi) to distribute Defibrotide in Sweden, Denmark, Norway, Iceland, Finland, Latvia, Lithuania and Estonia. Sobi will be responsible for managing named-patient requests and achieving price and reimbursement approvals in the territories. Defibrotide is used for the treatment of hepatic veno-occlusive disease (VOD), a serious and potentially fatal complication of hematopoietic stem-cell transplantation (HSCT).

Biouniversa IT Abcodia UK Abcodia Ltd. entered into a collaborative agreement with Biouniversa S.r.l., to advance the development of the BAG3 protein biomarker in the early detection of pancreatic cancer. Abcodia and Biouniversa shall work to design a series of longitudinal studies, and identify preclinical cohort samples from the serum bio-bank suitable for the evaluation of Biouniversa BAG3 ELISA assay.

Novamont IT Tecnogen IT Novamont S.p.A. acquired Tecnogen S.p.A. from Sigma Tau Finanziaria S.p.A. The acquisition by Novamont, a world leader in the bioplastics sector, is just the starting point for new research projects at Technogen, which may generate additional entrepreneurial initiatives, particularly with regard to biotechnology.

Gentium IT PharmaSwiss (acquired by Valeant Pharmaceuticals International in 3/2011)

SI Gentium S.p.A. has signed a ten year agreement with PharmaSwiss SA for the exclusive distribution of Gentium's Defibrotide in the following territories: Albania, Bosnia, Bulgaria, Croatia, Cyprus, Czech Republic, Greece, Hungary, Macedonia, Montenegro, Poland, Romania, Serbia, Slovenia and Slovakia. Under the terms of the agreement, PharmaSwiss will be responsible for managing named-patient requests and achieving price and reimbursement approvals in these territories. Defibrotide is used for the prevention and treatment of Veno-occlusive disease (VOD).

Table 8.1

Selected biotech alliances, deals and M&A in Italy (Source: Ernst & Young)


Company 1 Company 2Description of alliances

Name Country Name Country

Chapter 8

Diesse Ricerche IT Toscana Biomarkers

IT Toscana Biomarkers S.r.l., entered into a license agreement with Diesse Ricerche S.r.l. under which, Diesse shall produce and commercialize a proprietary kit developed by Toscana Biomarkers that allows the detection of anti citrullinated protein antibodies (called ACPA-G). The determination of ACPA-G, by permitting to differentiate rheumatoid arthritis from other acute and chronic arthritis even in the early stages of disease, is one of the most important tests for diagnostic laboratories, to be used on the Chorus system by Diesse.

Newron Pharmaceuticals

IT Meiji Seika Pharma

JP Newron Pharmaceuticals S.p.A. has finalised a definitive license agreement with Meiji Seika Pharma Co., Ltd. (“Meiji”), a subsidiary of the Meiji Holdings Co., Ltd., Tokyo, Japan, covering the research, development, manufacturing, and marketing of safinamide in Japan and key Asian territories. The transaction follows a binding agreement on principal terms and conditions. Under the agreement, Newron has received an up-front payment of € 5m.

SOL IT Diatheva IT SOL S.p.A. acquired a 51% stake in Diatheva S.r.l. from Università' degli Studi di Urbino - Carlo Bo. With this transaction, SOL shall provide Diatheva additional resources for the development of recombinant monoclonal antibodies for the treatment of rare tumors, and for the construction of the GMP plant for the production of recombinant proteins and antigens.

Gentium IT Biologix FZ Co. US Gentium S.p.A., signed a ten year exclusive distribution agreement with Biologix FZ Co. Under the agreement, Biologix will distribute Defibrotide in the Middle East and North Africa (MENA), and shall be responsible for managing named-patient requests and obtaining price and reimbursement approvals. Defibrotide is used for the prevention and treatment of Veno-occlusive disease (VOD).

TIGEM IT Shire UK Shire enters into a long-term research collaboration in rare diseases with Fondazione Telethon, for research carried out at the Telethon Institute of Genetics and Medicine (TIGEM). The alliance will facilitate research on 13 undisclosed rare disease indications, and has the potential to add multiple, novel therapeutic candidates into Shire's early stage pipeline. Shire will provide € 17 million funding over 5 years.

Istituto di Ricerche Biotecnologiche

IT Croda UK Croda International has acquired plant cell culture actives company Istituto di Ricerche Biotecnologiche (IRB) via its Sederma brand, for about £ 5.9 million. IRB uses an exclusive biotech method for sourcing plant stem cell ingredients, which is said to be fast, sustainable and eco-friendly, and provides products of guaranteed purity, which are non-GMO and free from pollutants. According to Croda, IRB’s reproducible products combined with Sederma’s extensive performance testing and claims validation will guarantee efficacy previously unknown in plant extraction. IRB’s products will be added to the Sederma product portfolio, while IRB will benefit from significant investment as part of the Croda group.

FIS IT Areta International

IT Holding FIS, the parent company controlling Fabbrica Italiana Sintetici S.p.A., has completed the acquisition of a strategic stake in Areta International S.r.l. The deal with Holding FIS, which is the first of its kind in Italy, will strengthen Areta’s capabilities and expand the current business opportunities, putting Areta in the ideal position to grow and innovate in the field of contract development and manufacturing of biotechnology and advanced therapy products.

EOS IT Servier FR Ethical Oncology Science (EOS) and Servier have signed a license agreement to further develop EOS' antitumor drug E-3810. EOS shall receive a € 45 million upfront payment, plus development milestones and royalties on sales, while Servier will obtain an exclusive worldwide license with the exclusion of the US, Japan and China. E-3810 is a novel kinase inhibitor, efficiently targeting both Fibroblast Growth Factor Receptor 1 (FGFR1) and Vascular Endothelial Growth Factor Receptor-1-3 (VEGFR-1-3). This unique activity profile confers specific antitumor activity in FGFR1-dependent tumors, and a strong antiangiogenic effect.

Axxam IT Fast Forward US Axxam S.p.A. announced funding support ($ 402,000 over 12 months) from Fast Forward, LLC, a non-profit making organisation established by the U.S. National Multiple Sclerosis Society, and Merck Serono. The award will help support Axxam’s research to identify small molecules that prevent the chloride intracellular channel 1 (CLIC1) activation, and have the potential to modulate glial cell activity. This project will provide the pharmacological tools for the validation of an innovative and attractive target belonging to the ion channel class CLIC1, which could then form the basis for the development of new treatments for multiple sclerosis, as well as for other relevant neurodegenerative diseases.

Menarini Biotech IT Oxford BioTherapeutics

UK Menarini Group and Oxford BioTherapeutics (OBT) announced a strategic alliance to develop a portfolio of antibody-based drugs in the field of cancer. The agreement covers OBT’s antibody and antibody drug conjugate (ADC) programmes, each of which addresses a different cancer indication via a different novel oncology target. The deal brings together OBT’s discovery expertise with Menarini’s clinical knowledge and expanding capabilities in the manufacture and development of biologics, to build value for both companies. Within the collaboration, Menarini will lead the efforts in the manufacture and clinical development of each programme, while OBT will provide the proprietary cancer target, antibody and arming technologies. Once clinical proof of concept has been achieved, OBT will complete the clinical development and commercialise these products in North America and Japan, whilst Menarini will do the same in Europe, CIS, Asia and Latin America.

Table 8.1

Selected biotech alliances, deals and M&A in Italy (Source: Ernst & Young)


Methodology

The 2013 Italian Biotechnology Report uses the same Ernst & Young methodology, consolidated over the last three years. In doing so, we were not only able to analyse the financial trend in the 2011-2012 period, together with the articulated reality of biotechnology in Italy, but also to compare the data with those drawn from other studies on the biotech sector that Ernst & Young

conducts internationally. Consequently, the decision to entrust the writing of this report once again to Ernst & Young was essential not only to increase the time perspective of the analysis, but also to ensure the highest methodological consistency with previous studies.

Also in the 2013 report, reference is made to 2012 for all general information

Definition

Pure biotech Companies whose core business activities are exclusively related to biotechnology

Other biotech Companies that use at least one biotech method to produce goods and services to carry out research in the biotech field, without this being the core business of the firm

Red biotech Biotechnology applied to human health: use of modern biotech methods for the development of therapeutic products, tissue engineering, vaccines, drug delivery technology, methods of molecular diagnostics, drug discovery activities and cosmetics

Green biotech Agro-food biotechnology: use of modern biotech methods for the production of transgenic plants with applications in food, chemical, manufacturing, molecular pharming (pharmaceutical production in plants), tests for the detection of ingredients or contaminants in food

White biotech Industrial biotechnology: use of modern biotechnological methods for the production and processing of chemicals, materials and fuel, including technology for environmental bioremediation

GPET Genomics, Proteomics and Enabling technologies: genomics (investigation of the structure and function of genes) and proteomics (analysis of protein expression, structure, post-translational modifications, interactions and function), bioinformatics technologies, bio-chips and other bio-related tools, biopharmaceutical productions, etc.

Multi-core Companies that operate in at least two of the application areas mentioned above

Table 9.1

Biotech companies: definition by application field


about the companies under consideration, with the exception of economic-financial data that correspond rather more to the accounting year 2011.

Similarly to what was already done in the previous reports, companies within the sample have been split into two main types:• Companies that “use modern biological

techniques to develop products or services for the treatment of humans or animals, agricultural productivity, renewable resources, industrial production and environmental protection”, and whose core business falls among these activities, defined as “pure biotech” according to the definition adopted by Ernst & Young;

• Enterprises that, according to the OECD definition, use “at least one biotechnological method to produce goods or services, or research and development in the biotech field,” and with a smaller share of their economic activities related to biotechnology, defined as “other biotech”. For the purpose of our analysis, “other biotech” comprises the Italian pharmaceutical companies, the subsidiaries of multinational companies based in Italy and “other Italian biotech”, such as CRO (Contract Research Organisation) and other companies not related to the above types.

As usual, the companies of the sample were classified according to the

application area in which they operate (Table 9.1).

The data we compiled and analysed were primarily collected by means of the questionnaire sent by Assobiotec, in cooperation with Farmindustria, to the companies in the sector. Once again, this approach allowed us to access information not normally available from public sources. For the companies who did not reply to the questionnaire, the information was gathered by consulting balance sheets and corporate Internet websites, as well as the international database of Ernst & Young. Based on the analysis of an initial sample of 730 target companies, we identified in fact 407 of them which, for their activities carried out, could coherently meet the definition of biotech company that we have adopted (Table 9.2).

Of the 48 new companies that we identified, 14 were actually set up in 2011, 34 were identified thanks to our market screening ability and added to the 2012 sample, while 16 firms were excluded, not having been properly included last year; these changes are intended to avoid distortions in the comparison phase, because of different sampling. In 2011, the firms no longer active in the field, due to bankruptcy or liquidation, were 19.

As regards red biotech, Table 9.3 defines the different application fields composing

9Chapter 9


Methodology

the sector. For the therapeutics pipeline, the information comes directly from the companies or through screening of public sources made by Assobiotec.

With reference to innovations in the 2013 Report, we considered it appropriate to provide an overview of the clustering process which was activated in response to the Notice of the Italian Research

Ministry (MIUR) of May 30th 2012, relating to the development and strengthening of National Technology Clusters. In particular we focused our attention on those clusters in which the contribution of biotech companies is key, notably the Life Sciences Cluster ALISEI, the Green Chemistry Cluster and the National Agro-food Cluster CL.A.N.

Table 9.2

Results of data collection: comparison of the 2010 Report, 2011 Report, 2012 Report ad 2013 Report with reference to target companies and companies analysed

2010 Report

2011 Report

2012 Report

2013 Report

Target companies 440 550 660 730

Sample- Questionnaires received- Information from balance sheets

No informationNon biotech

319124

1953883

375160

21516510

394155

23923234

407155

25228340

New companies- Set up the previous year

––

566

5421

4834

Table 9.3

Red biotech: application fields

Application field Description

Therapeutic Drugs or other therapeutic approaches, such as gene or cell-based therapies, including:- biologicals: recombinant proteins, monoclonal antibodies, products

based on nucleic acid technology and cell therapy- low molecular weight compounds (small molecules): pharmaceutical

products which are developed, tested, or identified by means of screening methods based on biotechnology

- Advanced Therapy products: gene therapy, cell therapy and tissue engineering

Vaccines Biological preparations for prophylaxis and treatment

Drug delivery Technologies to convey the drugs to a specific site through optimization of their absorption and their distribution (advanced materials, liposomes, antibodies, cell therapy, etc.)

Molecular diagnostics Tests and methods based on DNA/RNA for the diagnosis, prognosis and detection of any predispositions to specific diseases and for the analysis of pathogenic mechanisms

Drug discovery Synthesis, optimization and characterization of drug candidates, assay development, screening and validation activities on medicinal products


Chapter 9


AppendixCompanies with biotech R&D activities

• A.T. Grade • ➢Ab Analitica• ➢Abbott • ➢Abiel• ➢Accelera• ➢Actelion Pharmaceuticals

Italia • ➢Actygea • ➢Adienne• Advanced Biotech Italia• Agrifutur• Agritest• ➢Agroils Technologies• ➢Agrolabo • ➢Alexion Pharma Italy• ➢Alfa Biotech• ➢Algares • ➢Alicebiosources• ➢Allergan• ➢Alltox• ➢Alphagenics Diaco

Biotechnologies• Also Biotech• Altergon Italia• Ambrosia Lab• Amgen Dompé• Anabasis• Analisi & Controlli• Anallergo• Ananas Nanotech• Angelini• Apavadis Biotechnologies • Aptalis Pharma• Aptenia • Aptuit• Apuliabiotech• Archimede R&D • Areta International• Arintha Biotech• Arterra Bioscience• Associated Drug Designers• Astellas Pharma• Avantea• Axxam• B. & C. Biotech• Baxter World Trade Italy• Bayer• Bba Biotech• Bcs Biotech• Beta Renewables• Bgt Italia Biogenomic

Technology• Bict• Bint

• Bio Fab Research• Bio Flag • Bio Genetix• Bio Hi-Tech• Bio3 Research• Bioaesis• Bioagro• Bioanalisi Trentina • Biocell Center• Bioci• Biocomlab• Biodec• Biodermol• Biodigitalvalley• Biodiversity• Bioduct• Bioecopest• Biofer• Biofordrug• Biogen Idec Italia• Biogenera• Bio-Ker• Biolife Italiana• Bioman• Biomarin Europe• Biomat• Biomatica• Biomedical Research• Biomedical Tissues• Biomerieux Italia• Biomicroshear• Bionat• Bionsil• Bionucleon• Bio-On• Bioops• Biopaint• Biopox • Bioprogress Biotech• Bio-Rad Laboratories• Biorep • Biorimedia• Biorna• Biosearch Ambiente• Biosistema• Biosphere• Biostrands• Biosuma• Biosynt• Biotecgen• Biotech 4• Bioteck• Biotest• Biotrack

• Biouniversa• Biounivet• Bluegreen Biotech• Blueprint Biotech• Bluesodlab• Bmr Genomics• Boehringer Ingelheim Italia• Bouty Healthcare• Bracco Imaging• Bristol Myers Squibb• Bsa Ambiente• Byflow• C4t• C5-6 Italy• Cage Chemicals• Callimaco• Cbm• Ccs Aosta• Ceinge Biotecnologie

Avanzate• Celgene• Centro Biotecnologie

Avanzate• ➢ Charles River• Chemi• Chemtex• Chiesi Farmaceutici• Chorisis• Clonit• Cogep• Congenia• Consorzio per le Ricerche

e lo Sviluppo delle Biotecnologie Biotecne

• Cosmo Pharmaceuticals• Costantino e C.• Cpc Biotech• Creabilis Therapeutics• Crs4• Crucell Italy• Cryolab• CSL Behring• CTI Life Sciences• Cutech• Cyanagen• Cyanine Technologies• Cyathus Exquirere Italia• Dac• Dalton Biotecnologie• Delos Ricerche• Derming• DI.V.A.L.• Dia.Pro Diagnostic

Bioprobes

• Diasorin• Diatech• Diatheva• Diesse Diagnostica Senese• Diesse Ricerche• Dinamycode• Dompé farmaceutici• Ecobioservices

and Research• Ecoil• Ecotechsystems• Elan Pharma Italia• Eli Lilly Italia• Eos• Ephoran Multi Imaging

Solutions• Epinova Biotech• Epitech• Eridania-Sadam• Erydel• Espikem• Eugenomics• Euroclone• Eurosen• Eurospital• Eurovix• ➢ Euticals• Exenia Group• Exosomics Siena• Experteam• Explera• Explora• Externautics• Fabbrica Italiana Sintetici• Fase 1• Fastest• Fatro• Fedra Lab• Fem2 – Ambiente• Ferrari Biotech• Fidia Advanced

Biopolymers• Finceramica Faenza• Fotosintetica &

Microbiologica• G&Life• Galileo Research• Geistlich Biomaterials• Geltis Biotech• Gemiblab• Genechron• Genedia• Genemore Italy• Genespin

• Geneticlab• Genomnia• Genovax• Gentium• Genzyme• Gexnano• Gilead Sciences Italia• Gio.Eco• Giotto Biotech• GlaxoSmithKline• Glyconova• Gnosis• Godiagnostics• Grape• Green Lab• Greenceutics• Grifols Italia• HMGBiotech• Ho.P.E.• Holostem Terapie Avanzate• Hpf Nutraceutics• Idrabel Italia• Iga Technology Services• Inbios• Incura• Indena• Innovate Biotechnology• Intercept Italia• Intermune• International Plant Analysis

and Diagnostics• Intoresearch• Iom Ricerca• Ion Source &

Biotechnologies• Ipsen• Isagro• Isogem• Istituto Biochimico Italiano

Giovanni Lorenzini• Istituto di Ricerche

Biomediche Antoine Marxer Rbm

• Istituto di Ricerche Biotecnologiche

• Italfarmaco• Janssen-Cilag• Kayser Italia• Kedrion• Kemotech• Kither Biotech• Kos Genetic• Kron Morelli• Ktedogen


• Laboratorio Genoma • Lea Nanotech• Life Line Lab• Lipinutragen• Lofarma• Mater Biotech• Matric Europa• Matrica• Mavi Sud• Medestea Research

& Production• Mediapharma• Menarini Biotech• Merck Serono• Meristema• Metapontum Agrobios• ➢ Microbion• Micro Biological Survey• Micro4you• Microbo• Microgenomics• Micron Research Service• Millipore• Miltenyi Biotec• Molecular Biotechnology• Molecular Stamping• Molmed• Molteni Therapeutics• Murotherapy• Mybasol• Mybatec• Myrmex• N.T.I.• Naicons• Nano4bio• Nanomaterials• Nanomed Labs• Nanomed3d• Nanovector• Narvalus• Natimab Therapeutics• Naxospharma• Need Pharma• Nerviano Medical Sciences• Neuheart• Neuroscienze Pharmaness• Neuro-Zone• Next Genomics• Nexthera• Ngb Genetics• Nicox Research Institute• Nobil Bio Ricerche• Noray Bioinformatics• Notopharm

• Novagit• Novamont• Novartis• Novartis Vaccines

and Diagnostics• Novo Nordisk Farmaceutici• Noxamet• Nurex• Nutraceutica• Nutrigene• Nutrisearch• Officina Biotecnologica• Okairos• Oncoxx• Ophera• P.A.N.

Piante Acqua Natura• Pfizer Italia• Pharmeste• Philogen• Phytoengineering Italia• Phytoremedial• Pincell• Plantechno• Plasmore• Polymed• Prigen• Primm• Probiotical• Procelltech• Progefarm• Promis Biotech• Proteogen Bio• Proteotech• Raresplice• Re.D.D.• Recordati• Relivia• Remembrane• Research and Innovation• Resindion• Rigenerand• Roche• Rotalactis• Rottapharm Biotech• S B Technology• Sacace Biotecnologies• Safan Bioninformatics• Salentec• Sanofi-Aventis• Sclavo Diagnostics

International• Serge Genomics• Setlance

• Shire• Siena Biotech• Sienabiografix• Sifi• Sigea• Sigma-Tau• Silicon Biosystem• Sirius-Biotech• Sitec Consulting• Skin Squared• Smile Biotech• Soft Materials

& Technologies• Sorta• Spaceland• Spider Biotech• Sprin• Stemgen• Sulfidris• Synbiotec• Syntech• Takeda Italia Farmaceutici• Takis• Target Heart Biotec• Tecan Italia• Technogenetics• Tecna • Tectronik• Tethis• Teva• Therabor Pharmaceuticals• Tib Molbiol• Tissuelab• Toma Advanced

Biomedical Assays• Top• Tor• Toscana Biomarkers• Transactiva• Trustech• Turval Biotechnologies• Tydockpharma• Ucb Pharma• Ufpeptides• Vetogene• Vetspin• Virostatics• Vismederi• Vivabiocell• Wetware Concept• Wezen

Biopharmaceuticals• Xeptagen• Ylichron


Authors

Assobiotec: Rita Fucci Alvise Sagramoso Alessandra Mancia Leonardo Vingiani

Ernst & Young: Antonio Irione Guido Grignaffini Fabio Negri Silvia Allodi Pierfrancesco Servidio

In cooperation with:

Farmindustria: Maria Grazia Chimenti Maria Adelaide Bottaro Carlo Riccini Agostino Carloni

With contributions from:

Corrado Passera(Minister of Economic Development)

Alessandro Sidoli (President of Assobiotec)

Massimo Scaccabarozzi (President of Farmindustria)

Fulvio Uggeri (Head of Bracco Research Centre - Milano)

Camillo Ricordi (President of The Cure Alliance and Director of the Diabetes Research Institute and Cell Transplant Center, University of Miami - Florida)

Carlo Incerti (Senior Vice President and Head of Genzyme Global Medical Affairs)

Art direction:In Pagina sas, Saronno (VA)

Print:Elledue, Milan

Milan, March 2013

Italian Biotechnology

Report

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Italian Biotechnology Report - 2013

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