1see also www.lifesciencesoutlook.com
Dutch Life Sciences Outlook 2014
The Dutch Life Sciences Outlook is created under the supervision of Prof. dr. Fred van Eenennaam and Ir. Maarten Koomans. It is supported by the International Academic Advisory Council
-Academic partners--Developer-
-Since 2009-
-Partners-
-The Fifth Edition-
Monitoring & Advising
The cluster is at a crossroads.
2see also www.lifesciencesoutlook.com
Dear readers and friends,
In this Dutch Life Sciences Outlook 2014, The Decision Group has taken a deep dive into investigating the Dutch Life Sciences cluster, from both,
national and international perspectives. A thorough analysis of a large database (at company level) built over the last 5 years and involvement of
international cluster experts enable this Outlook to identify the successful achievements of the Dutch cluster and to point out its options towards
excellence.
The Dutch Life Sciences Outlook 2014 is intended to be a strong collection of facts and serve as a basis for a high level dialogue with all stakeholders.
“What kind of cluster does the Dutch LS cluster want to be?” is the central question of the Outlook 2014. Looking from a company perspective, amongst
other, three strategic options for the Dutch LS cluster are formulated. Cluster theories, extensive research, strategic reports and input from international
experts and institutions such as CEBR and HBS Microeconomics of Competitiveness are considered when formulating these options.
The Decision Group very much views its work as work in progress in a rapidly transforming life sciences cluster. Therefore, we encourage you to
participate in next year’s Outlook and welcome your help in realizing research ideas.
Foreword - Dutch Life Sciences Outlook 2014
On behalf of the team of The Decision Group; Kim Brüheim MSc, Bogdan Toma MSc, and business analysts.
With warmest regards,
Prof. dr. Fred van Eenennaam - Partner The Decision Group, Institute & Ventures.
- Affiliated professor of Microeconomics of Competitiveness, Harvard Business School
Ir. Maarten Koomans - Partner The Decision Group, Institute & Ventures
3see also www.lifesciencesoutlook.com
Contents of the Dutch Life Sciences Outlook 2014
Since 2009, the performance and progress of the Dutch Life Sciences cluster is presented annually, in the Dutch Life Sciences Outlook.
Executive summary 4
The Outlook 2014 has been compiled with the utmost care based upon available data in 2012. The authors are well aware of the fact that the data position on the Dutch LS cluster needs to be
improved by the cluster to allow for adequate monitoring of the effects of proposed strategic policy actions. Readers are advised to contact the authors of the report to avoid potential
misinterpretations of the reported results. The authors welcome suggestions for improvement on the Outlook 2015 (please contact: [email protected]).
Data on Cluster Size, Output and Input
Size: Number of companies & Employment 30
Output: Number of products & Revenue 36
Input: Public investments & Private investments 40
2
3
4
Contents
Cluster Bridges & Cluster Organizations
A gap analysis 45
Appendices:6
Not included in this version but available for download at www.lifesciencesoutlook.nl
1
The Dutch Life Sciences Cluster – The cluster is at a crossroads.
The Netherlands 10
International 15
Advice 20
A. Monitoring methodology 71
B. Bibliography 95
C. Glossary of terms 99
D. Consulted experts and organizations 105
5 A trend analysis
Trends 56
Possible explanations 59
4see also www.lifesciencesoutlook.com
BlueRidgeKitties
Executive summary1
5see also www.lifesciencesoutlook.com
The Dutch Life Sciences cluster is stabilizing
82
94
107
95
96
2008
2009
2010
2011
2012
18,2
18,7
17,7
17,8
19
2008
2009
2010
2011
2012
- 84%**
167
622
280
1887
304
2008
2009
2010
2011
2012
248
248
297
291
250
2008
2009
2010
2011
2012
298
314
329
344
361
2008
2009
2010
2011
2012
Listed and non-listed companies (KPI 1) Total products (KPI 3)
Total revenue in b€ (KPI 4)
PPPs*** and subsidies in m€ (KPI 5)
Milestone capital, Venture
capital, IPO’s… in m€ (KPI 6)
- 14%
+ 7%
+ 1%
- 0 %
+ 5%
24095
24255
24385
22732
22623
2008
2009
2010
2011
2012
Output (revenue and products) is slightly increasing. Size (employees and companies) is constant, whilst Input (public)¹ and (private)²are decreasing.
Total jobs (KPI* 2)
* Throughout this paper the acronym KPI stands for (Key) Performance Indicator
** Including the effect of the acquisition of Crucell by J&J in 2011 amounting m1687€
*** Public Private Partnerships
¹ For detailed explanations see page 39 and 61
² For detailed explanations see page 41 - 43
Hereinafter the words Dutch Life Sciences cluster,
Dutch LS cluster or the Dutch cluster are used
interchangeably unless other ways mentioned.
6see also www.lifesciencesoutlook.com
However, the Dutch LS cluster is growing less rapidly compared to the leading clusters
Over the years (2008-2012), the Dutch LS cluster has been growing at a slower pace compared to the key international clusters.
Primarily on Innovation, Input and Competitiveness.
Progress
(2008-2012)
The Dutch Life Sciences cluster 2008 - 2012
Is growing at a slower pace on:
1 A more detailed account of this data is given in Chapter 2
2 The scale is adjusted to make a practical comparison possible
Innovation, in terms of number of products
in development.
Input, in terms of private investments.
Competitiveness, mainly, in terms of
perceived impact of macro policies and
lack of innovation. (for details see page 18)
2
1
3
And according to the Global Competitiveness report 2013-2014 :
Leading Clusters:
Boston Area, San Diego area,
RTP area, Munich area, Medicon
Valley, Switzerland, UK.
7see also www.lifesciencesoutlook.com
What does it mean for the Dutch LS cluster?
The current situation of the Dutch LS cluster evokes questions about possible consequences and explanations, resulting in one key
decision: What kind of cluster does the Dutch LS cluster want to become?
A Stabilized Dutch LS cluster?
• Recovery after downsizing of companies?
After a few years of downsizing, the large increase in lay offs in the
Dutch LS cluster has slowed down. The employment rate shows signs
of stabilization – even a slight increase in employees.
• Financial crisis stabilizes?
The Dutch GDP has increased since 2010 onwards.
• (Public) investments are paying off?
Large investments were made in 2008 and 2009, and it may be
possible that the effect of earlier investments is stabilizing the current
performance of the cluster.
Growing less rapidly compared to international peers?
• Will we be running out of steam?
With an impeding growth in input (private investments) and stagnation of
development of new products, compared to the top clusters, the future
will be uncertain.
• Can the cluster accelerate to keep the growth track of its peers?
How strong is the resilience of the Dutch LS cluster? Are we able to go a
step further and align with the top LS clusters?
• The international cluster experts* and academic literature studies*
indicate that a dialogue with all stakeholders should be started to
answer the question:
“What kind of cluster does the Dutch LS cluster want to become?”
See for more info: page 28
*See Appendix D (www.lifesciencesoutlook.com for an overview of international cluster and academic experts.
8see also www.lifesciencesoutlook.com
What are the Dutch Life Sciences cluster options?
International cluster experts** were asked for their opinion on the current situation. They stated that the Dutch LS cluster is at a
crossroads, with several options.
Options*: Organization of clusters: Company Role: Actions:
Fragmented hub approach
In line with the current strategy/policy.
Business parks pop up, functioning as
individual hubs. This option will most
likely result in downsizing of the
cluster in the long run.
Create a cluster based on
smart specialization
Boost innovation by enabling the
cluster to focus on its strengths.
Smart specialization understands that
spreading investment too thinly
across several frontier technology
fields risks limiting the impact in any
one area.
Next generation convergence
Co-creation with adjacent clusters or
industries may open doors to develop
new possibilities and products, create
value by combining expertise and
technology of adjacent clusters such
as the Food or Agriculture industry .
2
1
3
1.Stimulate a favorable tax climate
(accounts for all three options).
2.Focus on attracting and retaining
talent (p. 22, 23)
(accounts for all three options).
3.Dialogue on assets, technologies
and potential partners. What do
we have? Identify points with
high strategic impact on the
cluster.
4.Optimize the internal cluster
bridges, and improve
communication (p.24)
5.Start testing co-creation hypo-
theses by short projects with
adjacent clusters or industries –
Scrum method (p.25).
5
*Account always a 20% free experimental space.
**See Appendix D (www.lifesciencesoutlook.com for an overview of international cluster experts.
Explore new strategic options and
new ways of working such as new
R&D Business models (p.26, 27)
(accounts for all three options).
Connect with international hubs.
(accounts for all three options).
Continuous dialogue with other
companies to make use of the best
technology and to avoid unneces-
sary duplication.
Being open to other initiatives.
Regions (hubs) are on their own,
stimulated by regional subsidies or
policies. Weak linkages with other
Dutch hubs, no cluster on a national
level. A need for linkages between
international hubs to create
competitive advantage.
Cooperation of firms, actors, and
corresponding bridges in a strong
network on a national level. Avoid
unnecessary duplication.
*** The Decision Group acknowledges that there are more options that could be
identified for the Dutch LS cluster and would like to invite you for a dialogue.
.
9see also www.lifesciencesoutlook.com
www.generalatronics.com
The Dutch Life Science Cluster – The cluster is at a crossroads2
The Netherlands 10
International 15
Advice 20
10see also www.lifesciencesoutlook.com
361
companies
The Dutch LS cluster - performance
The Dutch LS cluster aims at delivering value for health & wealth. An annual Outlook measures the performance and progress of the
core value chain of the Dutch LS cluster by six Key Performance Indicators* (KPIs).
304 m€
250 m€
19 b€
96 products
22623 jobs
361
companies
International
The Netherlands
Advice
KPI 1
KPI 2
KPI 3
KPI 4
KPI 5
KPI 6
Dutch Life Sciences
cluster 2012
* See the Appendix A on www.lifesciencesoutlook.com for the methodology and the exact definitions for all KPIs.
** The Health is also part of the core value chain of the Dutch LS cluster and will be addressed in the Health Outlook 2014
**
11see also www.lifesciencesoutlook.com
The Dutch LS cluster - progress
In 2012 compared to 2011, the Dutch LS cluster shows progress on 3 out of 6 performance indicators: Number of companies (5%),
Number of products (1%) and Revenue (7%). SMEs* have a large impact on the progress of the cluster.
361
companies
-84%
-14%
+7%
+1%
-0%
+5%
1. Stabilizing signs of the Dutch LS cluster
On a national level the Dutch LS cluster seems to
become healthier.
2. SMEs are growing
• Number of companies
• Number of employees
3. Revenue is increasing
Especially for the SMEs in relative terms.
International
The Netherlands
Advice
Dutch Life Sciences
cluster 2012
KPI 1
KPI 2
KPI 3
KPI 4
KPI 5
KPI 6
Overall data observations on a national level:
* Throughout this paper the acronym SME stands for small and medium sized enterprises as defied by EU recommendation 2003/361 unless otherwise mentioned.
12see also www.lifesciencesoutlook.com
The stabilizing signs of the Dutch LS cluster
On a national level the Dutch LS cluster seems to stabilize: new initiatives pop up, the number of bioparks is increasing and SMEs
have successful financial rounds.
The number of offices supporting the patenting process has increased.
The Netherlands has consistently been above the EU28 average when considering
the number of patents registered: only 4 countries (Germany, France, U.K and
Italy) have registered more patents than the Netherlands.
The number of Life Sciences & Health events and congresses has increased.
Amongst the main event organizers are Innovation for Health Netherlands Genomic
Initiative and Dutch Masters of Life Sciences and Health**.
The number of BioParks has increased from 44 to 63.
Recently new parks arose in Nijmegen (NovioTech), Delft (Science Park Technopolis) and Lelystad (Bio Science Park Lelystad).
There are more regional initiatives such as the RedMedTech partnership.
RedMedTech Highway is an ecosystem where knowledge is transformed into products and services for the healthcare industry. It covers the areas
of Noord-Brabant, Overijssel and Gelderland and its stakeholders envision that this ecosystem should lead the European Life Sciences & Health
cluster and substantially contribute to sustainable healthcare in the East of the Netherlands.
* For a detailed definition of the Dutch cluster please check Appendix A on Monitoring Methodology.
** www.innovationforhealth.nl,www.lifesciences.com; www.genomics.nl,
*** http://ir.prosensa.eu/releasedetail.cfm?ReleaseID=775476
Successful financial rounds
Successful financial rounds were completed in the Netherlands such as: Lanthio
Pharma, Cross Beta Biosciences and Prosensa. The latter announced at the
beginning of July 2013 the closing of its IPO offering 6,900,000 shares at a price of
$13.00 per share***.
1
0
500
1000
1500
2000
2500
2007 2008 2009 2010 2011 2012
Nu
mb
er o
f p
aten
ts
Patents awarded by EPO
Average EU 28 Netherlands
Source: EPO, http://www.epo.org/about-us/annual-reports-
statistics/statistics/granted-patents.html, Accessed on Dec 2013
International
The Netherlands
Advice
13see also www.lifesciencesoutlook.com
Small and medium sized companies are growing
Since 2008, the number of companies has increased: those of 1-5 employees grew from 155 in 2011 to 205 companies in 2012 and
those of 6-50 employees from 100 to 106 companies. The employment with SMEs* outperformed the Dutch economy by 5.69% (growth
rate).
* The acronym SME is used here to refer to companies with 1 to 500 employees.
** See the Appendix A on www.lifesciencesoutlook.com for the exact definitions of No of companies.
155166
178190
205
100 105 107 105 106
0
50
100
150
200
250
2008 2009 2010 2011 2012
Nu
mb
er o
f co
mp
anie
s
Number of companies Dutch LS clusterListed and non-listed companies
1-5 employees 6-50 employees
-10,00%
-5,00%
0,00%
5,00%
10,00%
2008/2009 2009/2010 2010/2011 2011/2012
Emp
loym
ent
gro
wth
rat
e
Employment growth in the Netherlands and in the Dutch LS cluster
Employment in the Netherlands
Employment in the Dutch LS Cluster
Employment with companies <500 employees Dutch Cluster
2 International
The Netherlands
Advice
14see also www.lifesciencesoutlook.com
Revenue is increasing
The total revenue increased from €17.8b in 2011 to €19b in 2012. Especially, the revenue of the SMEs** grew by 20% for small
companies and by 12.5% for medium sized companies.
0
2
4
6
8
10
12
14
16
18
20
2011 2012
Rev
enu
e (b€
)
Total Revenue Dutch LS cluster
Small(1-50 employees)
Medium(51 - 250 employees)
Large(> 250 employees)
6,7%17.819
* See the Appendix A on www.lifesciencesoutlook.com for the exact definitions of Revenue.
**For KPI 4 the acronym SMEs is used to refer to companies with 1-250 employees.
0,5 0,6
0,8
0,9
0
0,2
0,4
0,6
0,8
1
1,2
1,4
1,6
2011 2012
Rev
enu
e (b€
)
Revenue SMEs Dutch LS cluster
Small(1-50 employees)
Medium(51 - 250 employees)
20%
12,5%1.3
1.5
3 International
The Netherlands
Advice
15see also www.lifesciencesoutlook.com
International perspective
Based on The Decision Group’s data collection over the past five years, the international cluster experts have observed that the Dutch
LS cluster is growing at a slower pace on Innovation, Input and Competitiveness compared to other countries and key international
clusters.
The Dutch Life Sciences cluster 2008 - 2012
is growing at a slower pace in progress and growth on:
Innovation, in terms of number of products
in development
Input, in terms of private investments.
Competitiveness, mainly, in terms of
perceived impact of macro policies and
lack of innovation. (for details see page 18)
2
1
3
1 A more detailed account of this data is given in Chapter 2
2 The scale is adjusted to make a practical comparison possible
.
Performance (2011-2012)
The Netherlands
Advice
International
16see also www.lifesciencesoutlook.com
-5,00%
0,00%
5,00%
10,00%
15,00%
20,00%
25,00%
30,00%
35,00%
40,00%
No of products CAGR 2008-2012
47 7 7
14
40
45
55 55
48
0
10
20
30
40
50
60
2008 2009 2010 2011 2012N
um
bers
of
pro
ducts
Number of products Dutch LS clusterListed and non-listed companies
Drugs - Clinical phase I Medical Devices in development
Innovation, in terms of number of products in development
Whilst other international clusters grow in terms of number of products by an average CAGR of 9.01%, the Netherlands display a
CAGR of 1.07%. Overall, the number of products in development in the Netherlands is relatively constant.
* See the Appendix A on Monitoring Methodology available at www.lifesciencesoutlook.com for the exact definitions of Products in Development.
1
In 2012, the Dutch LS cluster doubled the number of drugs at phase I (7 to 14
products). The number of medical devices dropped for the first time in the last
three years from 55 to 48 products.
Average CAGR 2008-2012 9.01%
The Netherlands
Advice
International
17see also www.lifesciencesoutlook.com
0,00%
10,00%
20,00%
30,00%
40,00%
50,00%
60,00%
70,00%
80,00%
90,00%
Private Investments CAGR 2008-2012
Input in terms of private investments
Compared to the other key clusters, which have grown by an average CAGR of 32.83%, the Dutch LS cluster has attracted private investments by a CAGR of 12.49%. One exception is notable: the acquisition of Crucell by J&J for €1.687m in 2011.
*See the Appendix A on Monitoring Methodology available at www.lifesciencesoutlook.com for the exact definitions of Private investments.
2
Venture Capital (VC) has constantly grown over the years: in 2012, VC grew
by 13% compared to 2011 (from 161 to 182 m€).
25175 65 39 90
142 131 145161 182
2915
503302
201687
0
200
400
600
800
1000
1200
1400
1600
1800
2000
2008 2009 2010 2011 2012In
vest
men
ts (
m E
uro
s )
Private investments raised Dutch LS cluster
1887
167 280 304623
Average CAGR 2008-2012 32.83%
The Netherlands
Advice
International
Average private investments (2008-2012) €652.2m
18see also www.lifesciencesoutlook.com
Declining competitiveness compared to 2011
According to Global Competitiveness Report 2013-2014, the Netherlands’ competitiveness declined from the 5th position in 2011 to the
8th position in 2012.
The first 4 factors that are perceived to have a negative impact on competitiveness are access to financing,
restrictive labor regulations, insufficient capacity to innovate and inefficient government bureaucracy
* Figure adapted after the “Global Competitiveness report” 2012-2013 and 2013-2014, World Economic Forum
0,0 5,0 10,0 15,0 20,0 25,0
Access to financing
Restrictive labour regulations
Insufficient capacity to innovate
Inefficient government bureaucracy
Policy instability
Inadequately educated workforce
Tax rates
Poor work ethic in national labour force
Inflation
Tax regulation
Inadequate supply of infrastructure
Government instability/coups
Foreign currency regulations
Crime and theft
Corruption
Poor public health
Percent of respondents
Most Problematic Factors for Doing Business in the Netherlands
2012
2011
3The Netherlands
Advice
International
19see also www.lifesciencesoutlook.com
Impeding factors may have impact on cluster growth
National Level Impediments
A. Historical International Differences.
The European clusters may lag because of legislations that inhibit innovation, immobile labor markets, less
interaction between universities and the private sector and to a certain extend the availability of venture capital.
B. Gaps in Cluster Bridges.
In particular the Dutch cluster displays gaps on the bridges between both life sciences companies and capital
providers as well as between the companies and the government.
C. Public Investments Pressures.
The level of public investments is expected to decrease and from 2014 onwards the public investments will be
regulated, amongst other, via new TKI regulations.
D. Patent Cliff & Generics.
In 2012 patent expiration, at global level, amounted $27 billion in value and in 63% of the drugs sold in the
Netherlands were generic drugs.
E. Pricing Pressures.
The penetration of low cost generic producers, governmental regulations and managed care providers, among
others, may put pressure on prices.
F. Costing Pressures.
Increasing scrutiny of regulators and lawsuits on allegation of breaching patents, amongst others, may
increase the costs.
Possible explanations* to impeding factors are the historical international differences, the worldwide patent cliff, the current gaps in
the Dutch LS cluster and/or the actual pressures on public investments, pricing and costing.
World Level Impediments
* For detailed explanation and analysis see chapter 5.
The Netherlands
Advice
International
for details see p.60
for details see p.61
for details see p.62
for details see p.63
for details see p.64
for details see p.65
20see also www.lifesciencesoutlook.com
How to address the current situation of the cluster?
International cluster experts were asked for their opinion on the current situation. Furthermore, extensive research is performed on
cluster theories.
Literature Study – extensive research International Advice on Clusters Cluster Theories
Strategic reports Database Analysis Input from institutions
The Netherlands
International
Advice
21see also www.lifesciencesoutlook.com
What are the Dutch Life Sciences cluster options?
International cluster experts were asked for their opinion on the current situation. They stated that the Dutch LS cluster is at a
crossroads, with several options.
Options*: Organization of clusters: Company Role: Actions:
Fragmented hub approach
In line with the current strategy/policy.
Business parks pop up, functioning as
individual hubs. This option will most
likely result in downsizing of the
cluster in the long run.
Create a cluster based on
smart specialization
Boost innovation by enabling the
cluster to focus on its strengths.
Smart specialization understands that
spreading investment too thinly
across several frontier technology
fields risks limiting the impact in any
one area.
Next generation convergence
Co-creation with adjacent clusters or
industries may open doors to develop
new possibilities and products, create
value by combining expertise and
technology of adjacent clusters such
as the Food or Agriculture industry .
2
1
3
5
Explore new strategic options and
new ways of working such as new
R&D Business models (p.26, 27)
(accounts for all three options).
Connect with international hubs.
(accounts for all three options).
Continuous dialogue with other
companies to make use of the best
technology and to avoid
unnecessary duplication.
Being open to other initiatives.
Regions (hubs) are on their own,
stimulated by regional subsidies or
policies. Weak linkages with other
Dutch hubs, no cluster on a national
level. A need for linkages between
international hubs to create
competitive advantage.
Cooperation of firms, actors, and
corresponding bridges in a strong
network on a national level. Avoid
unnecessary duplication.
* We acknowledge that there are more options that could be identified
and find suitable for the Dutch LS cluster and would like to invite you to
join us to point them out.
.
In the following pages, some actions have been elaborated on.
1.Stimulate a favorable tax climate
(accounts for all three options).
2.Focus on attracting and retaining
talent (p. 22, 23)
(accounts for all three options).
3.Dialogue on assets, technologies
and potential partners. What do
we have? Identify points with
high strategic impact on the
cluster.
4.Optimize the internal cluster
bridges, and improve
communication (p.24)
5.Start testing co-creation hypo-
theses by short projects with
adjacent clusters or industries –
Scrum method (p.25).
22see also www.lifesciencesoutlook.com
Action 2 - Focus on attracting and retaining talent (1/2)
Investing in attracting talent, retaining talent and developing education is essential for a successful cluster and its innovativeness.
Invest in a strong Education & Talent Bridge, through contact between cluster representatives and the educational organizations to
improve education.
“Strengthen the curriculum of PhD students and postdocs
with material on the entire drug development. Each
researcher works on his/her own specific part. At some
point they need to understand how their research fits in
and adds value to the context of health and wealth.” -
Jorg Jansen, Managing Director TiPharma
“Next to a good investment climate, attracting AND
keeping talent is essential for a successful cluster” -
Göran Lindqvist, Principal Associate at the Center for Strategy and
Competitiveness (CSC) at the Stockholm School of Economics and
Cluster Observatory project manager
Attracting, investing and retaining talent
Results from the Conjoint analysis*. The companies have indicated that they
would like to be more involved in the curriculum of universities, for example by
way of an internship program or guest lectures. They would also like a special
post-doctoral program for pharmaceutical professionals in the industry.
0
2
4
6
8
10
12
14
16
18
20
Strongly disagree Largely disagree Neutral Largely agree Strongly agree
Education Bridge - Companies should be more involved in curriculum
The Netherlands
International
Advice
2
*See the chapter 4 Cluster Organizations for the data, interviews and results of the conjoint analysis.
23see also www.lifesciencesoutlook.com
Action 2 - Focus on attracting and retaining talent (2/2)
Further increase collaboration with universities, CROs** and Align Incentives Industry & Universities.
42,0% 38,3%46,0% 44,4% 40,7%
58,0% 61,7%54,0% 55,6% 59,3%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2008 2009 2010 2011 2012
% n
o o
f d
rugs
Percent of the number of drugs in development by Dutch Companies and UMCs
Drugs developed by Companies Drugs developed by Universities
Currently, universities are more successful in developing drugs. In 2012,
59,3% of all drugs were developed by UMCs, compared to 40,7% by
Dutch Companies. This is probably due to their access to a large pool of
talented employees (from students to researchers).
Results from the Conjoint analysis*. An obstacle that the cluster
organizations and firms experience is that the incentives for
academic researchers are not aligned with those of the industry.
The main incentive for academic researchers is publications in
scientific journals. This pressure can sometimes be very high. In
the industry the incentive is more focused on the number of
patents.
*See the chapter 4 Cluster Organizations for the data, interviews and results of the conjoint analysis.
**Throughout this paper CRO(s) stand(s) for Contract Research Organization(s)
0
2
4
6
8
10
12
14
Stronglydisagree
Largely disagree Neutral Largely agree Strongly agree
Incentives of academic researchers should be better aligned with the industry, to stimulate
collaboration between them
The Netherlands
International
Advice
2
24see also www.lifesciencesoutlook.com
Action 4 - Optimize the internal cluster bridges
Minimizing the gaps between firms and actors can be done primarily through improving communication.
*See the chapter 4 Cluster Organizations for the data, interviews and results of the conjoint analysis.
The Netherlands
International
Advice
1. Better communication between actors and bridges
2. Involve firms in the curriculum: Internship programs, guest lectures.
3. The government and policy bridge can help the sector to become a successful cluster
a. Offer a consistent policy.
b. Communicate with companies on regulatory aspects: Companies want ‘seat
at the table’.
c. Provide more seed investments.
d. Risk hedging for start ups and small companies (comparative research with
other countries, e.g. Germany and USA).
4. The Healthcare system should be more open for innovative remedies
a. Develop a system for conditional admission.
5. There is a role for cluster organizations on the Capital Bridge
a. Review the financing system: process from seed investments to IPO or
acquisitions.
b. Setting up specialized funds in financial industry for investments in the life
sciences cluster.
6. There is a role for cluster organizations on the Global Bridge
a. Focus on a collective story.
4
25see also www.lifesciencesoutlook.com
Action 5 – Test of co-creation hypothesis
Use the scrum method (accepting that the option cannot be fully understood or defined, focusing instead on maximizing the clusters'
ability to deliver quickly) to identify potential co-creation clusters.
5The Netherlands
International
Advice
Source: Ministerie van Economische Zaken, Landbouw en Innovatie
The Dutch Medical Devices sector has increased its participation to world export
market share. In 2010, its size was $15 billion.
The Dutch government wants to make even stronger the top
sectors in which the Netherlands excels worldwide.
26see also www.lifesciencesoutlook.com
Insights in the future
A few options to gain strategic flexibility and boost competitiveness are to break down the wall between R&D and product
development, to develop new decision tools, and/or to personalized medicine and niche products.
Company Role – Strategic options to boost competitiveness
Break down the wall between R&D and product development.
A strategic conversation between the two departments can lead to
better results. Switch from marketing to science and investigate
therapies that make economic as well as medical sense.
Develop new decision tools for new phase zero drugs. This will
determine the winners in the early stage. (Real Option Model to
appraise R&D and new projects with zero or negative NPV,
innovation and managerial flexibility).
Compete on value not on prices. Focusing on a few research
areas and targeted therapies that make economic and medical
sense can help you gain control over your pipeline and increase
the value for your patients and stockholders. Given the increasing
demand for “tailor made” drugs, focus on personalized medicine
and on niche product i.e. orphan drugs.
The Netherlands
International
Advice
COMPETITIVENESS
New R&D models
Focus on niche
products i.e.
orphan drugs
Personalized
medicines
New decision
tools
27see also www.lifesciencesoutlook.com
COMPETITIVENESS
Company Role – New ways of working
A few examples of approaching new ways of working are to enter emerging markets, diversify the risks, obtain financial and R&D
synergies and/or improve operational excellence.
Especially focus on cross border expansion given by the attractiveness of emerging markets and where amongst other it is expected that governments
will increase their health expenditure together with the increase in GDP per capita.
Because the capital is scarce we expect that companies will enter in joint-ventures to diversify the risks and make use of each other’s dynamic
capabilities to tackle the pressure on productivity and profitability. In the same time, try to divest and focus on core activities.
.
Cross-border
expansion
Process
innovation New R&D models
Focused joint-
ventures to
account for R&D
and financial
synergies
Diversify the risk(s)
Enter emerging markets
The Netherlands
International
Advice
Improve operational excellence
By making use of process innovation to release the pressure on costing and decrease time to market.
28see also www.lifesciencesoutlook.com
Start a high level dialog
The international cluster experts indicate that a dialogue with all stakeholders should be started to answer the question: “What kind of
cluster does the Dutch LS cluster want to be?”. Based on this discussion, actions and a strategic agenda can be defined.
Join us: Options:
Fragmented hub approach
Create a cluster based on smart
specialization
Next generation convergence
Dialogue with all stakeholders:
Interested in a session (Dialogue with
all stakeholders) to discuss the
options and performance of the Dutch
Life Sciences Outlook?
Please contact The Decision Group:
2
1
3
29see also www.lifesciencesoutlook.com
Data on Cluster Output, Input and Size
Size: Number of companies & Employment…………………29
Output: Number of products & Revenue………………………..35
Input: Public investments & Private investments…………….39
www.genengnews.com
3
30see also www.lifesciencesoutlook.com
155 166 178 190 205
100105
107105
106
0
50
100
150
200
250
300
350
2008 2009 2010 2011 2012
Nu
mb
er o
f co
mp
anie
s
Number of companies Dutch LS clusterListed and non-listed companies
1-5 employees 102 118 135 6-50 employees 126 131 141
Performance indicator #1: Number of companies
The number of companies has consistently increased over the years. These grew by 5%, from 344 in 2011 to 361 in 2012.
298314
329344
361
International
Forecast
The Netherlands
Companies that have 1 – 5 employees have had a significant contribution to the amount of growth
in companies by 7,9% from 190 in 2011 to 205 in 2012.
* See the Appendix A on Monitoring Methodology available at www.lifesciencesoutlook.com for the exact definitions of Number of companies.
31see also www.lifesciencesoutlook.com
Performance indicator #1: Number of companies
The Boston and San Diego areas have been preferential for starting new companies. The Boston area grew from 1277 in 2011 to 1367
companies in 2012 and San Diego from 683 in 2011 to 854 companies in 2012.
0
5
10
15
20
25
30
35
40
45
50
0
200
400
600
800
1000
1200
1400
1600
Nu
mb
er o
f co
mp
anie
s (p
er c
apit
a/1
00
00
0)
Nu
mb
er o
f co
mp
anie
s
Number of companies key clustersListed and non-listed companies
2011 2012 Number of companies per capita/100000
Forecast
The Netherlands
International
* See Appendix A on Monitoring Methodology available at www.lifesciencesoutlook.com for the exact definitions of Number of companies.
** RTP stands hereinafter for Research Triangle Park (region in North Carolina- the U.S)
32see also www.lifesciencesoutlook.com
Performance indicator #1: Number of companies
In 2013 compared to 2012, companies with 1-5 employees are expected to make a significant contribution to the size of the cluster, with
a 5% increase (from 205 to 215). Companies of 25-50 employees are predicted to grow by 4.4% (from 45 to 47).
0
50
100
150
200
250
300
350
400
2012 2013
Nu
mb
er o
f co
mp
anie
s
Number of companies Dutch LS clusterListed and non-listed companies
>50 employees
26-50 employees
11-25 employees
6-10 employees
1-5 employees
361 377
The Netherlands
International
Forecast
* See the Appendix A on Monitoring Methodology available at www.lifesciencesoutlook.com for the exact definitions of Number of companies.
33see also www.lifesciencesoutlook.com
Performance indicator #2: Employment
Employment by large companies decreased by 6.6%, from 11352 in 2011 to 10596 employees in 2012. Employment by companies with
less than 500 employees increased by 5.7% from 11380 in 2011 to 12027 in 2012.
462 365 1018
1273
8262
11352
Employment Dutch LS cluster (2011)
1-5 employees 6-10 employees 11-25 employees
26-50 employees 51-500 employees >500 employees
475 356 1099
1325
8772
10596
Employment Dutch LS cluster (2012)
1-5 employees 6-10 employees 11-25 employees
26-50 employees 51-500 employees >500 employees
International
Forecast
The Netherlands
1138012027
* See the Appendix A on Monitoring Methodology available at www.lifesciencesoutlook.com for the exact definitions of Employment.
34see also www.lifesciencesoutlook.com
In 2012 the Dutch cluster displayed a small decrease in employment. The Munich area displayed the highest increase in employment,
from 42.545 in 2011 to 43.790 employees in 2012.
Performance indicator #2: Employment
0
2
4
6
8
10
12
14
0
10000
20000
30000
40000
50000
60000
Emp
loym
ent
rate
(p
er c
apit
a/1
00
0)
Emp
loym
ent
Employment key clustersListed and non-listed companies
2011 2012 2012 (Capita/1000)
Forecast
The Netherlands
International
* See the Appendix A on Monitoring Methodology available at www.lifesciencesoutlook.com for the exact definitions of Employment.
35see also www.lifesciencesoutlook.com
1044 1031 1016 1273 1325 1414
5296 5322 5244
8262 8772 9635
16456 16617 1678911352 10596
10596
0
5000
10000
15000
20000
25000
2008 2009 2010 2011 2012 2013
Emp
loym
ent
Employment Dutch LS clusterListed and non-listed companies
>500 employees
51-500 employees
26-50 employees
Performance indicator #2: Employment
The employment by large companies (>500 employees) is expected to slow down whilst the employment by companies with 26-50
employees is expected to increase by 6,7% (from 1325 to 1414). The employment by companies with 51-500 employees is also expected
to increase, by 9,8% from 8772 to 9635.
The Netherlands
International
Forecast
* See the Appendix A on Monitoring Methodology available at www.lifesciencesoutlook.com for the exact definitions of Employment.
36see also www.lifesciencesoutlook.com
4 7 7 7 1418
21 2513
13
2021 20
2021
40
4555
5548
0
20
40
60
80
100
120
2008 2009 2010 2011 2012
Nu
mb
ers
of
pro
du
cts
Number of products Dutch LS clusterListed and non-listed companies
Drugs - Clinical phase I Drugs - Clinical phase II
Drugs - Clinical phase III Medical Devices in development
Performance indicator #3: Number of products
The number of drugs in phase I increased by 100% from 7 in 2011 to 14 in 2012. The total number of products in 2012 increased by 1
product (from 95 to 96), compared to 2011.
- Source: The Decision Group database -
International
Forecast
The Netherlands
9695
107
94
82
* See the Appendix A on Monitoring Methodology available at www.lifesciencesoutlook.com for the exact definitions of Number of Products.
37see also www.lifesciencesoutlook.com
Performance indicator #3: Number of products
From 2011 to 2012, the RTP area and Switzerland displayed the largest increase in the total number of products with 255 to 274 and
220 to 270, respectively. The Boston area showed a large decrease (-77 products).
0
5
10
15
20
25
0
100
200
300
400
500
600
Nu
mb
er o
f p
rod
uct
s (p
er c
apit
a/1
00
00
0)
Nu
mb
er o
f p
rod
uct
s
Number of products key clusters(clinical phase I,II,III and medical devices in development)
Number of products in 2011 Number of products in 2012 2012 product per capita/100000
Forecast
The Netherlands
International
* See the Appendix A on Monitoring Methodology available at www.lifesciencesoutlook.com for the exact definitions of Number of Products.
38see also www.lifesciencesoutlook.com
0,5 0,6 0,4 0,5 0,62,6 2,6
1,4 0,8 0,9
15,1 15,515,9 16,5
17,5
0
2
4
6
8
10
12
14
16
18
20
2008 2009 2010 2011 2012
Rev
enu
e (b€
)
Revenue Dutch LS clusterListed and non-listed companies
Large(> 250 employees)
Medium(51 - 250 employees)
Small(0-50 employees)
Performance indicator #4: Revenue
In 2012 large, medium sized and small companies in the Dutch LS cluster showed an increase in revenue. In total, the revenue increased by 6.7%, from €17.8b in 2011 to €19b in 2012.
18.2 18.717.7 17.8
19
* The increase in revenue for large companies is mostly due to Philips Healthcare.
International
Forecast
The Netherlands
* See Appendix on A Monitoring Methodology available at www.lifesciencesoutlook.com for the exact definitions of Number of Products.
- Source: The Decision Group database -
39see also www.lifesciencesoutlook.com
Performance indicator #4: Revenue
Almost all clusters displayed an increase in revenue. The Dutch cluster managed to enter the top 3 highest cluster revenue together
with Medicon Valley.
0,0
0,1
0,2
0,3
0,4
0,5
0,6
0,7
0
5
10
15
20
25
30
35
Rev
enu
e (p
er c
apit
a/1
00
00
0)
Rev
enu
e (b€
)
Revenue key clusters
Revenue 2011 (b€) Revenue 2012 (b€) 2012 Revenue (per capita/100000)
Forecast
The Netherlands
International
* See Appendix A on Monitoring Methodology available at www.lifesciencesoutlook.com for the exact definitions of Revenue.
40see also www.lifesciencesoutlook.com
Performance indicator #5: Public investments
The level of public investments decreased by 14.7%, from €456m in 2011 to €389m in 2012. The largest decrease, in absolute amount, is
displayed by Public investments in PPPs by €36m from €146m in 2011 to €110m in 2012 (24.6%).
65 65 79 78 77
123 123150 146
110
61 60
68 67
46
96 107
166 165
153
0
50
100
150
200
250
300
350
400
450
500
2008 2009 2010 2011 2012
Inve
stm
ents
(m€
)
Public investments Dutch LS clusterPPPs and subsidies
Matching investments by private partnersin PPPs and subsidies
Matching investments in PPPs byknowledge institutes
Public investments in PPPs
Subsidies
International
Forecast
The Netherlands
* See Appendix A on Monitoring Methodology available at www.lifesciencesoutlook.com for the exact definitions of Public Investments.
345 355
463 456
389
41see also www.lifesciencesoutlook.com
Performance indicator #5: Public investments
In 2012, the public investments decreased in the majority of key clusters. Only the U.K clusters showed a slight increase in
public investments from €215m in 2011 to €226m in 2012.
Forecast
The Netherlands
International
0,00
2,00
4,00
6,00
8,00
10,00
12,00
14,00
16,00
0
200
400
600
800
1000
1200
1400
1600
Pu
blic
inve
stm
ents
(p
er c
apit
a/1
00
00
0)
Pu
blic
inve
stm
ents
(m€
)
Public investments in key clusters
Total Public Investment 2011 (m€) Total Public Investment 2012 (m€)
Public investments (per capita/100000)
* See Appendix A on Monitoring Methodology available at www.lifesciencesoutlook.com for the exact definitions of Public Investments.
42see also www.lifesciencesoutlook.com
25 175 65 39 90
142 131 145161 182
2915
503302
20 1687
0
200
400
600
800
1000
1200
1400
1600
1800
2000
2008 2009 2010 2011 2012
Inve
stm
ents
( m
Eu
ros
)
Private investments raised Dutch LS clusterMilestone Payments, Venture Capital, IPOs, FOPOs, PIPEs
PIPE (Private Investments in Public Equity)
FOPO (Follow-on Public Offering)
IPO (Initial Public Offering)
Venture capital
Strategic alliances (milestone payments)
1887
Performance indicator #6: Private investments raised
Over the years the Dutch LS cluster has constantly attracted private investments through venture capital. These increased by 13%, from €161m in 2011 to €182m in 2012. Noticeably, the amount of milestone payments more than doubled, from €39m in 2011 to €90m in
2012.
- Source: The Decision Group database -
International
Forecast
The Netherlands
167280 304
*
* In 2011, €1687m were due to the acquisition of Crucell by J&J.
*
623
** See Appendix A on Monitoring Methodology available at www.lifesciencesoutlook.com for the exact definitions of Private investments raised.
43see also www.lifesciencesoutlook.com
Performance indicator #6: Private investments raised
The largest increase in private investments in 2012, compared to 2011 was displayed by Medicon Valley, from €394m in 2011 to
€1787m in 2012.
0,0
10,0
20,0
30,0
40,0
50,0
60,0
0
500
1000
1500
2000
2500
3000
3500
4000
4500
Pri
vate
inve
stm
ents
(p
er c
apit
a/1
00
00
00
)
Pri
vate
inve
stm
ents
(m€
)
Private investments raised key clustersVC, IPO, FOPO, PIPE and milestone payments
2011 2012 Private investment raised (per capita/100000)
Forecast
The Netherlands
International
* See Appendix A on Monitoring Methodology available at www.lifesciencesoutlook.com for the exact definitions of Private investments raised.
44see also www.lifesciencesoutlook.com
Performance indicator #6: Private investments raised
In 2013, the Dutch cluster is expected to attract most private investments through milestone payments and FOPO.
0
200
400
600
800
1000
1200
1400
1600
1800
2000
2007 2008 2009 2010 2011 2012 2013
Inve
stm
ents
(m€
)
Private investments raised Dutch LS clusterMilestone payments, Venture capital, IPOs, FOPOs, PIPEs
PIPE (Private Investments in Public Equity)
FOPO (Follow-on Public Offering)
IPO (Initial Public Offering)
Venture capital
Milestone payments
The Netherlands
International
Forecast
*See Appendix A on Monitoring Methodology available at www.lifesciencesoutlook.com for the exact definitions of Private investments raised.
** In 2011, m€ 1687 were due to the acquisition of Crucell by J&J
**
45see also www.lifesciencesoutlook.com
Cluster Bridges & Cluster Organizations
A Gap Analysis………………………………...…………………43
www.genengnews.com
4
46see also www.lifesciencesoutlook.com
Dutch Life Sciences cluster – the Scandinavian model
Dr. Lindqvist and Dr. Sörvell developed a schematic overview of a life sciences cluster. The cluster is built up by firms and several
actors (government, research organizations, healthcare, education organizations and capital providers) which influence the
performance of the cluster.
Lindqvist & Sörvell: Clusnet final report. Organising clusters for innovation: Lessons from city regions in Europe
The grey lines between the actor and firms
display the paths between them.
47see also www.lifesciencesoutlook.com
Cluster organizations in the Netherlands
Cluster organizations construct bridges that allow traffic to flow along the paths. The cluster organizations may have a role on multiple
bridges.
Source: Image adapted from LSH.
48see also www.lifesciencesoutlook.com
Gaps between the actors and the cluster
In reality, between the actors and the cluster, the “7 gaps of innovation” may be present (according to Lindqvist & Sörvell): the
research, education, capital, policy, firm-to-firm, cluster-to-cluster and global gap.
The ideal situation - gaps
Page 46 shows the representation of a cluster in an
ideal situation. In the ideal situation all actors cooperate
perfectly: they are aware of the situation the other
actors are in and of the actions that are demanded by
other actors in the cluster to provide the circumstances
for a successful cluster. In reality, this is not what
clusters look like. There are many obstacles that disturb
this perfect interaction between the actors, causing
clusters in reality to not live up to the potential that is
described in cluster theories.
Examples of these obstacles are different expectations
of each other, unaligned incentives, different norms and
attitudes. To get a better insight in the Dutch life
sciences industry a conjoint analysis was performed
with input of many companies, based on semi-
structured interviews with 7 cluster organizations.
49see also www.lifesciencesoutlook.com
Results of the conjoint analysis - Main conclusions
In general, the Dutch LS cluster shows signs of satisfaction with respect to its bridges, however a few aspects that need attention are
to be pointed out, on 1) the capital bridge, 2) the policy bridge, 3) general communication.
The Capital Bridge performs below average and there are not
enough organizations to cover this bridge.
The Dutch life sciences cluster indicates that the Policy Bridge may
be more proactive in enhancing communication among government
and companies in the cluster.
Companies in the cluster recognize the importance of healthy
communication between companies and actors and between the
bridges themselves.
2
1
3
50see also www.lifesciencesoutlook.com
Capital Bridge
The low number (zero) of organizations that enhance the communication between firms and local capital providers is perceived as the
main obstacle for the capital bridge.
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Poor Below average Average Above average Good
Evaluation of the Capital Bridge by the life sciences companies
Banks or pension funds
Life sciences companies indicate that on national level
there are no banks or pension funds investing in the life
sciences sector (a sector with potential high returns).
Seed capital
With more seed capital available, start-ups may have a
higher probability of success. This could lead to mature
companies being created.
1
Some aspects of the capital bridge are:
51see also www.lifesciencesoutlook.com
Policy Bridge
A more proactive role of the cluster organizations on this bridge is desired: open communication networks between government and
companies in the cluster on topics such as risk hedging, continuous policies and stimulating or flexible regulations.
Seat at the table
Companies want a “seat at the table”. The government needs to offer
life sciences companies a seat at the table to discuss the possibilities
of continuous policies with stimulating and flexible regulations.
Risk hedging
Risk hedging of start-ups may lead to “more innovative ideas that can
grow”. For example, the USA and Germany use a system in which the
government hedges more risk of the start-up businesses, which enables
start-ups to further develop their products
0
2
4
6
8
10
12
14
Stronglydisagree
Largely disagree Neutral Largely agree Strongly agree
The government should hedge risks of start-ups
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
Strongly disagree
Largely disagree
Neutral
Largely agree
Strongly agree
Policy Bridge - Flexible regulations
SME Large
2
* http://www.medscape.com/viewarticle/405869_4
** http://www.forbes.com/sites/matthewherper/2013/08/11/how-the-staggering-cost-of-inventing-new-drugs-is-shaping-the-future-of-medicine/
52see also www.lifesciencesoutlook.com
Communication between actors and companies
Better communication between actors and companies could help align the incentives of academics and industry, involve companies in
the curriculum, and discover opportunities for large private investors.
0
5
10
15
Stronglydisagree
Largelydisagree
Neutral Largelyagree
Stronglyagree
Incentives of academic researchers should be better aligned with the
industry, to stimulate collaboration between them
0
5
10
15
20
Stronglydisagree
Largelydisagree
Neutral Largelyagree
Stronglyagree
Education Bridge - Companies should be more involved in curriculum
0
5
10
15
Stronglydisagree
Largelydisagree
Neutral Largelyagree
Stronglyagree
An expectation mismatch exists between private investors and the life sciences
sector
Expectations mismatch
Whilst investors look for short-term returns,
the life sciences sector looks for long-term
investments.
3
Incentives
Academic researchers have incentives to
publish in academic journals, the industry
has incentives to focus on the number of
patents. Aligning the incentives for both
groups may pose a challenge since it
depends on the assessment criteria
applied by the funding provider(s)
Education
Companies expect to be more involved in
internship programs, be invited to organize
guest lectures and participate in fairs and
“industry days”. Organization of additional
courses and training to align the needs of the
companies such as courses on IP, process
of drug development & clinical trials and
post-doctoral programs for the professionals
in the (bio)pharma industry is recommended.
53see also www.lifesciencesoutlook.com
Gap analysis
Bridge Current situation 1 Desired future state 2 Gap
Life sciences
cluster in
general
- Actors are preoccupied with themselves.- All stakeholders communicate: Conditions highly
adapted to needs of companies
- Not an optimal communication
- Actors and bridges are not aware of each other’s
needs
Research- Collaboration between industry and academic
research, but not at an optimum level
- Cutting-edge knowledge at university research
groups
- Findings are channeled to firms in cluster
- Not enough trust* between industry and
academia
- Different incentives for academic researchers and
industry (publications vs. patents)
Education &
Talent
- They bring graduates into contact with firms
- Additional courses for academics (mainly about
IP)
- Specialized education programs at universities
- Executive programs to attract talent- Firms are not directly involved in curriculum
Policy
- Government and industry may sometimes not be
on the same wave
- Not enough encouraging regulations or public
funding
- Government learns to understand needs of firms
- Make it easy for firms to be competitive and grow
- Policy bridge is not proactive enough, does not
fully know needs
Healthcare- Hard to get innovative remedies approved for
insurance packages (= use by patients)
- Collaborative development of innovative ideas
- Buy many products of Dutch life sciences sector
- Insurers prefer less expensive remedy for whole
patient population
- Industry R&D focusses on targeted therapy for
small groups
Capital
- No cluster organizations
- Investments from large life sciences firms or
venture capitalists
- Capital providers are experts in life sciences
- No banks and pension funds invest (mismatch
business models)
- No cluster organizations
Global- Communication of different stories
- Firms are not properly collaborating for export
- Put cluster on world map, what they can offer
- Results in students, entrepreneurs, technology
and inward investments
- No focus on cluster as a whole by actors and
bridges
1 The current situation is based on interviews and conjoint analyses
2 The desired future state is based on interviews, conjoint analysis and academic literature.
*In the last years, the trust between industry and academia has
improved, however it seems not to be an ideal situation yet.
54see also www.lifesciencesoutlook.com
Recommendations to improve the performance of the Dutch LS cluster
Optimization of the internal cluster bridges can be achieved by minimizing the gaps, primarily with improved communication between
companies and actors.
1. Better communication between actors and bridges
2. Involve firms in curriculum: Internship program, guest lectures.
3. Government and policy bridge can improve and help the sector to become a successful
cluster
a. Offer a consistent policy
b. Communicate with companies on regulatory aspects: Companies want ‘seat
at the table’.
c. Provide more seed investments.
d. Risk hedging for start ups and small companies (comparative research with
other countries, e.g. Germany and USA).
4. Healthcare system should be more open for innovative remedies
a. System for conditional admission.
5. There is a role for cluster organizations on the Capital Bridge
a. Review financing system: process from seed investments to IPO or
acquisitions.
b. Setting up specialized funds in financial industry for investments in the life
sciences cluster.
6. There is a role for cluster organizations on the Global Bridge
a. Focus on a collective story.
55see also www.lifesciencesoutlook.com
A trend analysis
Trends………………………………...…………………56
Possible explanations ……………...…………………59
ww.proskauer.com
5
56see also www.lifesciencesoutlook.com
Population, aging and expenditure
Trends such as increasing world population, aging, and health expenditure have emerged and may be relevant to the life sciences
industry.
The world population is on an upward slope and will increase by 47% until 2050*. A significant portion of
the estimated increasing population can be attributed to the less developed countries (Africa, Asia, Latin
America and the Caribbean). Data shows that a significant percentage of people will look for shelter in
large cities. This conglomeration of people is likely to put pressure on companies to adapt to urbanization
and to display greater mobility. The agglomeration in cities will cause a fertile territory for rapid virus
spreading and increasing their resistance to common medicines (like antibiotics).
* According to UN report “World population to 2300” (United Nations, New York,2004) the population will grown from 6.1 billion in 2000 to 8.9 billion in 2050
** http://www.prb.org/Articles/2011/agingpopulationclocks.aspx
*** http://www.oecd.org/health/healthdata
**** SMEs stands for small and medium sized enterprises
Along with population development, aging** will put
pressure on life sciences companies to address an increase of chronic diseases. Global change
in life style and eating habits may increase chronic diseases.
Increasing expenditure on healthcare
Nowadays, almost 90% of the world’s expenditure*** on healthcare has been made by OECD
countries to cover the needs of 20% of the world population. With the emergence of developing
economies (such Brazil, Russia, India and China) the gap between developed and developing
countries is expected to narrow, which will increase governmental and private spending on
healthcare. Life sciences companies could find the development in these countries fruitful for
their business.
At a global level there is a tendency towards increasing health partnerships to accelerate innovation and enhance patient value. Companies unite to
accelerate development. For example, in February 2013 the European Lead Factory was founded to boost the drug discovery in Europe. Through this
platform, researcher, patient organizations and SMEs have access to half a million compound libraries.
Source: www.ihsglobalinsight.com
World population is on an upswing
Increasing aging and changes in life style
Increasing global Health Partnerships
Source: rightfromyaad.wordpress.com
Possible
explanations
Trends
57see also www.lifesciencesoutlook.com
In the U.S and Europe, both FDA and EMA have started to emphasize the focus on
quality and are demanding comparative effectiveness research concerning the safety,
efficiency and costs of new drugs compared to existing ones. At the same time,
governments increase pressure on regulatory bodies to speed up the drug approval
process in order to allow the newest products on the market. Yet there are fears that
drugs rapidly advanced through the approval process may not be appropriately
assessed. There is an increasing debate that Quality By Design (QBD) by which the
process is managed and controlled, followed by a stable product analysis may lead to
more effective treatments.
Reputation of large companies, rules and compliance
The role of patients and patient organizations has grown visibly in the context of, among others: 1) decreasing reputation of large
companies and 2) increasing rules and regulatory compliance. Companies and regulators have to adapt and listen to them in order to
enhance value.
Rules & Regulatory compliance
Confidence in large companies
The reputation of large companies is under pressure. They
have to face their patient reaction to negative media
headlines. For example, GSK was recently involved in a
scandal, being accused to have paid doctors. In reaction the
company declared that they would stop these kind of
practices*. Another example is J&J and Novartis, who were
fined 16 million Euros by the European Commission for
agreeing to postpone the introduction of a cheaper version of
Fentanyl, a painkiller used by cancer patients, in the
Netherlands.**
* http://nos.nl/artikel/587845-gsk-stopt-betalingen-aan-artsen.html
** http://www.skipr.nl/actueel/id16790-farmaceuten-beboet-voor-kartelvorming.html
*** http://www.npcf.nl/index.php?option=com_content&view=article&id=4164&Itemid=31
In the Netherlands patients will have more to say and
participate in shared decision making. The Council for Public
Health and Healthcare (De Raad voor Volksgezondheid en
Zorg), for example, is an independent body that acts as an
advisor to the Dutch government and parliament in matters of
quality, accessibility and affordability of healthcare****.
Furthermore, the increasing importance of patients has been
acknowledged and accepted by the Healthcare Insurance
Board (Het College voor Zorgverzekeringen) and patients are
involved more when ruling out decisions about the
continuation of reimbursement for certain drugs, like was the
case for Pompe and Fabry diseases*****.
Patients and patient organizations
Source: www.medtecheurope.org
**** http://rvz.net/uploads/docs/De_participerende_patient.pdf ( in Dutch)
**** http://rvz.net/uploads/docs/Achtergrondstudie_Shared_DecisionMaking_en_Zelfmanagement.pdf (in Dutch)
***** http://www.geneesmiddelendebat.nl/nieuws/archief-nieuwsbrieven/editie-52-nieuws-augustus-
2013/patientenbelang-eerder-meenemen-bij-besluit-vergoeding (in Dutch).
Possible
explanations
Trends
58see also www.lifesciencesoutlook.com
855
920
991
1037
1107
0 200 400 600 800 1000 1200
2007
2008
2009
2010
2011
$ billion
Global pharma and biotech revenue
Revenue and investor confidence
At global level the life sciences have remained immune to economic crisis when measuring the revenue of (bio)pharma.
At a global level, the revenue of life sciences companies (bio/pharma) has increased at a CAGR 6.67% from 2007 to 2011. The increasing
confidence of investors in the Life Sciences sector can also been seen in the increase in the NASDAQ Biotechnology Index which has increased at a
CAGR 2.64% over the period 14.12.2009 to 23.12.2013.
Source: Figure adapted using DTTL Global Life Science and Health Care Industry Group analysis of “Global
pharmaceuticals, biotechnology & life sciences industry profile” Marketline, May 2012, EIU database
Source: Yahoo Finance, data retrieved on 23.12.2013
Revenue and investor confidence
Possible
explanations
Trends
59see also www.lifesciencesoutlook.com
Impeding factors may have impact on cluster growth
Possible explanations* can be drawn from the perspective of historical international differences, the worldwide patent cliff, the current
gaps in the Dutch LS cluster, the actual pressures on public investments, pricing and costing.
Possible
explanations
Trends
National Level Impediments
A. Historical International Differences.
The European clusters may lag because of legislations that inhibit innovation, immobile labor markets, less
interaction between universities and the private sector and to a certain extend the availability of venture capital.
B. Gaps in Cluster Bridges.
In particular the Dutch cluster displays gaps on the bridges between both life sciences companies and capital
providers as well as between the companies and the government.
C. Public Investments Pressures.
The level of public investments is expected to decrease and from 2014 onwards the public investments will be
regulated, amongst other, via new TKI regulations.
D. Patent Cliff & Generics.
In 2012 patent expiration, at global level, amounted $27 billion in value and in 63% of the drugs sold in the
Netherlands were generic drugs.
E. Pricing Pressures.
The penetration of low cost generic producers, governmental regulations and managed care providers, among
others, may put pressure on prices.
F. Costing Pressures.
Increasing scrutiny of regulators and lawsuits on allegation of breaching patents, amongst others, may
increase the costs.
World Level Impediments
for details see p.60
for details see p.61
for details see p.62
for details see p.63
for details see p.64
for details see p.65
60see also www.lifesciencesoutlook.com
The European clusters are lagging because of “dearth of venture capital, immobile labor markets, legislation that inhibits innovation
and less interaction between universities and the private sector”*.
Equity market
Attraction of financing may be
challenging. Investors on the
European stock markets, in general,
have less appetite for risks,
compared to U.S. exchanges, like
NASDAQ.
Recruiting key talent and collaboration
with universities has not been one of the
cluster’s priorities. Europe lacks the scale
of U.S. “scientific ecosystems”.
Universities Labor legislation
Restrictive labor rules, in favor of the
employee, make the possibility of lay-offs
difficult when the company’s fortune has
changed for the worse.
Insights in the future Historical international differences
*Source: Harvard Business School Case – MorphoSys AG: The evolution of a biothechnology business model
Possible
explanations
Trends
A
61see also www.lifesciencesoutlook.com
Gaps in cluster bridges
The Dutch LS cluster has some gaps on the bridges between firms and actors. In particular, we can identify obstacles on the bridges
between the life sciences companies and capital providers, and between companies and the government.
*See the chapter 4 Cluster Organizations for the data, interviews and results of the conjoint analysis.
** In the last years, the trust between industry and academia has improved, however it seems not to be an ideal situation.
In a schematic overview of the Dutch LS cluster, the firms are placed in the middle, with all actors influencing the cluster’s performance around it. Cluster
organizations increase the competitiveness and growth of clusters by bringing different types of actors together, via bridge building.
Bridges Gaps
Research
Not enough trust** between industry and academics.
Different incentives for academic researchers and industry
Not enough translational research calls
Education
& Talent
Firms are not directly involved in curriculum
Policy Not enough communication between government and sector
Little public funding available
Healthcare Not enough innovative remedies to successfully market
Capital
No banks and pension funds investments (mismatch business
models)
No cluster organizations
Global
No cluster organization for whole cluster
Not enough awareness of value of collaboration on Global
Bridge by life sciences companies
Life
sciences
cluster in
general
• Not an optimal communication.
• Actors and bridges are not aware of each other’s needs.
Possible
explanations
Trends
B
62see also www.lifesciencesoutlook.com
Public investments under pressure
The level of public investments is expected to continually decrease¹. With the beginning of 2014 the public investments will be
regulated, amongst others, via new TKI regulations.
65 65 79 78 77 69 74 80
123 123
150 146110
53 499
61 60
68 67
46
23 21
0
0
50
100
150
200
250
300
350
2008 2009 2010 2011 2012 2013 2014 2015 2016
Inve
stm
ents
(m€
)
Public investments Dutch LS clusterPPPs* and subsidies
Matching investments in PPPs byknowledge institutes
Public investments in PPPs
Subsidies
*
*See Appendix A on Monitoring Methodology available at www.lifesciencesoutlook.com for the exact definitions of Public Investments.
**PPP stands for Public-Private Partnerships
¹Based on data available until August 2013
?
Possible
explanations
Trends
C
63see also www.lifesciencesoutlook.com
Patent cliff & generics
Companies need to develop new ways to address the patent cliff, decreasing reputation of large companies, generic penetration of low
cost producers and decreasing reliance on the blockbuster model. These factors may affect competitiveness and need to be dealt with.
Drying pipelines &
patent cliff
Large generic
penetration of low
cost producers
Decreasing reliance on the
blockbuster model
COMPETITIVENESS
Decreasing
reputation of large
companies
The patent cliff translates through expiration of old patents at higher
rates without being replaced by new patents. From 2008 to 2012, drugs
worth $123 billion lost their patent protection at a CAGR of 7.8%.
Moreover, the governmental pressure to reduce prices combined with
the increasing (combined) power of managed care providers will force
the companies to search for new ways of adding value to their
stockholders and patients, triggering a change in the (bio)pharma
industry.
20
20
28
28
27
0 5 10 15 20 25 30
2008
2009
2010
2011
2012
$ billion
Patent expiry by value (Global level)
Source: DTTL Global Life Sciences and Health Care Industry Group analysis of Global Generic, Cygnus
Pressure of government and
management care providers
Patent expiration and pressure to reduce costs
0% 10% 20% 30% 40% 50% 60% 70%
1995
2007
2009
2011
2013
% of generics out of total drugs
Generic penetration in the Dutch market
Source: Figure adapted using SFK reports (Stichting Farmaceutishe Kengetallen) “Facts and
Figures from 2006, 2008, 2010 and 2012.
Possible
explanations
Trends
D
64see also www.lifesciencesoutlook.com
The penetration of generics has
increased by CAGR=3.5%* (in NL)
as a reaction to expiring of patents.
Pricing pressure
For example, in the Netherlands, the
Medicines Pricing Act** allows the
government to fix maximum prices
based on the average official list price
of comparable medical products in
Germany, France, the U.K and
Belgium. A maximum price can be set
if a product is marketed in two or more
reference countries and if the product
is eligible for reimbursement.
Healthcare insurances’ preference
policies that state when a number of
medicines contain the same active
agent only the cheapest one will be
reimbursed, pushing the prices as
low as possible ***.
There are several branded drugs
produced by several companies that
address the same disease. For
example the arthritis drug market
includes several players such as
Abbott, J&J, Amgen, Roche and
Pfizer.
On one hand, the life sciences companies need to adapt to pricing pressure, e.g. the potential to affect one’s competitiveness.
Generics Competition
Consolidation
Source: SFK reports (Stichting Farmaceutishe Kengetallen) “Facts and Figures from 2006, 2008, 2010 and 2012.
** www.practicallaw.com/0-383-9411
*** http://www.gabionline.net/Policies-Legislation/The-preference-policy-in-The-Netherlands
Government and managed
care providers
Low cost generic producers
Competitors product
Consolidation
Government and managed care
providers
Possible
explanations
Trends
E
65see also www.lifesciencesoutlook.com
Costing pressure
Increasing scrutiny of EMA and
FDA determines an increase in
associated compliance cost.
Failure of one’s own R&D department to
innovate and progress drugs through
pipeline increases the R&D costs.
Costs associated with lawsuits on allegation
of breaching patents.
Decreasing reputation,
associated with payment
of doctors who participate
in medical congresses and
accept bonuses given for
prescription of medicines.
Externalization of research and M&As
Buying successful R&D products come at
a higher premium and mergers and
acquisitions come with higher integration
and fitting costs.
On the other hand life sciences companies need to adapt to costing pressure, which alike pricing pressure, has the potential to affect
competitiveness.
Regulatory related
Reputation of large
companies *
R&D and IP related
*http://nos.nl/artikel/587845-gsk-stopt-betalingen-aan-artsen.html
*http://www.skipr.nl/actueel/id16790-farmaceuten-beboet-voor-kartelvorming.html
Reputation of large
companies
Regulatory related
R&D / IP related
Externalization of research
and M&A’s
Possible
explanations
Trends
F
66see also www.lifesciencesoutlook.com
In 2011, next to the industry partner represented by the Ministry of Economic Affairs through the “Life Sciences & Health” innovation program, three
world prestigious business schools, Grenoble School of Management, The George Washington University and Stockholm School of Economics,
cooperated with The Decision Group to present the Dutch Life Sciences Outlook 2011. Three main conclusions were drawn:
1. The Dutch life sciences cluster has grown in size and output and despite the economic downturn showed a high increase in private
investments raised.
2. The Dutch life sciences & health cluster showed above average performance for revenue and private investments raised compared
to international key clusters.
3. The Dutch life sciences & health cluster had been making progress compared to the key clusters.
After a successful first Outlook, industry commissioned The Decision Group to produce the second Dutch Life Sciences Outlook in 2010 through the
“Life Sciences & Health” innovation program. Driven by the cluster and empowered by the Ministry of Economic Affairs, the Life Sciences & Health
program had the objective to improve the life sciences innovation and investment climate in the Netherlands. The Outlook was part of a four-year work
plan. Three main conclusions were drawn:
1. The Dutch red biotech cluster showed the largest increase on public investments.
2. The performance of the Dutch red biotech cluster is improving, but low compared to key international biotech clusters.
3. The Dutch red biotech cluster scores about average on its number of companies when compared to key international clusters.
Five years of history – an overview (1/2)
In 2009 Prof. dr. Fred van Eenennaam and Ir. Maarten Koomans were asked to produce the first Dutch Life Sciences Outlook. This pioneering work
has developed definitions, methodology and key performance indicators. An International Academic Advisory Council has helped produce a cutting
edge Dutch Life Sciences Outlook with a unique approach to the Dutch cluster.
67see also www.lifesciencesoutlook.com
With the 2014’s Outlook edition, The Decision Group celebrates the fifth anniversary of the Dutch Life Sciences & Health Outlook. Based on our data
the international cluster experts have noticed that the Dutch cluster is at a crossroads and a dialogue should be started about the future direction of the
Dutch cluster. The main options identified in the 2014 Outlook are:
1. Fragmented hub approach
2. Create a cluster based on smart specialization
3. Next generation convergence
The Dutch Life Sciences Outlook 2013 was extended with the Dutch Health Outlook 2013 and with two new partners: Samenwerkende Topklinische
opleidings Ziekenhuizen (STZ) and Value Based Healthcare Center Europe. In the fourth edition of the Outlook, focus laid on the ability to attract, retain
and develop talent at all levels. This was a major point of competition between the life sciences and health clusters and also a major focus of the
Regiegroep LSH and its Human Capital Agenda. The three main findings were:
1. Small and medium sized companies compensated the restructuring of large companies.
2. The revenue of small and medium companies declined.
3. The cluster attracted public investments, with public investments being under pressure.
As a natural course of events the Dutch Life Sciences Outlook 2012 followed, in cooperation with the same industry and academic partners. For 2012,
a survey was sent to gain insight into the cluster expectations concerning the cluster building, investment climate, public investments and business
knowledge. The three main conclusions drawn were:
1. Growth and outperformance
2. Positive expectations
3. Partnering
Five years of history – an overview (2/2)
68see also www.lifesciencesoutlook.com
The Decision Group is a strategy consulting firm, focussing on: ‘helping our clients make better business decisions’. Our advice is pragmatic and
involved. As an innovative, high end strategy consulting firm we have strong academic links with international renowned universities as the Harvard
Business School, Erasmus Universiteit Rotterdam, The George Washington University and Universitat St Gallen.
The Decision Group offers different approaches to help making better decisions. A few examples: cluster and association management, strategic
agenda setting, developing scenarios and scenario planning, creating strategic dialogues between stakeholders, policy studies and monitors, conjoint
analysis and other analytical tools.
The Decision Group annually studies the position of the Duch life sciences & health cluster in comparison to the international elite. It examines the
cluster’s performance and progress in six different areas: number of products, revenue, number of companies, employment, public investments, and
private investments. The basis for this Outlook is a comprehensive database of information collected at company level. The seven clusters that the
Netherlands is compared with are: Boston area, San Diego area, Research Triangle Park area (USA), United Kingdom, Switzerland, Medicon Valley
(Sweden and Denmark) and the Munich area.
With help from our academic colleagues, the Netherlands Center for Competitiveness has been founded. It is the logical consequence of our past
experiences. The center combines the international network of cluster organizations with academic and pragmatic expertise on international business.
We call this combination of an academic and pragmatic approach, the pracademic approach. The aim of the Netherlands Center for Competitiveness is
to provide expertise, access and knowledge to companies that wish to build their international business and academic institutes that wish to increase
their knowledge. Visit www.centerforcompetitiveness.nl for more information.
.
Interested in hearing more?
Contacts:
Prof. Fred van Eenennaam
ir. Maarten Koomans
Kim Bruheim, MSc.
Bogdan Toma, MSc.
+31(0346-574942)
www.thedecisiongroup.nl
Helping clients make better business decisions
69see also www.lifesciencesoutlook.com
Colophon
Developer
The Decision Group
Postbus 54
3620 AB Breukelen - the Netherlands
+31(0)346-574942
www.thedecisiongroup.nl
www.lifesciencesoutlook.com
Partners
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Postbus 54
3620 AB Breukelen - the Netherlands
+31(0)346-574942
www.centerforcompetitiveness.nl
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www.hyphenprojects.nl
© 2014 The Decision Group
Disclaimer
This report and other written reports and oral statements made from time to
time by The Decision Group may contain so-called “forward-looking
statements,” all of which are based on The Decision Group’s current
expectations, which are subject to risks and uncertainties which may cause
results to differ materially from those set forth in the statements or reports.
Please carefully consider any such statement and understand that many
factors could cause actual results to differ materially from the The Decision
Group’s forward-looking statements.
70see also www.lifesciencesoutlook.com
Appendices (available at www.lifesciencesoutlook.com)
www.stevensworldwide.com
5
A. Monitoring methodology 71
B. Bibliography 95
C. Glossary of terms 99
D. Consulted experts and organizations 105