Sources: Copenhagen Capacity, Invest in Denmark

Medicon Valley combines the area around Copenhagen in Denmark, Malmö and Lund in Sweden into one of Europe's leading centres for biotechnological, medical technical and pharmaceutical development.

More and more synergies emerge as the region grows: Medicon Valley has successfully dedicated itself to optimising the business and scientific environment of the Valley for the biotechnological, medical technological and pharmaceutical industries. Drawn to its fertile environment, every year more companies move to Medicon Valley. Non-stop growth of pharmaceutical exports for over 15 years, a 500% increase since 1980, is evidence of the biotechnology industry's strength and dynamism in Medicon Valley. Medicon Valley already boasts an unusually high density of companies in the biotechnological, pharmaceutical, and medical technological fields.

Medicon Valley is the largest pharmaceutical and biotechnological growth centre in Scandinavia and one of the strongest in Europe, featuring a fertile cross-border partnership between industry, investors and academia. In addition, this partnership will be strengthened in the year 2000 on the completion of the Øresund Fixed Link roadway system, which will make it possible to drive directly between Denmark and Sweden in a matter of minutes.

The name Medicon Valley, inspired by "Silicon Valley", is more than just a play on words: there are clear parallels in the sheer concentration of know-how and the highly dynamic research and development environment to be found within the Valley. Compared to the region’s population of only 3 million people there is a very strong concentration of hospitals, universities, research parks and companies within the pharmaceutical, biotechnology and medical technology field. The combination of big international companies, small innovative companies, strong academic centres, professional research institutions, competitive support organisations and co-operative authorities is the corner stone in Medicon Valley's international position.

Hundreds of companies

Medicon Valley is home to countless pharmaceutical, biotechnological, and medical technological companies, many large specialty hospitals, and the largest universities in Denmark and Sweden.

Over 30,000 people in Medicon Valley work in the medical industry, including 4,000 researchers with an academic background. Companies like Pharmacia & Upjohn, Astra Draco, Novo Nordisk, Lundbeck, and Gambro are major international players. Medicon Valley places Denmark and Sweden among the world's top five pharmaceutical exporters on a per capita basis.

Medicon Valley is developing at an incredible pace, with new companies constantly springing up in an exciting and stimulating research environment and benefiting from a favorable and stable investment climate. Phytera, ACADIA Pharmaceuticals and OXiGENE are some of the companies, which have received funding from local venture capital companies, on establishing activities in Medicon Valley.

Novo Nordisk, one of the world's largest biotech companies with 14,000 employees around the globe, also benefits from the dynamic environment and diversity of Medicon Valley: "All these small new research companies bring an exciting variety of research activities," says Børge Diderichsen, Director of Corporate Research Affairs at Novo Nordisk. "The region has one of the greatest concentrations of know-how in Europe, and this will be important for the development of the companies here in the future."

Two new biotech centers

The concentration of research and know- how in Medicon Valley is a result of substantial government grants to universities and hospitals and of major private industry research programs. In Denmark alone, public sector research into biotechnology will receive USD 60 million over the next three years. It is estimated that the private sector spends over 20% of its total research budget within biotechnology in Medicon Valley. Research institutes also have provided additional financing. On top of standard university funding, over USD 160 million has been invested in extraordinary biotechnological research programs in the last ten years.

The construction of two large biotechnology centres at universities in the Danish and Swedish parts of Medicon Valley, each worth around USD 125 million, is a further indication of the ongoing and future-looking commitment to biotechnology in Medicon Valley.

The flagships of Medicon Valley are pharmaceutical heavyweights like Pharmacia & Upjohn, Astra Draco, Novo Nordisk, Lundbeck, Leo, and Ferring that employ thousands of scientists.

Alongside them are the universities with their ambitious biotech programs. The two biggest universities alone, Copenhagen and Lund, are set to invest several hundred million USD to enhance their already extensive biotechnology research centers over the next few years.

A series of major Medicon Valley success stories have opened the eyes of pension funds and venture capitalists alike. Companies and financial advisers both see major benefits in a Medicon Valley location.

Most important of all, investors are focused on Medicon Valley, and operate with long-term investment horizons. Unaffected by day-by-day ups and downs, they focus on what is actually going on at the companies they invest in.

"The biotech investment climate here is extremely mature," says Professor Ron Pero, Chief Scientific Officer and founder nine years ago of OXiGENE, which moved to Medicon Valley in 1995. OXiGENE had no difficulty raising USD 27 million on the Stockholm Stock Exchange. Before moving to Medicon Valley the company was valued at around USD 30 million on Nasdaq; now its market capitalization is USD approx. USD 300 million. "OXiGENE had many good reasons for settling in Medicon Valley," continues Pero. "However, in my view, the strongest argument for other biotech companies to follow suit is the extremely positive investment climate."

The capital market in Medicon Valley has managed to build up in-depth biotech expertise in just a few short years: "Investors are familiar with the key concepts in biotechnology and with the underlying strategic issues, and they have become very good at assessing biotech companies - they are getting experienced in evaluating the risks in early state research companies," says Henrik D. Simonsen, Chief Analyst, Health Care Companies, Aros Securities.

For the biotechnology companies it is also important that the size of the Scandinavian market is far more manageable, so it is easier to attract the interest of analysts.

The largest corporate finance players in Medicon Valley are Alfred Berg, Skandinaviska Enskilda, Aros Securities and Carnegie Bank which currently dominate the biotech side and helped to bringa total of USD 250 million into the Scandinavian biotech sector both in 1996 and 1997.

One of the first big successes in Medicon Valley is NeuroSearch, a company working on drugs to combat Parkinson's disease. Neuro-Search has reached the milestones set for its development activities, and parallel with its Parkinson's disease drug compound, Neuro-Search has developed three other compounds, which now are being tested in clinical trials. From an investor's point of view Neuro-Search is also a very interesting case. Its stock price rose by 157% in its first year on the Copenhagen Stock Exchange, with the institutional investors involved in a private placement the year before seeing a six-fold increase in the value of their original investment. Today more than 3,000 private and institutional investors have invested in Neuro-Search, and NeuroSearch is among the ten biotech companies in Europe with the highest market value. Naturally NeuroSearch's success has led to a surge in demand for Medicon Valley biotech stocks, and its success has paved the way for other biotech companies.

The investment fund Business Development Finance (BDF) specializes in financing projects which entail an element of risk, a policy which has attracted several biotech companies to Medicon Valley.

Acting as a safety buffer to absorb risk is one of the main ideas behind government-backed BDF. With an initial capital base of USD 300 million, BDF has proved one of the key financiers of growth companies in Medicon Valley. To date, BDF has provided capital for around 110 projects in the medical sector. BDF offers loans and guarantees for up to 45% of the total development costs, with a maximum of USD 7 million for each project.

"The projects we finance must not only have potential but also be innovative, which means that development of a new technology may be a failure," says Bent Kiemer, Director of BDF.

BDF has developed an excellent reputation among other investors. As a result, when BDF takes the plunge others often follow suit. Another benefit is that BDF works quickly: "Our target is to reach a decision within two months of receiving the documentation we need," says Bent Kiemer.

Several foreign biotech companies cite favorable loan terms from BDF as the deciding factor for opening R&D departments in Medicon Valley. One is Arizona-based Verigen Inc., which set up a Medicon Valley subsidiary on the strength of the financing offered by BDF. Verigen uses a special technique to try to use antibodies taken from pigs' blood to treat AIDS and arthritis more effectively and with fewer side-effects than existing drugs. The arthritis treatment is currently undergoing clinical trials at two local hospitals.

BDF loans are repaid only when a project becomes profitable. If the project is abandoned, BDF simply writes off the loan in return for the rights to the project.

ACADIA Pharmaceuticals appreciates Scandinavian investors' long-term view: The reason why biotech company ACADIA Pharmaceuticals chose to set up a subsidiary in Denmark is simple: Business Development Finance. "BDF lent us USD 6.5 million so that we needed less venture capital and avoided having to dilute our capital stock," says Dr. Mark R. Brann, CEO and founder of ACADIA. "This was a huge advantage, as our stock is held by our employees. But BDF also makes it easier to raise other financing; the green light from BDF serves as a mark of approval and thus attracts venture capital."

ACADIA Pharmaceuticals, formerly Receptor Technologies, was founded in Vermont, USA in 1993. Headquartered in San Diego, the company tests and develops new drugs using special screening techniques, ACADIA has worked with pharmaceutical companies like Procter & Gamble, Novo Nordisk and Allergan for several years.

BDF was also extremely professional when it came to drawing up a realistic business plan, offering "a lightning fast response with a minimum of red tape". Brann is also impressed by the Scandinavian venture capital market: "The investors, including private investors, work with a time-scale of importance for a research-oriented company like us, and it gives us a chance to get on with our work within a reasonable timetable."

Another key benefit has been a successful partnership with the universities in Medicon Valley. ACADIA started working here in the spring of 1997 and managed to sign a number of agreements on post doctoral and Ph.D. projects within the first six months.

"In Medicon Valley we help design and organ-ize projects for university researchers. We bring a multidisciplinary approach and provide technology and resources which they would not otherwise enjoy access to. In return they carry out basic medical research which we may then be able to use. We also help train highly skilled researchers, to the benefit of both ourselves and others in the industry," adds Mark R. Brann.

A recent study of the region's scientific output has confirmed Medicon Valley's position as number 3 in European biotechnological and medical research in terms of both quantity and quality: Surpassed by only London and Paris, Medicon Valley ranked higher than Amsterdam-Haarlem-Utrecht, Edinburgh-Glasgow, Oxford-Reading, Cambridge, Munich, Berlin, and Brussels-Antwerp. The study by the Institute of Geography at the University of Copenhagen was based on bibliometric analysis of the 5,300 scientific journals in the Science Citation Index.

This high level of scientific output is partly explained by the fact that Medicon Valley is home to no less than 60% of Scandinavia's pharmaceutical industry, not to mention the major universities of Copenhagen and Lund. Medicon Valley is especially strong in certain fields, including allergology and endocrino-logy/metabolism (where it accounts for 19% of the world's total scientific output), physiology (17%), and biomethods (16%). The study concludes that the region has a "clear predominance of advanced medical disciplines" and that the pharmaceutical and biotechnology fields are Medicon Valley's "primary source of strength".

The quality of research in Medicon Valley was the reason why US biotech company Phytera located here in 1996: "Both Sweden and Denmark are in the world's top five in terms of scientific research, and the public sector has invested a great deal in biotechnology," says Neil Goldsmith, CEO and Vice President of Phytera.

Phytera, founded in 1992, possesses the world's largest library of live plant cells in suspension cultures that are used to find new pharmaceutical products. The company is currently looking for new fungicides and new ways of dealing with multi-resistant bacteria. Rather than explore the biodiversity of the rain forests itself, Phytera chose to work with the Botanical Gardens in Copenhagen:

"There are many botanical gardens around the world, but the advantage of Copenhagen is that they are incredibly well organized. We receive a significant number of plants from different places every month, and quality is vital. The quality of the work in Copenhagen is very high." During Phytera's first year, its team in Medicon Valley grew to 16 full-time employees: half of them scientists and half technicians. The high standard of skills at every level of the workforce has been another key factor in Phytera's work. "The laboratory technicians here are extremely skilled," explains Neil Goldsmith. "They have a longer training, can work independently, and take responsibility for their own work.

Medicon Valley Academy

Bridge building is the key to continued development of Medicon Valley's competencies and capabilities.

Building bridges was the aim of the universities, hospitals, and companies that teamed up to establish the Medicon Valley Academy in 1997. The institutions behind this unique multidisciplinary project are Lund University, the University of Copenhagen, the Technical University of Denmark, Copenhagen Business School, the Royal Danish School of Pharmacy, and Malmö University.

"The idea of building bridges spans not only links between Denmark and Sweden but also between the region's research institutions, universities, colleges, hospitals, and industry and any interested parties abroad," explains Jes Østergaard, Managing Director of Medicon Valley Academy. "The focus is on areas where the region already has a strong base to build on. In addition to this the Academy will act as a facilitator to develop new technologies and competencies in Medicon Valley."

The academy's board includes top executives from Astra Draco, Gambro, and Novo Nordisk; the medical faculty deans at the two main universities; and senior public health service representatives.

"One of our many goals is to build up a data-base accessible via the Internet in which people can search for information on research and researchers throughout the Medicon Valley region," explains Per Belfrage, Chairman of Medicon Valley Academy and Dean of the Faculty of Medicine at Lund University.

Another key goal is to ensure that companies in Medicon Valley continue to have access to highly skilled staff. To achieve this, Medicon Valley Academy will introduce initiatives to support continued development of the region as an attractive environment for cooperation, research and education.

The high level of research activity in both private and public sectors guarantees the most indispensable resource of all: a highly skilled workforce. Without it there can be no growth. Top scientists will always be in short supply, but the better the research environment, the more researchers there are to choose from, and the higher the quality of the research:

"The first phase of our major new Biomedical Center has already put us in a position to attract some of Europe's leading research scientists," reports Per Belfrage, Chairman of the Medicon Valley Academy and Dean of the Faculty of Medicine at Lund University. "They come here because we can offer a standard of quality and a multidisciplinary environment which are extremely hard to beat."

"One of the greatest benefits of moving here is being able to recruit the right people with the right qualifications," says Göran Olofsson, General Manager of Ideon. Ideon is surrounded by a wide variety of outstanding education and research institutions, including Lund University's Faculties of Medicine and Natural Sciences, Lund University Hospital, and the Biotechnology Center. This makes for easy access to academic resources:

"Astra came here to be close to the university and the many small companies in the area. It's an excellent recruitment base for us," says Uli Hacksell, CEO of Astra Draco. "It's also less expensive to carry out research in Medicon Valley: commercial rents are comparatively low and the cost of a senior researcher is much lower than in Boston, San Francisco or San Diego."

Medicon Valley is also home to several internationally renowned private and government research institutes that make its medical and biotechnological research environment even more attractive.

These include the John F. Kennedy Institute (neurology and genetics), the Jes Olesen Migraine Center, the Hagedorn Research Institute (diabetes and molecular endocrinology), and the Medical Laser Center.

There is also the Wallenberg Neuroscience Center which houses the new Gene Therapy Center and six research divisions looking into neuro degenerative diseases and cell signaling in the central nervous system.

There are especially good opportunities for funding of cancer research projects thanks to financing from the Danish Cancer Society. One of the charity's special projects is the unique Cancer Epidemiology Center, which has spent over 50 years building up detailed statistics on the incidence and frequency of different types of cancer. It is also involved in the partnership behind the pan-Nordic cancer database.

Medicon Valley's science parks bridge the gap between academia and industry

• Ideon Science and Technology Parks, Lund/Malmö
• Danish Science Park, Hørsholm
• Symbion Science Park, Copenhagen
• Center for Advanced Technology, Roskilde

Ideon, which is Europe's third largest science park, and the three parks in and around Copenhagen, are ideal locations for hi-tech companies looking for a creative environment with strong ties to both academia and industry.

The science parks are the perfect incubators for small scientist-based development companies. Large companies also choose to carry out some of their R&D work at the science parks.

Heavy concentration of students

The greatest concentration of Medicon Valley's 120,000 university students is to be found in Lund. Despite a population of just 90,000, this is Sweden's largest university town with 37,000 students and around 5,500 lecturers and full-time researchers. Lund is an excellent example of the close symbiosis which can arise between industry and higher education with Ideon as bridge builder. Ideon is home to 140 small and medium-sized companies, with biotechnology and IT being the dominant sectors. In fact it was here that Ericsson first started its research into mobile telephony.

Lund is also home to large international companies like Pharmacia & Upjohn, Ericsson, Astra Draco, Tetra Pak, and Gambro.

Hospitals and industry work together closely on clinical research. A well-developed and efficient public health service is one of the key reasons for Medicon Valley's unusual concentration of medical companies.

Free public health services are one of the cornerstones of the Scandinavian health care system. Every citizen has the right to the best possible treatment free of charge, making the public health service the best domestic market imaginable for the medical industry.

In terms of both drugs and medical technology, general practitioners and hospitals are critical and demanding customers keen to get the best for their patients. This has helped to set the standards which Medicon Valley companies then use to conquer the world market.

Hearing aids are a good example of how the Scandinavian health care system has helped in the development of medical technology companies. People with hearing difficulties have been entitled to free hearing aids for several decades. Today, no fewer than three hearing aid companies located in Medicon Valley are among the world leaders. Where would Gambro be today if the hospital in Lund had not set up a renal clinic in 1957 where Gambro could develop the hemodialysis techniques that have elevated Gambro to the position of second worldwide in its field?

Clinical trials held in Medicon Valley are known for their high quality and low cost. In fact, they cost only half what they would in the US. The population's positive attitude towards medical trials means that willing subjects are easily found. The centralized personal ID registers maintained in the Scandinavian countries then facilitate subsequent patient follow-up to clinical trials. Trials can be carried out cost-effectively, quickly, and accurately.

The close ties between industry and the public health service in Medicon Valley also benefits the biotechnology industry when it comes to research and clinical trials. Most health science research takes place at Medicon Valley's 26 hospitals. With widespread clinical trial experience, doctors and hospital staff have developed highly efficient systems for managing such trials, and have worked to GCP standards for many years. Attitudes towards participation in clinical trials are positive among staff and patients alike, which means that survey results are more reliable and cost effective than those generated by clinical facilities with less experience.

Professor Ron Pero, OXiGENE's founder and Chief Scientific Officer, is particularly impressed by the quality of clinical trials in Medicon Valley: "Scandinavian hospital staff are very careful to complete case record forms correctly and do it straightaway. Elsewhere forms may not get filled in for six weeks so you have to reconstruct what the patient actually said. We have seen how they treat clinical trials as scientific studies and not merely as a source of income for the hospital. The benefits are clear: the less uncertainty in your data, the fewer the sources of error when you process these data in your computer," Ron Pero states.

In Medicon Valley government agencies do their work quickly and efficiently, with a minimum of red tape. Permits for clinical trials are no exception: "Time is money in our business, and the authorities understand this," enthuses Pero. "It rarely takes more than a couple of months to get approval."

Time is also an issue when it comes to signing research contracts with universities and hospitals - it takes just two or three months in Scandinavia. "The commercial aspects are different," explains Pero. "Researchers are non-profit investigators on fixed salaries who take part in the trials out of scientific curiosity and not simply to bring in extra money for themselves or their hospitals." Ron Pero concludes that OXiGENE would not be where it is today had it not been for Medicon Valley and its partnership with Lund University Hospital: "We've had much more value for money here than would have been the case elsewhere."

The US-based OXiGENE is a specialist in the development of new drugs for the treatment of cancer patients, the company set up a subsidiary in Lund in 1995. OXiGENE's original reason for locating in Medicon Valley was a financial reconstruction process that led to the company's listing on the Stockholm Stock Exchange in 1996. Since then there proved to be many other benefits from moving to the supportive, welcoming Scandinavian environment: high quality research, a minimum of red tape, and rewarding partnerships with hospitals.

The region offers "service society" which works not only for the people but also for the biotechnology and medical industry: According to Transparency International, an organization that monitors public administration the world over, Denmark and Sweden were the world's two most transparent countries in 1997. In Denmark and Sweden the governments really do work for the people, making for a degree of efficiency rarely matched anywhere in the world. While the benefits of such policies are meant primarily to aid the people of Denmark and Sweden they also directly benefit the biotechnology industries in Medicon Valley through reduced time, effort and cost in dealing with governmental regulations.

Consultants rather than regulators

The approval procedure is transparent for drug registration or clinical trial permits. There are limits to the time it can take to obtain such approvals. The same applies to patent applications and to environmental permits for laboratory or production facilities. The authorities in Medicon Valley assist such companies wherever possible and come across as consultants rather than regulators. There is much to gain in terms of both time and money from registering drugs in Medicon Valley.

Denmark and Sweden are both members of the European Union, where a marketing and sale authorization granted in one country automatically applies throughout the rest of the EU, thus opening up a market of 370 million people.

Drug registration

Drug registration in the EU can follow one of two routes: the "mutual recognition procedure" or the "centralized procedure".

The centralized procedure is compulsory for biotech products. Applications are handled by the European Medicine Evaluation Agency, which issues a single license that applies in all 15 member states.

The mutual recognition procedure allows all innovative products of a non-biotech nature to be approved in just one country first.

Later the company can be granted marketing authorization in the other member states on the strength of the original authorization.

Thanks to their medical authorities' broad experience with drug registration, Denmark and Sweden are among the most frequently used EU member states for registration under the mutual recognition procedure. In 1995-97 these two countries were the most widely used drug registration rapporteurs in the EU, second only to the UK.

Cover the whole of northern Europe with a sales office in Medicon Valley

Medicon Valley is the natural gateway to the prosperous markets of northern Europe. Most of the international pharmaceutical heavyweights have chosen to set up offices here: Eli Lily, SmithKline Beecham, Bristol Myers Squibb, Amgen, Glaxo Wellcome - the list goes on. For SmithKline Beecham, excellent transportation links clinched the decision to move its northern Europe HQ to Medicon Valley:

"Communications did the trick," explains Bo Kollberg, General Manager, SmithKline Beecham Consumer Healthcare. "From Copenhagen we can go on business trips to any city in Europe and return on the same day. We believe that this is a key factor for the success of the regional headquarters of a truly multinational company with a lot of travel activity."

Medicon Valley's prime location makes it an excellent base for serving the northern European market. The Nordic countries alone make up a large and lucrative market with more than 20 million consumers.

In 1997 Pfizer - one of the fastest growing pharmaceutical companies in the world - also chose Medicon Valley as its home for a new regional head office to cover the Nordic region and Benelux.