Why Life Science Companies May Explore Relocation to Zurich

As an anchor sponsor for OneMedForum NY 2012, The Greater Zurich Area AG will be hosting a workshop Thursday morning on “Entering Europe.” This session will address when a company should enter the international market place as well as what should be included in the due-diligence process.  The Greater Zurich Area is Switzerland’s economic center, not least thanks to the strong presence of international companies, which profit from a remarkably favorable combination of prime location factors. The company will sponsor a Swiss themed networking reception the evening of July 12th. Below, Doug Ebert, Senior Advisor Americas and workshop speaker sat down with OneMedRadio to discuss the rapidly growing life sciences sector in the region.

Click below to hear full audio interview and see transcript that follows.

Matthew Margolis:    Greetings from OneMedRadio, I’m Matt Margolis. Today, I’m with Doug Ebert, Senior Advisor Americas for Greater Zurich Area. Greater Zurich Area is a super-regional non-profit with integrated networks providing information and promoting business in the area. Thank you for joining us, Mr. Ebert.

Doug Ebert:  Matt, thank you very much.

MM:      Sure. So today, we’re discussing the rapidly growing life sciences sector in the region as well as opportunities for biotech and medtech companies entering the area. But first, I think we should learn a little bit more about what you do. So can you give us some background on your organization?

DE:    Absolutely, yeah. Greater Zurich Area as you mentioned is a not-for-profit, public, private partnership that functions as the economic development marketing arm for Zurich and the six surrounding states. It includes the Canton or State of Schaffhausen and the Canton of Zurich as I mentioned, the Canton of Solothurn, the Cantons of Zug, Glarus, Graubünden, and Schwyz. Also included in this, we have the cities of Zurich and the city of Winterthur. These cities and states support the effort for economic development within the Greater Zurich Area and our private partners within this endeavor include well-known organizations like UBS and Credit Suisse, some law firms as well as some private industry.

MM:    What are the most popular reasons that life science companies will explore relocation to the Greater Zurich Area?

DE:   Well, I think there are several key factors here. The infrastructure that in fact supports R&D and development and innovation is extremely important both in biotech and in medtech, and with the academic institutions that exist there supporting that role, it becomes a major drawing card for us. This region, you may not know this, but Zurich has more – not Zurich in and of itself I should say, Switzerland in and of itself, has more Nobel laureates per capita than any other country in the world, and we’re fortunate that the Greater Zurich Area is able to participate in that kind of a lively development region that supports that kind of science if you would.

MM:   And now what about entry into market and time to market?

DE:      I think one of the key factors here, because of the regulatory environment in many sectors around the world, entry to market becomes extremely important for most US companies especially in this dynamic business of biotech and medtech. The average medical device company can get a product to market anywhere from six to twelve years sooner. From Europe and in particular from Switzerland, the average pharmaceutical product can enter the market anywhere from one to three sooner. When you’re talking about blockbuster solutions, blockbuster drugs if you would, that can add up to quite a bit on the company’s bottom line very quickly.

I was at a conference not long ago in California where the keynote speaker didn’t realize that we were in the audience as far as that goes. But he looked out at the audience, there were about a thousand people attending the event that night, and said if you’re not doing business from Switzerland then you shouldn’t be doing business. So we were very pleased, we were busy the rest of the conference. But I think the main focus is the fact that time to market is reduced significantly.

MM:   It’s very interesting. So I want to circle back to a point you made earlier about the unique relationship between Swiss private sector and academia and government. So how unique is this relationship? How does it foster development in life sciences?

DE:   Well, I think it’s very crucial that business and academia work together. I think this is something that has had a strong foundation in Switzerland for a long time. A number of years ago, the academic institutions in Switzerland moved to a model of schools of applied science, applied engineering, applied physics, applied chemistry, applied biology. Our research centers work actively with businesses to find new solutions. One of the things that helps to foster from a corporate standpoint is, unlike many examples here [in the U.S.], when a company is collaborating with a research institute, in Switzerland if the company is collaborating with one of these institutions (either a university or a research institute), any IP that results from that collaboration, it is the company’s to commercialize as they see fit. Here in the US, often they lose the IP itself or there’s a significant royalty back to the institution.

Now that’s not say that the institutions don’t have strong technology transfer departments. There’s a great deal of science that have evolved from those institutions without corporate support. If a company decides that after they’ve achieved a certain point in that process, that they have decided whatever innovation it is if it’s not part of their core business, the institution has first right of refusal and can again keep the IP should they choose to do so.

The other thing that’s interesting with that collaboration is that, particularly for startup companies, if they qualify under the CTI startup program and this is a program fostered through the Swiss Commission for Technology and Innovation, if they qualify as a CTI startup, they may then be introduced to the CTI venture community, some 40 or 50 different VCs. There’s a variety of levels where there’s an angel investor, mezzanine investor, a typical private equity firm, whatever the case might be. Those kinds of funds are made available also in addition to a variety of other normal funding sources and grant sources. So there’s a real sense of collaboration between the academic community and the corporate community in these development endeavors.

MM:   And now you touched on favorable IP code so I’m curious if you could talk about sort of the state of patent protection in Switzerland as compared to the rest of the world.

DE:  Yeah, absolutely. One of the things that’s been pointed out through a recent study by IMD in the IMD World Competitiveness Yearbook is a statement on intellectual property rights. In one recent survey, Switzerland ended up being number one in IP protection and the USA followed, followed by Sweden, Singapore, Austria, Germany, Denmark, Netherlands, and the UK, Ireland, and France. On a scale of 1 to 10 where there was more than adequate enforcement, Switzerland was at 8 and the US at 7.8 and Sweden at 6.9 and then so on. So our IP protection is quite significant. As a matter of fact, one of the things that we signed a number of years ago with the US under a particular agreement was continued collaboration in IP.

MM:     Sure. So let’s shift gears a little bit now and perhaps we can discuss the state of domestic private financing. How healthy is private financing in life sciences specifically?

DE:    Pretty good. I think here again it’s so many things. It’s contingent upon what people are looking at, at any given time. There’s a great deal of activity in oncology as it continues to be a worldwide problem. There’s a great deal of activity in CNS diseases, there’s a great deal of activity in diabetes, and a variety of other areas. The key here is taking a look at what the companies that are presenting that’s new, that’s different, that is going to make a difference on a worldwide basis.

MM:  What is the advantage to having big pharma powerhouses like Roche and Novartis in your backyard?

DE:    I think the advantage is twofold. One, I think it’s an attraction to a variety of domestic vendors, contractors, and suppliers that big pharma rely on. It’s also been great for us in attracting new, early stage companies who are becoming the development arm for big pharma today and it’s been a place for them to come in and participate in a variety of different programs there. There are development funds that are made available through those organizations as well. You know, when Sandoz and Ciba combined to form Novartis some years ago, it was mandated by Swiss law that they have a fund set aside as they went through the consolidation process of closing facilities where they had duplicate efforts that that fund be set aside to spur on new development. So the Novartis fund is there and available for new and interesting activities throughout Switzerland as well, particularly in areas in and around the Greater Zurich Area too.

MM:    So lastly, what are some advantages that companies exploring relocation to Greater Zurich Area may overlook?

DE:     Oh, gosh I think there are a couple of things. Not so much from a biotech perspective as a medtech perspective as they take a look at perhaps sourcing components for devices from outside of the European Union or outside of Switzerland. Switzerland has a weight-based tier for example rather than a value-based tier and in many medical devices, you have a very high valued product that has a very low weight especially with implantable devices, electronic devices, whatever the case might be.

A good example, we worked with a project not long ago that was sourcing components from Asia into the UK and a hundred kilos of unfinished components were taxed at the rate of $18,000. On the other hand, that same hundred kilos of unfinished components coming into Switzerland were taxed at 74 Swiss Francs. Given the bilateral agreements that Switzerland then has with the whole of the EU countries even though we’re not a member of the EU, those agreements then allowed the company to do final test and assembly in Switzerland and then moved that product tariff free throughout the rest of the European Union. So it’s an advantage that some people just simply aren’t aware of.

MM:   That was a discussion of the rapidly growing life sciences sector with Doug Ebert, Senior Advisor Americas for Greater Zurich Area. With OneMed Radio, I’m Matt Margolis signing off.

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