Etla » biotechnology

Expectations, Reality and Performance in the Finnish Biotechnology Business

Martti Kulvik — Wed, 19 Sep 2012 11:00:00 +0000

In this paper our aim is to assess the evolution of the Finnish biotechnology sector during the 2000s. Particular focus is given to the growth expectations and realized outcomes of Finnish biotechnology companies, to the evolution of public investments, and to potential determinants of company performance in the sector. The empirical results suggest that there is considerable disparity between the companies growth expectations and actual performance. Roughly one third of the expected sales have materialized. That being said, it should be noted that the sector has witnessed a significant increase in terms of sales and employment. At the same time, the scale of public funding has dramatically fluctuated during the 2000s in part due to public policy changes and in part due to the financial crisis towards the end of the decade. We also aim to identify where the growth in the sector has come from by discussing company growth and profitability. The findings provide important implications for policy makers regarding the potential evolution paths of the Finnish biotechnology business.

JEL: O30, M21, L25
Publication year: 2012
Pages: 30
Price: 10€
Language: English
Discussion Papers no. 1286

Competitiveness and future challenges of Pohjois-Savo – A report for The Regional Council of Pohjois-Savo (in Finnish with English abstract and summary)

Martti Kulvik — Fri, 07 Sep 2012 11:00:00 +0000

The turnover of the companies in North Savo in 2011 was nearly 10 billion euros, of which industry accounted for just under a third. The industrial structure of the region is not strong, but on the other hand it is not alarmingly thin either, because it does have certain successful niches. North Savos production and export growth has been on par with the average of other regions. The region is specialized in forestry and machinery industries as well as food production. The forest and machinery industries are export-oriented. Promising growth businesses include biopharmaceutical research, testing and production. These segments will be the engines of growth for the region in the future. In the forest industry the wood products industry is strong and its special products, such as heat treated wood, glue-laminated timber and hardwood floors, are selling well. Pulp and paper production have suffered losses, but the carton is in demand. In the machinery industry, power plant boilers, forestry tractors and mining machinery are global successes. Their production networks include a considerable number of local sub-contractors. Counterflow strategies will be the key to future development. The forest industry will evolve into a biotechnology industry, where decentralized local bio-oil production instead of large plants will play a large role. Clusters can be built around wooden apartment buildings. The key skills of the machinery industry should be kept as Savos own secret, but the network of services and output should go global. In addition to timber, milk is one of the regions precious raw materials, the production of which should be safeguarded in the future. Research can facilitate processing of milk and timber into more lucrative products with higher value-added. Fresh, local and organic food production can be promoted via entrepreneurial training, product development, and use of competitive bidding in purchases of fresh food products by public institutions. Development of the pharmaceutical industry is following a dual strategy : the development of the biopharmaceutical industry is based on synergies and investing in research, entrepreneurship and the raising of risk capital. Neighbouring Russia is investing in the development of its pharmaceutical industry. Kuopios medical cluster could participate by helping in the development of medicines, approval process, manufacturing and packaging, as well as marketing to Western markets. Industrial development requires close-knit co-operation with government departments. The University of Eastern Finland, the Savonia University of Applied Sciences, vocational schools, research institutes and laboratories, Kuopio University Hospital and the Finnish Medicines Agency as well as authorities responsible for business development and funding are key players is this development.

JEL: R11, D28, R53,L52, L73,L 66, L61,L62, L64, L65
Publication year: 2012
Pages: 92
Price: 10€
Language: Finnish
Discussion Papers no. 1281

Diagnosing the Growing Pains of a Technology-based Industry. An Examination of the Finnish Biotechnology Industry in Light of Empirical Economics

Antti-Jussi Tahvanainen — Fri, 03 Jun 2011 11:00:00 +0000

Väitöskirjassa tunnistetaan ja tarkastellaan mm. liikkeenjohtoon ja toiminnan organisointiin liittyviä haasteita, joita suomalaiset pienet ja keskisuuret bioteknologiayritykset ovat kohdanneet alan kehittyessä teollisuudeksi.

Väitöskirja todentaa, että yliopistolähtöiset bioteknologiayritykset ovat muun tyyppisiä bioteknologiayrityksiä heikompia hankkimaan rahoitusta, rekrytoimaan osaavaa työvoimaa ja suunnittelemaan kestäviä liiketoimintamalleja.

Publication year: 2011
Pages: 229
Price: 30€
Language: English
ETLA A 47

Studies on the Diffusion of New Science-based Technologies

Tuomo Nikulainen — Mon, 13 Dec 2010 11:00:00 +0000

Technological change is one of the key driving forces behind economic growth. In this process, the diffusion of new technologies plays a vital role. In particular, the early stages of diffusion, in which knowledge is created and transferred for wider industrial use, are seen as crucial to the broader societal impact of technologies. Therefore, it is essential to understand how technologies diffuse from academia to industry, and to highlight different factors that facilitate or hinder the diffusion process. This thesis addresses the diffusion of nanotechnology and biotechnology in four articles, each highlighting a specific and critical part of the early-stage diffusion process.

The first article focuses on the variety of outcomes that university researchers achieve when interacting with companies. It identifies whether a researchers boundary-spanning position in research collaboration networks is connected with these outcomes. The results suggest that university-industry interaction leads to both tangible and intangible outcomes and that boundary-spanning plays a role in achieving them.

The second article highlights the importance of understanding the unique characteristics of the transferred technology. It compares the specificities of nanotechnology to other science-based technologies such as biotechnology. The empirical results indicate that nanotechnology differs from other science-based technologies in only a few dimensions of technology transfer related to the basic research orientation of nanotechnology.

The third article emphasises the role of smaller technology-dedicated companies in the diffusion process. The paper highlights the importance of understanding the economic value of the patent portfolio of biotechnology-dedicated companies with respect to the companies future growth expectations. The results indicate that there exists a positive connection between growth expectations and the value of patent portfolios; this value could be signalled to external financiers.

The fourth article identifies links between smaller technology-dedicated companies and larger established companies. The latter may act as industrialists when introducing new science-based products and processes to the market. The results of this paper identify several potential diffusion channels for nanotechnology in both traditional and high-tech industries.

The articles provide implications for research, policy and practice. The key implications relate to the role of interdisciplinarity as an important ingredient in producing more industry related knowledge, the technology specificity of the technology transfer process and the different roles smaller and larger companies have in technology diffusion.

Publication year: 2010
Pages: 115
Price: 30€
Language: English
ETLA A 45

Cluster Sustainability in Peripheral Regions: A case study on Israel’s and Finland’s biotechnology industries

Antti-Jussi Tahvanainen — Wed, 24 Mar 2010 11:00:00 +0000

Even with globalization, industrial clusters are maintaining their importance in todays economy. With the decomposition of production we find that clusters are becoming focused on specific industries and stages of production. This paper analyzes two peripheral western countries, Finland and Israel, which saw success in their ICT clusters and wanted to duplicate this success building on their knowledge in the life science industry to create biotechnology clusters. This paper focuses on two innovation-based clusters, the bio¬technology agglomerations in Rehovot, Israel, and Helsinki, Finland. These industrial districts consist of companies, many spun out of university research, that are either devoted to early-stage R&D (Israel), or choose to conduct the entire business cycle (Finland). Utilizing a multi-method study that includes both quantitative and qualitative research, with a series of in-depth interviews and site visits, archival and statistical data, the paper investigates whether a cluster of young research companies can become the basis of industrial growth and bring economic sustainability to a region. We find that while the firms strategic choices regarding their focus on certain positions in the value chain do not necessarily have any direct implications on the sustainability of the respective clusters as such, a variety of other characteristics necessary for long-term sustainability are missing in both clusters. These include particularly inter-firm knowledge flows within the clusters, an active and demanding VC market, connections to international expertise, and opportunities to recruit experienced expertise.

Publication year: 2010
Pages: 28
Price: 10€
Language: English
Discussion Papers no. 1212

Medical Innovation and Government Intervention

admin — Thu, 10 Sep 2009 11:00:00 +0000

Global health care issues are driving the public sector into a balancing act between conflicting and complementary forces of inevitable change: an ageing population, the explosion of new therapeutic technologies, a critical shortage of clinical professionals, the desire to improve clinical outcomes, and economic constraints.

With respect to technology and economic constraints, the public is in a confusing situation as it strives to lower current health care costs, but at the same time, seeks more and better health care technology. Moreover, in developing this new technology it is in the publics interest to foster successful new business development, increasing national wealth by creating jobs and the resulting tax revenues. Also, a healthier workforce is more productive, further enhancing the incentive for technology development.

Biotechnology has been seen as offering promises of breakthrough innovations and hence major business potential. These innovations are not incremental improvements but new and different types of therapy and diagnostics. Consequently, a number of governments have invested significant resources into creating a strong biotechnology industry base, with special emphasis on subsidizing drug development.. Despite the success of some individual products, however, the infrastructure has so far not fully met expectations.

This book deals with the complex ambiguity of the health care sector, assessing, in particular, the risks inherent with an enforced regulation of an entire industry sector. The major focus is on value creation in general and biotechnology in particular. Since drugs constitute the bulk of biotechnological health care applications, and likewise both drug development and pricing is under particular governmental regulation, the book highlights the pharmaceutical sector whenever possible. Both practitioners and policy makers will find the messages in this book helpful in creating value for their stakeholders.

Publication year: 2009
Pages: 343
Price: 40€
Language: English
ETLA B 236

Simulaatio lääkekehitysalan kannattavuudesta ja riskeistä

admin — Mon, 05 Mar 2007 11:00:00 +0000

Tässä tutkimuksessa simuloidaan lääkekehitykseen suuntautuneiden pienten ja keskisuurten biotekniikkayritysten tulevaisuutta, erityispainopisteenä kansantaloudelliset implikaatiot. Simulaatiossa huomioidaan vaihtoehtoisia kehityspolkuja, joiden avulla on arvioitu erilaisten liiketoimintamallien toimialakohtainen kasvuvaikutus. Koska simulaation lähtökohtana ovat yhtiöiden vuonna 2004 ilmaisemat kehityskelpoiset hankkeet, laskee projektien lukumäärä simulaation myöhemmässä vaiheessa verraten pieneksi ja markkina-arvon kehitys riippuu täysin siitä, mitkä yksittäiset projektit pääsevät eteenpäin. Simulaatio perustuu 21 yhtiön yhteensä 46 erillisen tuoteaihion portfolioon; otos kattaa n. 80% Suomen pienistä ja keskisuurista lääkesovelluksiin tähtäävistä bioteknologiayhtiöistä. Kansainvälisesti tarkasteltuna verrattain pienestä hankemäärästä ja toisaalta lääkekehitykseen liittyvien korkeiden riskien johdosta to-dennäköisyysjakaumat yksittäisen vuoden sisällä ovat varsin vinoja siten, että suurin todennäköisyysmassa sijaitsee lähellä nollaa sisältäen kuitenkin pitkän hännän korkeille markkina-arvoille. Simulaatio siis osoittaa, että kehitystyöhön sisältyy suuria tuotto-odotuksia, mutta sa-malla liiketoiminnan ja teknologiakehityksen epäonnistumisriskit ovat huomattavat jopa koko alan tasolla. Tulosten perusteella tulisi miettiä, miten tällaisia riskejä voisi hallita. Tämä voisi tapahtua esimerkiksi kehittämällä sellaisia innovaatiopolitiikan välineitä, jotka 1) ohjaavat yrityksiä hyödyntämään Suomen erityispiirteitä ja ainutlaatuisia voimavaroja, ja jotka 2) ohjaisivat panostamaan erityisesti [epäonnistumis]riskien hallintaan, sekä 3) mahdollisesti painottamaan ratkaisuja jotka tarjoavat myös yhteiskunnallisia hyötyjä, perusteluna julkiselle sektorille kantaa kehitysriskejä

JEL: C15, G31, L65
Publication year: 2007
Pages: 25
Price: 10€
Language: Finnish
Discussion Papers no. 1075

Riskirahoituksen merkitys biotekniikka-alalla: Pääomasijoittajien vertailu yritysten näkökulmasta

admin — Tue, 21 Nov 2006 11:00:00 +0000

The paper reports an empirical study on the overall importance and non-financial value-added provided by Venture Capital (VC) investors to their investee firms in biotechnology. The study compares the characteristics of firms that have obtained VC funding with those of firms that have not. Furthermore, it pays attention to the activities and non-financial value-added by different types of VC organization : informal investors (business angels), public sector VCs, and private sector VCs.

The study data was collected through a survey and interviews at the end of 2005 with the total population of small and medium-sized biotech companies established in Finland since 1986 – 85 companies, 95 % of which participated in the study.

VC investors indeed provided both financial and non-financial value-added to their investee firms. All three VC types, informal investors, public sector VCs, and private sector VCs, had somewhat different investment profiles in terms of firm type and age, and therefore, we may conclude that they are not alternatives to, but complement each other. Central findings of the study included an observation that all three VC types were fairly active in their activities vis-à-vis their investee firms. Nevertheless, they differed in terms of the overall perceived value-added as well as their activity profiles. Informal investors were found to have the highest overall value-added and kept closest contacts with their investee firms. It is, however, to be noted that informal investors invested in the youngest firms and therefore their advice and support was probably most needed. Overall, public sector VCs performed nearly as well as private sector VCs, contrary to expectations based on previous research literature on the subject.

JEL: O16, G24, O38, L65
Publication year: 2006
Price: 10€
Language: Finnish
Discussion Papers no. 1057

Patent citations indicating present value of the biotechnology business

admin — Thu, 26 Oct 2006 11:00:00 +0000

Patents form a central pathway for capturing the value of intangible assets in a knowledge-intensive business. Patents can potentially generate and support earnings in two ways : they can be traded or licensed out, and they can provide critical protection for core production technologies or products that are to be traded. Recent patent valuation literature relates backward citations to the basicness of an innovation, and forward citation counts to the economic value of an innovation. In our data covering all Finnish biotechnology patents, we found indications of only the first relation. This might reflect either an excess of a technology-orientated attitude of the companies, or a well-argued value creation mechanism that remains hidden from our research methods. The results imply that a usage of patent citation measures might provide important measures for innovation policies, technology management, and valuation of knowledge-intensive industries.

JEL: O30, M21, L25
Publication year: 2006
Pages: 21
Price: 10€
Language: English
Discussion Papers no. 1048

Coaching Small Biotech Companies into Success: The Value-adding Function of VC

Terttu Luukkonen — Tue, 22 Aug 2006 09:56:31 +0000

The paper reports an empirical study on the non-financial value-added provided by Venture Capital investors to their investee firms. This study will use a four-class grouping of the various non-financial value-adding capabilities provided by VC firms, namely, scouting, monitoring, signalling and value-adding services. The study examines biotechnology industry in Finland.
Finland has a dual system with independent (partially ever-green) VC companies and public or semi-public VC organisations. Additionally, informal VCs are fairly active. Whether the different types of VC organisation aim, are able and indeed do deliver non-financial value-added, in addition to their financial input, is the central focus of this study.
The paper has an evolutionary perspective on Venture Capital according to which VC promotes a variety of experimentation with new technologies, especially through the foundation of new firms oriented to experimentation and development of new ideas. At the same time, VC industry fulfils a selection function in its role as a financial intermediary.
The study data have been collected through interviews, conducted at the end of 2005, with the total population of small and medium-sized, VC-backed biotech companies established in Finland since 1986.
Central findings of the study include an observation that all three VC types did provide value-added in the meaning outlined above. Nevertheless, there were clear differences between them in terms of the overall perceived value-added as well as in their activity profiles. Informal investors were found to have the highest overall value-added and kept closest contacts with their investee firms.

JEL: O16, G24, O38, L65
Publication year: 2006
Pages: 33
Price: 10€
Language: English
Discussion paper no. 1032