The Czech Republic is long on talent but short on cash to put its research into production. Charles Piggott reports on attempts to solve the problem.

It would be hard to find a better advert for the Czech Republic’s fledgling biotech sector than Marián Hajdúch, a researcher director at the Laboratory of Experimental Medicine in Olomouc. He knows that in Germany he could make 10 times his salary, yet he returned from postgraduate work in Canada to work in Moravia, famous for scientific research since Gregor Mendel laid the foundations of modern genetics 150 years ago.

Mr Hajdúch says: “Our number one problem is our lack of experience in the management of intellectual property. Until now, the only pressure for Czech researchers was to publish their research. But if a compound or discovery is not protected, no pharmaceutical company will ever develop a treatment based on our discoveries. The intellectual property, and the work, is lost. We need to attract more Western-style management to commercialise research into production.”

Commercial potential

Recent scientific breakthroughs in the Czech Republic leading to US FDA-approved blockbuster treatments, such as Vistide, Viread and most recently Adefovir Dipivoxil, have opened Czech researchers’ eyes to the commercial potential of their research.

One of the country’s pre-eminent academics, Jan Zaloudik, associate professor and dean of Masaryk University’s faculty of medicine in the eastern city of Brno, says that changes in state funding, the acquisition of Czech pharmaceutical companies by foreign players and the loss of markets in eastern Europe have made it harder for Czech scientists to develop their work for industrial production.

He also says the problem lies in ensuring that research is transferred into production. “Czech companies may have ideas but they lack the capital backing of strong investors. So we are now trying to put in place a system to commercialise research and this involves building the organisational infrastructure and management to do that,” he says.

With the help of a CK3.5bn ($117m), 25-year loan from the European Investment Bank, Brno’s new university hospital campus due for completion before 2006 will include 6000m2 of laboratory space for start-up biotech companies. Professor Zaloudik says this will encourage the creation of more small- and medium-sized research & development (R&D) companies engaging in the development of biotech compounds and therapies.

Limited investment

Western management ideas are becoming more common, particularly as international pharmaceutical groups expand eastwards. However, so far, most pharmaceutical companies have confined investment to manufacturing plants and clinical trials programmes rather than setting up R&D ventures.

The industry’s largest players, such as Pfizer, GlaxoSmithKline and Novartis, have largely confined their Czech operations to distribution and the outsourcing of clinical trial contracts.

“I really don’t know why the largest pharmaceutical companies haven’t invested here,” says Professor Zaloudik. “Perhaps they are waiting for our integration into the European Union or maybe there is still not enough of a regulatory framework.”

Medium-sized players, however, have been quicker to commit significant capital investment. US pharmaceuticals group Baxter International is in the final stages of building a $40m vaccine production facility in Bohumile, in the central Czech Republic.

Baxter spokeswoman Patty O’Hayer says: “This facility will be state-of-the-art and the fact that we are locating high-tech operations in the Czech Republic shows the company’s relatively high level of confidence in the region’s skill levels.” The decision to locate in the Czech Republic also involved “the significant cost advantages and the potential to establish a gateway to growing pharmaceutical markets in the region”, she says.

Swiss speciality chemicals group Lonza, which supplies active ingredients to many of the world’s pharmaceutical companies, is currently investing between Sfr75m ($54m) and Sfr100m to boost its Czech bio-manufacturing operations. Since it came to the Czech Republic in 1992, Lonza’s biotech division, Lonza Biotec, has invested Sfr200m in buying and refitting a veterinary research and supplement plant in Kourim, in the east of the republic. It is also building two new production lines at its Kourim plant, due to be completed by next spring, to increase capacity by about 60%.

Tomasz Cieslewski, general manager of Lonza’s Czech operations, says: “We were in the difficult position of having to cancel production contracts because our existing capacity was not enough. We didn’t want to lose clients, so we are expanding.” He says although production costs are significantly lower in the Czech Republic, most of his clients have low expectations. “Some have been left speechless when they saw the sophistication of our facilities.”

Funding initiatives

The Czech government also hopes to attract private investment into R&D ventures through its support of the country’s dozen or so biotech-focused science parks.

And as part of the drive to promote investment in biotechnology, which has been designated a special target sector for investment incentives, municipal authorities have been encouraged to invest in science parks. For example, the eastern city of Olomouc is doubling the size of one park by building new ‘incubator’ laboratories, to encourage the transfer of scientific discovery into the commercial sector.

Vladimír Viklick, a director at the Prague Institute of Molecular Genetics who sits on the government’s research and development strategy committee, says that the government will increase funding for its centres-of-scientific-excellence programme. “The aim is to concentrate support by encouraging players from the academic sector and high schools to work with industry,” he says.

Xenia Svobodová, managing director of Prague-based IQA, a pharmaceutical development spin-off company launched in 2000 with venture capital funding, is also concerned that little research is transferred to the private sector. She says: “We are missing the bridge between research and basic industry. On the one side we have universities and public research institutes and on the other there is industry, with little in between. How to promote the transfer of research, particularly through small companies, has become a hot topic.”

Czech researchers say it may be 20 years before salaries in the life sciences sector reach parity with Germany and the UK. Until wages reach western European levels, investment in the Czech Republic should be an attractive business proposition.