The economic development of Berlin is as chequered as its political history. At the heart of Germany’s largest city lies a dynamism which makes it one of Europe’s most important cultural, political, media and scientific centres. After the reunification of Germany in 1991, it took about 10 years of political manoeuvring to reinstate Berlin as the country’s capital city. What followed in the first years of the 21st century was the burgeoning of the city both culturally and economically. As a capital city, Berlin is unusual in that it is not, and has never tried to become, a major financial services centre – a blessing in today’s era of financial crises. Instead, the economic drivers of Berlin’s future are the creative and health industries.

The city’s biotechnology industry in particular has grown significantly over the past two years, attracting major companies including Pfizer, Bayer Schering, Shire and Sanofi-Aventis. A number of factors have fostered growth in the sector including a large talent pool originating from the city’s many teaching and public hospitals, universities and research institutes, as well as close links forged between the scientific and industrial community.

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From start-ups to multinationals

Berlin has the scientific and academic infrastructure to accommodate biotechnology companies right from start-up phase or campus spin-off to major multinational firms. A number of technology parks across the region provide a good starting point for small and medium-sized companies as well as a rich source of partners for larger companies looking for specific expertise, says Dr Kai Bindseil, director of BioTop Berlin-Brandenburg, a government networking body that liaises between the scientific community and industry.

“The biotechnology industry still has a strong focus on quality, safety and intellectual property issues, which is a good reason international companies would set up operations here in Berlin rather than in lower cost destinations,” he says.

A network of nine biotechnology parks in the Berlin-Brandenburg region offers not only 90,000 square metres of laboratory space but also the chance for companies to benefit from networking with a community of scientists but also a range of practical incentives to reduce start-up costs. One such site, BiotechPark Berlin-Buch, located just outside the city, was founded in 1996. More than 47 biotechnology companies have chosen to locate themselves in the 26,000 square metres of science park space.

 

Transfer of ideas

Berlin-Buch has always been known for the close interaction between hospital treatments and basic clinical research, says campus managing director Dr Andreas Mätzold. “But the new component is business development,” he adds. Benefits to being located on the park include subsidised rents, workshops and seminars as well as access to more than 1000 patients for clinical trials due to close links with nearby hospitals. The transfer of scientific ideas into business ideas is a priority for the campus, says Mr Mätzold. “The scientific landscape of Berlin includes technical schools, universities and non-governmental research institutes, which makes it a specialised biotechnology, biomedical applications and plant technology cluster which presents a lot of possibilities, even for large pharmaceutical companies,” says Mr Mätzold.

Glycobiology and cellular engineering company Glycotope started as a spin-off of the Berlin-Buch campus and has expanded into a business with a staff of 70. Berlin’s focus on natural sciences, the talent pool of scientific and technical expertise, and lifestyle benefits are reasons why the company decided to grow in Berlin rather than its other site in Heidelberg, where the company has 40 employees, says chief operations officer Dr Hans Baumeister. “Berlin is an exciting city for arts, music and culture. It is a great place to live and it is still pretty cheap here, too,” he says. Another benefit of being in the area is the financial support that small biotechnology companies can receive from the government for research projects.

 

Funding strong

Mike Schuessl, of Investitionsbank Berlin, says enquiry levels for help with funding life sciences projects has not seen any decline since the global economic downturn hit. The state-owned bank offers grants, subsidies and competitive government loans to companies locating to the area.

“We can help every size of company from the one-man start-up to the big international firm,” says Mr Schuessl. The most popular funding package is one which offers small life sciences companies a 35% subsidy rate on their investment over the first three years if highly qualified permanent jobs are created in the region. Financial help can be used for anything from building and construction costs, to buying technical equipment to personnel costs. Mr Scheussl’s enquires are becoming increasingly international as Berlin’s biotechnology industry gains a global reputation. “First movers from Asia, Chinese companies, are looking to move directly to Berlin to start European operations and I have noticed this more and more over the past two years,” he says.

Ute Mercker, senior investment manager at IBB Beteiligungsgesellschaft, a firm of venture capitalists, says she has not seen any decline in funding for biotechnology start-ups in Berlin despite the economic downturn and the dearth of available credit for small businesses. She has about $20m to invest and a broad network of investors all attracted to Berlin for its growing status as a location for biotechnology innovation. “Tax credits would also be good for innovation and we have elections at the end of the year so that is always a possibility with a new administration,” she says.

 

Big players

Among the big players to move to Berlin, pharmaceutical giant Pfizer was one of the first. The company moved its European headquarters from Karlsruhe in southern Germany to Berlin in 2008. Pfizer is typically present in either the capital or the largest city of a country market but the move to Berlin also made sense on many other levels, says clinical research director Dr Claus Göbel. “Berlin’s scientific infrastructure and healthcare infrastructure was critical in the decision to locate here,” he says. The city’s 3.7 million people – 4.3 million when counting the surrounding areas – is significant population density for clinical research. And the infrastructure of its healthcare system is highly developed with many university and public hospitals carrying out high-level clinical research.

Pfizer also wanted to increase its involvement in the healthcare debate that is currently taking place within Germany, primarily in Berlin. “In the past we sold our medicines at the doctor’s office but today the decision about whether a drug will be successful or not lies at the health ministry,” says Mr Göbel. A presence and a platform in Berlin to discuss and network with the stakeholders involved in getting a new drug to market is invaluable.

Pfizer believes it will benefit from Berlin’s highly developed scientific community. “There is a landscape of medical and bioscience research institutions here that is unmatched in this concentration and quality,” says Mr Göbel. That includes universities, institutes such as the Max-Planck Institute or the Fraunhofer Institute, and a wide range of biotech companies. And it is that community of small biotechnology companies which was also a draw to the area. “Drug development in the past was a siloed activity but today it is about partnerships with small companies which have the ideas but no money to develop them,” says Mr Göbel, who adds that the future of clinical development is collaboration with small biotechnology companies such as Noxxon, a Berlin-based company with which Pfizer has been working with since 2006.

 

Clinical trial research

Of the 500 staff Pfizer has in Berlin, more than 130 are involved in clinical trial research. Berlin is home to the largest university hospital in Europe, the Charité, which employs about 15,000 staff, 2200 of which are physicians. With 130,000 inpatients a year and one million out

patients a year, the hospital presents companies with a huge pool of subjects for potential co-operation for clinical trials. Pfizer has between 80 and 90 trials ongoing in Germany, starting about 30 new trials a year across 500 to 600 research sites nationally. Ten per cent of those sites are at the Charité, which is the company’s biggest research location.

UK global biopharmaceutical company Shire bought German biotechnology company Jerini last year, bringing yet another big-name multinational to Berlin.

Health sector companies in Berlin include Bayer Schering Pharma. The company’s corporate headquarters are located in Berlin as well as one of its main global research centres focusing on the fields of oncology, diagnostic imaging and women’s health.

Chairman Andreas Fibig sees great commercial potential in the product developments being pursued in Berlin, which is why the company maintains close contacts with a large number of Berlin-based biotech companies, as well as academic institutions in the region, most notably with the Charité. “The Charité is an important partner for us, both in clinical development and in research collaborations. We co-operate closely in immunology and inflammation research, diagnostics research and oncology research,” he says.

The company maintains a number of collaboration projects with universities and non-university partners in Berlin, including the Max Dellbrück Center for Molecular Medicine, the Leibniz Institute for Molecular Pharmacology in Berlin-Buch, the bioinformatics department at Berlin’s Free University and the chemistry department of the Berlin Technical University.

As Berlin’s biotechnology industry grows, it will be competing with locations such as London, Oxford, Cambridge, Copenhagen, Paris and northern Switzerland for a share of the biotechnology investment. All economic indicators point towards the sector’s growth; and with the city’s infrastructure, scientific and academic expertise and wealth of talent, not even the economic downturn threatens to stop the momentum of growth the industry has experienced over the past few years.

 

KEY FACTS

 

  • Berlin has an 18% share of all German biotech companies.
  • 14% of Berlin’s population are foreign nationals.
  • Berlin has 170,000 university students.
  • The city has 180 biotechnology companies and 19 pharmaceutical companies.
  • Berlin has 350 research groups in the field of biotechnology and biomedicine.