For the Belgian region of Wallonia, 2018 was a banner year for foreign investment. The region, which makes up the southern half of Belgium, attracted $761.9m in greenfield FDI in 2018, its highest level since before the 2009 financial crisis and subsequent global recession.
While traditional industries such as chemicals and industrial equipment led the way, the hi-tech pharmaceutical and biotech industries made a sizeable contribution to FDI into the region in 2018. Wallonia’s push to position itself as a hub for the life sciences industries appears to be paying off.
The growing regional pharmaceuticals industry garnered four new projects in 2018 totalling an estimated $67m in investment, according to greenfield investment monitor fDi Markets. Meanwhile, two new biotechnology projects brought in $14.3m in new investment. A further two projects in the medical devices sector garnered an additional $12m in investment, bringing the total invested in life sciences in Wallonia to just under $95m, as estimated by fDi, since the beginning of 2018.
These new projects built on regional trends. Wallonia’s authorities have worked to promote the region as a European life sciences centre, a strategy that is so far bearing fruit. Since 2003, the industry has contributed some 17,000 direct jobs and 33,000 indirect jobs in the region, and the workforce it employs continues to expand at about 7% annually.
A European hub
While much of the cutting-edge research in medical research is still located in the US, Wallonia is carving out a place for itself as a destination for life sciences industries, as Belgium already plays host to industry giants including GlaxoSmithKline, Pfizer and Bayer.
However, for smaller, start-up companies, Wallonia offers attractive incentives, both financial and beyond. “Silicon Valley is great but it is also extremely expensive and there’s less early-stage money available. Europe has few med tech hubs and none compares to Silicon Valley or Boston, but at the scale of Europe, Wallonia is definitely on the map,” says Olivier Delporte, CEO of Miracor, a medical device maker that relocated its headquarters from Austria to Liège, Wallonia, at the beginning of 2018.
One rationale for relocation was the financing that the government of Wallonia offered Miracor in the company’s latest fundraising round, according to Mr Delporte. However, other factors were just as important.
He cites the availability of talent as key, and especially hard to come by in specialised fields. The dense network of university research institutions in Wallonia, and its hospitals, provide ample opportunity for research partnerships and recruitment.
“There’s a real biotech hub happening now in Belgium, with more companies, listings and exits,” says Mr Delporte. “The public sector and authorities are dedicating attention and financial means to helping companies such as ours.”
Incentives for investors
According to BioWin Wallonia, the region’s health sector cluster, Wallonia offers many reasons for life sciences companies to base themselves there. Belgium is set up for globally minded life sciences companies, given that it is already the world’s second largest exporter of pharmaceuticals, with some $1.7bn invested in R&D annually nationwide. About $933m of the country's R&D budget is spent in Wallonia.
The region also boasts 10,000 beds across top-ranked hospitals and 400 life sciences-focused research units spread across five universities. Michel Spagnol, CEO of French molecule specialist Novasep, says: “It is very hard to start this kind of business from the grassroots because the technological barrier is substantial. Already in Belgium there is a nice network of the pharma industry around to make these kinds of investments.”
Novasep’s $12m investment into a facility next to the city of Seneffe – expected to open in the latter half of 2019 – is the culmination of a move that Mr Spagnol made when he first joined the company in 2013.
At the time, the viral vectors portion of Novasep’s business was underdeveloped. Rather than shutting the unit down, the company bet that as gene and immunotherapy treatments became more widely available, these viral vectors technologies would be in great demand. This is exactly what happened.
“The market helped even more than we anticipated. In past two years, it has expanded dramatically. Today it is still difficult to find capacity for customers to make this particular products. We were one of the first to offer this technology,” says Mr Spagnol.
“The market is continuing to expand at a faster rate than capacity can be put in. Once we start operations at this plant, in a very short time we will be saturated. If we are successful with this first investment we will continue to invest and in the same location. The barrier to entry in these industries is very high, and this level of knowhow is very difficult to find in other locations.”
Other companies appear to agree. Orgeneisis, a US biotech company that specialises in manufacturing products for cell therapy, invested $5.9m in new offices and laboratories near Liège. Spain’s Minoryx Thereapeutics, meanwhile, invested $22.7m in a new subsidiary based near Charleroi in Wallonia.
According to the Belgian government, more than 140 biotech companies operate in the country, accounting for 7% of all companies in this sector in Europe, while Belgian companies garnered almost 10% of Europe’s R&D spend.
Costs of this report were underwritten by the Wallonia Export & Investment Agency. Writing and editing were carried out independently by fDi Magazine.