Aiming for pole position

Hilary Ayshford visited several biotech clusters to see how France is looking to re-establish itself at the head of world biotech rankings

With some 250 biotechnology companies, France ranks third in Europe behind the UK and Germany. More than 80% of French biotech companies were created after 1990, and since 1997 the number has grown rapidly: in 2000 the annual growth rate exceeded 25%. Until recently, genomics and drug delivery companies dominated the sector, but there is now growing emphasis on the development of therapeutic products.

Dr Philippe Pouletty, chairman of France Bio-tech and president of the Conseil Strategique de l'Innovation (Strategic Innovation Council), is convinced of the strategic, economic and social importance of the biotech sector.

Internationally, more than 50% of innovative new medicines involve biotechnology. Biotech SMEs thus ensure the renewal of the portfolio of global pharma

products. The sector attracts 25-35% of all investments in high technology internationally, but Europe lags well behind the US. In 2003, the total capitalisation of the sector in Europe amounted to only 22% of the capitalisation of US companies.

According to Pouletty, this chronic financial undernourishment can be attributed to a weakness in risk capital, the absence of a European stock market for growth technology securities, and French universities' low level of excellence and research productivity.

'This situation could push Europe not only far behind the US, but also behind China, whose elite, trained in the US, are today being repatriated and are contributing to an unequalled recovery effort,' he said. 'However there is still time for France and Europe to come in among the first in the race, in particular through some high-impact structural reforms and by avoiding insignificant measures.'

US model

To re-establish itself among the global leaders, France has adopted the model that has proved successful in the US: developing biotech clusters around a small number of areas of academic excellence. Known as Biopoles, these regional innovation networks group together public research laboratories, hospitals, universities and incubators with the aim of facilitating technology transfer and helping companies in their initial stage of creation and development by providing the necessary infrastructures, services and support.

Support from national and regional authorities has led to the creation of eight 'Genopoles', specifically engaged in the genomics and post-genomics fields: Evry-Ile de France (Paris region); Lille (Nord Pas de Calais); Strasbourg (BioValley); Lyon and Grenoble (Rhone-Alpes); Marseille; Montpellier; Toulouse and Bordeaux.

In the biotech field, the Lyon-Grenoble area stands out as a European 'bio-valley'. The Lyon Life Science Network and the Gerland Bio-centre (genopole Rhone-Alps) are backed by the Rhone-Alps genetic biology site and many others involved in the life sciences.

Genopole d'Evry is based on the concept of uniting high level academic research laboratories and biotechnology start-ups in one locality, with the idea being to speed up the development of biotechnology start-ups. Today, the site houses 18 research laboratories, about 40 biotech enterprises and the University of Evry-Val-d'Esonne.

Biotechnology has spread to the west of France to Angers, while in Nantes St Nazaire biotech has seen an exponential growth curve: nine biotech projects were incubated at Atlantapole in 2000. The French state and municipal authorities voted through an investment budget of €49m between 2000 and 2006, of which €27m was earmarked for the therapeutic research unit and the biotech incubators, and €22m for research into the post-genome, biomaterials, cancerology, chemistry-pharmacology, agri-food processes and the bio-environment.

Strasbourg was one of the first Genopoles named by the Ministry of Research, and has significant resources in the field of molecular and cellular biology, gene research and pharmacology. Its state-run research laboratories recruit their graduates from the specialised colleges, such as the French biotechnology engineering college (the ESBS), an incubator dedicated to biotechnology and three-way networking with Switzerland and Germany.

The other major centres of excellence in the biotech field are:

• Lille, which hosts the Eurasante Park, the fastest-growing bio-business park in Europe, as well as many renowned research institutions, about 40 biotech companies and the French Blood Transfusion Centre.

• Montpellier, which has an abundance of universities, research centres and innovative companies.

• Clermont-Ferrand, where, at the centre of the biopole Clermont-Limagne, a technopole is entirely dedicated to biotechnology.

• Limoges, which is working with the Institut de la Vie et de la Sante (Life Sciences and Health Institute) on glyco-proteins

• Toulouse, which has a new incubator, Prologue Biotech, on the LabEge-Innopole site.

The Biotechnologies - Life Sciences 2005-2010 project aims to stimulate academic research, promote a small number of public-private centres of excellence, attract investors and savings in innovative SMEs, encourage a stock exchange intermediary for the most up and coming companies and feed the future with some large French-European research projects.

From the existing centres of excellence, two or three of the best would be reinforced so as to achieve scientific, financial and industrial critical mass. This would be done in a number of ways, ranging from the building of ultra modern laboratory buildings on the sites to establishing strong tax incentives within a limited geographical area around them, and allowing the universities involved in these centres of excellence to take on French and foreign staff at international market cost, outside the civil service salary scale.

capital investment

A further boost to innovative companies has come from the decision by French life assurance companies to put capital investment into SMEs. In 2005 this was expected to amount to more than e1bn invested by life insurance funds, either in specialised risk capital investment funds, development capital, or directly in SMEs, with increases in 2006, 2007 and beyond.

However, France Biotech recognises that more robust capital investment alone will not suffice: some way needs to be found to facilitate the launch of the most innovative SMEs onto the stock market. 'Unfortunately, our European stock markets are fragile today. This fragility comes in part from too low a number of promising SMEs and their financial and operational anaemia before making an entrance on to the stock market,' said Pouletty.

To encourage French investors to enter the SME stock market, France Biotech, together with la Caisse des Depots et Consignations and Euronext, proposed to the government the status of Young Listed Enterprise (Jeune Entreprise Cotee, JEC). This designation would offer tax benefits to investors who take risks: exemption from capital gains tax, from wealth tax, and from inheritance rights.

'French companies are dynamic but major efforts are still needed to put in place the most appropriate financial, scientific and regulatory environment, stressed Pouletty. 'France Biotech will finish the work for the adoption of the JEC status and the set-up of an ambitious reform in research with the objective of having France and Europe back as worldwide leaders.'