FEATURE

http://biotech.nature.com • MAY 2002 • VOLUME 20 • nature biotechnology

The so-called Medicon Valley—a binational“bioregion” spanning greater Copenhagen inDenmark and Skåne in southern Sweden—has set itself the ambitious goal of becomingEurope’s most attractive biore-gion by 2005. And that goalmight, indeed, be feasi-ble as the movers andshakers in the inter-national biotech-nology communityeye this expandingcluster with interest.With one of the fastestgrowth rates, in number ofstartups, in Europe, the Medicon Valleymay indeed become a leader in Europe if itcan successfully integrate the two regions.

Biotech in the ValleyThe Medicon Valley concept debuted during1993, when a report from urban geographersChristian Wichmann Matthiessen and ÅkeAndersson highlighted the potential of lifesciences within the region. In particular, thereport pointed out that the Medicon Valley ishome to 60% of Scandinavian pharmaceuti-cal companies and is ranked third in Europeon the basis of number of medical publica-tions by researchers in the region. Indeed, theMedicon Valley can boast 135,000 students,26 hospitals, and 11 universities, includingthe large Copenhagen and Lund Universities.

The message got through to theØresundscomiteen, a forum of counties fromboth regions hoping to drive development inthe region. In particular, the forum chose topromote biotechnology, coining the termMedicon Valley in 1994 and later helping toset up the networking organization MediconValley Academy (MVA) to spur developmentand to assist knowledge transfer betweenuniversities and the private sector. The MVAnow has a substantial presence in the area,with offices in both Denmark and Sweden. Itarranges regional meetings and conferences,and has recently started setting up educa-tional programs and stipends for postgradu-ate students working within biotechnology.

The pharmaceutical industry has been a

presence in the Medicon Valley for decades.Southern Sweden is home to major corpora-tions including Pharmacia and AstraZeneca,whereas Novo Nordisk, Lundbeck, Ferrosan,

and Ferring are located inDenmark. Biotechnology

in the valley first arosein southern Sweden,where it sprang outof universityresearch in the

form of companiessuch as BioInvent and

Biora during the 1980s.In Denmark, the industry

made its debut slightly later with thecreation of NeuroSearch, established in 1989by a group of researchers from Novo Nordiskand Ferrosan. NeuroSearch develops drugs totreat diseases of the central nervous system,and now has a market capitalization ofaround $100 million, making it the third-largest biotechnology entity within Denmarktoday. To some extent, NeuroSearch served asa psychological battering ram for thebiotechnology sector in the valley, demon-strating to the cautious Danish businesscommunity that it was possible to build acompany with no imminent profits and a sig-nificant cash-burn rate. The company alsobecame a breeding ground for biotechnologyexecutives, and many of its former employeesnow occupy key positions in other compa-nies.

Today, the valley’s commercial center ofgravity remains firmly on the Danish side,where the density of startups is muchgreater. There are 32 biotechnology compa-nies in Sweden and 80 in Denmark (seeTable 1 for examples). MVA director BentChristensen credits the difference to the “bigcity effect”—the draw of Copenhagen andits efficient infrastructure. The Swedes,however, are gearing up: the year 2001became the first in which the number ofbiotechnology startups on the Swedish sideequaled those in Denmark—each registeredsix. According to some Danish observers,entrepreneurial spirit is more pronouncedin Sweden, where academics are more will-ing to risk leaving university posts for star-tups. Gertrud Bohlin Ottosson, director ofthe Ideon science park in Lund, disagrees,suggesting other reasons for the Swedish

growth spurt: “Since the late 1980s ourbiotech industry was overshadowed byinformation technology, which was themain focus with investors,” she says. Sincethe worldwide dot-com bubble burst, ven-ture capital has been rerouted to biotech-nology. And, at the same time, the largeSwedish pharmaceutical companies are con-centrating on core competencies, outsourc-ing more work to biotechnology startups.

Foreign interestThings have moved fast since the humblebeginnings of the Scandinavian biotechnolo-gy sector. Today, with over 100 biotechnologycompanies in a region of only 3 millioninhabitants, the Medicon Valley has one ofthe highest densities of companies per capitain Europe.

Just six years ago, venture capital dedicat-ed to biotechnology was unknown inScandinavia. Today, however, a host of localand foreign investors have earmarked $650million for biotechnology. Lately, theMedicon Valley has managed to attract sig-nificant interest from abroad. The first todip its toes in the water was Californiancompany Maxygen (Redwood City, CA),which moved in three years ago to acquirethe then one-year-old Danish companyProfound with the help of Danish invest-ment bank BankInvest. Since then, theoperation in Hørsholm, north ofCopenhagen, has grown from a handful ofemployees to nearly a hundred.

Last spring, the local media applaudedloudly when US major-league player Biogendecided to place a new biomanufacturingfacility in Hillerød, north of Copenhagen.The plant, which will employ 400 peopleand bring in $35 million in investment, isscheduled to open in 2005. “I believe thatthis decision firmly put Medicon Valley onthe map and that it will help bring in moreinvestment,” says MVA’s Christensen.Before the announcement, there was a 14-month race in which several Europeanbioregions were assessed as possible futurehomes for the plant. According to James C.Mullen, Biogen’s chief executive officer(CEO), the quality of the workforce and thearea’s “world class in biotechnology andpharmaceuticals” weighed in favor of theMedicon Valley.

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Biotechnology in the Medicon ValleyAlthough the new Øresund bridge physically links southern Sweden and Denmark, it will take some time to establish good working relations between their biotechnology clusters.

Lone Frank

Lone Frank is a freelance writer working inCopenhagen (lonestar@cool.dk).

© Amy Center

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be more modest and only go for theamount he thinks he needs,” saysBankInvest director Jesper Zeuthen.

Mature fundingTo date, the development of biotechnologywithin the Medicon Valley has benefited lessfrom government investment in biotechnolo-gy business than some other regions; govern-ment initiatives have been focused on build-ing excellence at the basic research level ratherthan providing “soft money” for startups.However, startups can receive financial back-ing from the Swedish Industrial DevelopmentFund and Danish Business DevelopmentFund, which are networked with the MVA.Biotechnology ventures can find shelter in thefive science parks—Symbion, Hørsholm, andCAT in Copenhagen, Ideon in Lund, andMedeon in Malmö—which are supported bya mix of private and public funding. Mostly,biotechnology in the Medicon Valley hasevolved under its own steam, and the currentsituation looks set to continue, despite argu-ments in favor of more government support.Indeed, Asger Aamund, an angel investor andchairman of the board of NeuroSearch andseveral other companies, has for years com-plained that the government has not providedtax breaks on stock options and warrants inorder to motivate more academic researchersto make the jump into business.

Fortunately, however, Scandinavian venturecapital is now more seasoned and prolific. Thepioneer was Copenhagen’s BankInvest, whichset up the area’s first specialist biotechnologyfund during 1997. Since then, BankInvest hasexpanded to create two more funds, and a hostof other local funds such as Novo Capital andMedicon Valley Capital have been established.Today, there are about 32 investors in theregion.

What is perhaps most important is that theregion’s capital base is fast becoming interna-tional. “The ability to draw internationalinvestors will be a staple for the companieswho survive in the future,” says FlorianSchönharting. The man behind theBankInvest biotechnology funds for tenyears, Schönharting has now moved on tocofound and direct Denmark’s youngestbiotech venture capital company, NordicBiotech. Schönharting and his partner,Christian Hansen, are currently raising theirsecond round of funds and are looking foroutside partners. As one of the area’s few spe-cialized early-stage funds, Nordic Biotech hasso far managed to attract investment fromCalifornia’s Biotechnology Value Fund andrelated investors.

Meanwhile, well-known heavyweightssuch as Swiss Index Ventures, Alta Partners,Apax, and Lombard Odier have moved intothe area, investing in companies such as 7TM

Furthermore, in general, Scandinavians aremore willing than most to participate in clin-ical trials, making trials very cost-effective.

Now, comfortably past the venture fund-ing stage, Genmab has been able to contin-ue building alliances with foreign compa-nies, among them deCODE Genetics(Reykjavík, Iceland) and GeminiGenomics, now owned by Sequenom (SanDiego, CA). Although among the youngest,Genmab is the only Medicon Valley com-pany to have a product in phase 3 clinicaltrials—the tumor necrosis factor alpha(TNFα)—inhibiting antibody HuMax-CD4, for the treatment of rheumatoidarthritis. Some say that the company hasset a new standard for professionalism andambition, especially in raising venture cap-ital funding. “While the American way is toraise all the capital you can while the win-dow is open, a Danish CEO would typically

nature biotechnology • VOLUME 20 • MAY 2002 • http://biotech.nature.com

FEATURE

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Making a markHowever, the unrivaled star of MediconValley, Genmab, is the result of a successfulcollaboration between locals and outsideplayers, and observers are hopeful that it is asign of deals to come. In the year 2000, US-based Medarex and BankInvest set up theantibody company Genmab in Copenhagenas a joint venture. By October of that year,Genmab, making the most of the opportuni-ty afforded by the upsurge in market interestin biotechnology, had one of the most suc-cessful European initial public offerings todate, raising $220 million.

Genmab, whose main asset is an exclusivelicense to Medarex’s HuMab technology,develops human antibodies directed againsttargets related to cancer and various autoim-mune diseases. Today, the company has amarket capitalization of $500 million, plac-ing it securely as the area’s largest biotechnol-ogy operation; the second-largest company,allergy drug developer ALK-Abelló, is just athird of Medarex’s size.

The location of Genmab in the MediconValley is key, according to Genmab’s CEOLisa Drakeman.“Especially, the availability ofventure capital and access to skilled cliniciansand patients to help conduct clinical studiesare essential,” she says. The Medicon Valleyalso has several other advantages: the publichealth system is practically a monopoly, withrecord keeping tied to a personal identifica-tion number given everyone at birth.

Table 1: Selected biomedical companies in the Medicon ValleyDenmarkAcadia Pharmaceuticals A/S Genomics-based drug discoveryALK Abelló A/S Allergy treatments: R&D and productionBavarian Nordic Gene therapy and vaccines

Research InstituteBioImage A/S A system for detecting intracellular signal transductionCombio A/S Gene-based drug discoveryExiqon A/S Microarray and high-throughput solutions for genetic pro-

filing and gene-expression analysisGenmab A/S Development of human monoclonal antibodies for treat-

ment of chronic diseaseMaxygen A/S Protein-based pharmaceuticals, developed through

structure-based analysis and robotic screening of candidate molecules

NeuroSearch A/S Novel therapeutics for neurological and psychiatric disordersNsGene A/S Genetically engineered neuronal cell cultures for gene-

based treatments of CNS disorders, such as Parkinson’s and Alzheimer’s disease

Pantheco A/S Peptide nucleic acid–based antibiotics for treating drug-resistant pathogens

Pharmexa A/S Therapeutic vaccines for the treatment of chronic diseaseSymphogen Recombinant human polyclonal antibodies7TM Pharma Drug design focused on G-protein-coupled receptors

SwedenActive Biotech AB Pharmaceuticals and vaccines based on immunobiologyBioInvent International AB Specific antibody fragments for research tools and

therapeuticsBiora AB Development of oral therapeutics to treat periodontal

disease and improve healing after oral surgeryCellavision AB Image analysis, software, and hardware for improved diagnosis

The new Øresund bridge connects southernSweden and Denmark.

© Francis Dean, Getty Images

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FEATURE

http://biotech.nature.com • MAY 2002 • VOLUME 20 • nature biotechnology

Pharma, Genmab, and BioImage. SwissIndex’s director Francesco de Rubertis haseven named Medicon Valley the preferredlocation for future investments by his fund.This February, Finland’s largest life scienceventure fund, BioFund, set up an operationin Copenhagen as its first step into Europe.BioFund director Seppo Mäkinen says thatthe Medicon Valley is clearly the area with thegreatest potential within Scandinavia, andSchönharting agrees: “The period 2000–2001has been a breakthrough year and the outsideinterest shows that Medicon Valley has nowattained critical mass.”

Troubles aheadIt remains unclear as yet whether there isenough high-quality, innovative research toinvest in within Medicon Valley. BankInvest’sZeuthen is worried that the well of innovativeprojects could start to run dry in a few years,although Schönharting points out that thedeal flow has actually been increasing overthe past few years. But at the same time,Schönharting stresses the need to look out-side Scandinavia and import ideas and tech-nology from other regions.

And there could be more snakes in par-adise: the difficulty of recruiting suitablyqualified personnel could stunt the futuredevelopment of biotechnology in theMedicon Valley. Several biotechnology play-ers have long argued that there will be ashortage of qualified researchers for thebiotechnology industry because universitiesin Denmark and Sweden are pumping outtoo few life science graduates. Per Salholt,research director of Novozymes—formerlypart of Novo Nordisk—says although he isstill able to recruit the necessary staff, he wor-ries about the future. “As all the new startupsgrow, there will be a serious demand, and theoutput from universities does not match the[expected] need in just three or four years,”he says. As an indicator, the number ofbiotech employees in Denmark and Swedengrew by 30%, to 3,500, during 2001.

At the Copenhagen startup 7TM Pharma,management has had to recruit the entire staffof its chemical department from outsideScandinavia, because of the shortage of post-doctoral chemists at home. According to chiefoperating officer Peter Moldt,“it is possible tolure researchers to Scandinavia, but itdemands a lot of time and effort and thattakes a toll on small operations.” On the posi-tive side, stresses Moldt, although it may bedifficult to attract researchers from academia,mobility among researchers in big pharma-ceutical companies has increased dramatical-ly as the biotechnology sector has matured.

Meanwhile, unusual initiatives are cookingin the academic world. One is the so-calledDanSing program, which Medicon Valley

universities are taking on a road show toSingapore this spring. The institutions arenegotiating for the opportunity to educate1,000 Singaporean life science graduates inthe Medicon Valley over five years. The hopeis that some of these students—recruitedfrom the top 5% of students in Singapore—will stay on in the Medicon Valley to feed thehungry biotechnology industry.

“Being an attractive bioregion ultimatelycomes down to one thing—excellentresearch,” says Per Belfrage, chairman ofMVA and a professor at Lund University.Although Denmark may be leading the com-mercial race so far, Sweden is fartheradvanced in boosting the academic arena.Sweden also benefits from a few wealthy pri-vate research charities such as the WallenbergFoundation, which has helped to create the$80 million SWEGENE initiative, which sup-ports a high-profile institution for postge-nomic research. Public money backed the$120 million Biomedical Center launched inLund during 2000, which is already planningto expand.

Meanwhile, the Danes are shaking theirheads because the counterpart to theBiomedical Center in Copenhagen, theBiotech Research and Innovation Centre(BRIC), remains stuck on the drawing board.Danes complain that their politicians act tooslowly and do not appreciate the need forspeed within the sector. Claus Bræstrup,BRIC chairman and research director atLundbeck, regards the Biomedical Center as awonderful initiative but believes that theplanned opening in 2004 is the very last call.“Politicians must give stronger support toresearch if the region is to ultimately suc-ceed,” he says.

Succeeding as a region also means bring-ing two cultures together, which poses struc-tural problems for the Medicon Valley.Although the two-year-old Øresund Bridgeprovides a physical link between Copenhagenand Malmö, integration is far from complete.Forming collaborations between the twocountries remains a challenge, and there isstill a feeling that the Medicon Valley is morea theoretical construction than a reality.According to Ideon’s Gertrud BohlinOttosson, the practical problems loom large:students are deterred from crossing thebridge because of the costly toll ($60), whilecompanies complain that the different taxsystems deter employees from commutingfrom one side to the other to work. But themost detrimental omission is the paucity ofcollaborations across the region, says BohlinOttosson. “It will take time to get this aspectgoing, and the only way is to keep on push-ing, to arrange more meetings and confer-ences and to keep discussing the need to fur-ther integrate the region.”

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