Biotechnology Industry In Europe - Book Report/Review Example

Biotechnology Industry In Europe Introduction: Bio Technology is truly a global business as there are numerous bio technology patents registered every year. However, it does make a huge difference as to where the company is situated with regards to investments and marketing sales. The US market still is the global leader in bio technology. This report draws facts finding and valuation of each location. In Europe the United Kingdom leads in biotechnology and is the largest growing business in Europe with more than 270 biotechnology SME’s, 460 bioscience companies with more than 40,000 skilled employees. Over the last 10 years, UK has invested more than GBP 344 million in the area of biotechnology. The government’s annual expenditure in bioscience research is around GBP 650 million each year. UK has a very strong element of supply chain for biotechnology from the scientific research base through the presence of clusters. UK has built in biotechnology clusters and helped in creating a supportive environment for development. Clusters are defined as geographic concentration of interconnected companies, specialized supplier and service providers, firms in related industry. London has a number of leading universities and research hospitals and this accounts for one third of the countries’ publicly funded research in Britain. The EU medicines regulatory agency is also situated in London and can prove to be a huge potential for biotechnology starts ups. (Lord Sainsbury) It is sometimes very risky to put a price tag on biotechnology companies. Forecasting sales and revenue is most important and arriving at an appropriate conclusion is a difficult task. The operating costs associated with starting up a corporate office would include administrative expenses, cost of running clinical trials etc. Taxation and working capital are also factored in. The UK government has identified biotechnology as the most important industrial growth sectors and have adapted ‘soft loan’ program from Germany where private funding is matched with government investment. London has the most advanced international and domestic infrastructure in Europe. Massive investment in infrastructure has been made by the government in the public transportation sector such as cross rail and the East west high speed rail link. London has the world’s best skilled workforce in Europe which makes it the best place to hire. London is the most accessible business location in Europe with over 5 international airports in and around the city and has strong transport link both through air and rail. The first reason of similarity between Britain and America is that like US, London is a multicultural society and is the most diverse city in the world. Britain’s are sometimes more American and share a common national language. London has been confirmed as the best city to globalize business and the top position is largely due to the quality and perceived high value for money of skilled workforce. Transparent corporate governance regulation contribute to low risk environment for a start up company. However, there are some clear drawbacks. London is the most expensive country in the world with a high cost of living but it has been very successful in drawing a massive crowd particularly from the east and west cost of US. There has been a 44% reduction in the prices for London office since 2007 and are expected to go down even more. High property values and space constraint in London is greater than elsewhere in the UK. Depending upon the business requirements, the office can be relocated to other areas outside London as the property values are lower and more space will be available for future expansion. Problems such as high cost of living and space constraint can be a hindrance to the development of the business. (Lord Sainsbury) The tax rate is also one of the main drivers for doing business and according to a survey conducted; London does not offer an attractive tax regime for globalizing companies. Paris According to experts, France has taken the lead in biotechnological applications in Europe. The French government has pledged to invest and fund more projects in biotechnology. There are more than 400 biotech companies and they share 25% of total annual growth rate. Paris is ranked 4th in the world for R&D development and expenditure in biotechnology. Biotechnology industry employs 98,000 highly trained labors in 2001. There are many biotech startups because of the government’s initiative and for the increasingly comprehensive network of collaborative clusters. French Biotech companies lack crucial capital to go beyond development and research. Understanding this, the government went through a series of measures to attract more private investors. It also grants aid directly and provides tax benefits. France has cut down the costs involved for setting up start ups while maintaining strict guidelines on quality. Paris is a highly attractive place to try clinical trials and biotechnology investments. Foreign investors hold up to 40% of the total market capitalization in France. Paris is an enviable location to start the business as it is the heart of Europe and the worlds’ top tourist location. The basic infrastructure aims at improving the present living conditions of the people. Excellent road –rail-air transport has made Paris the best city for tourists. There is also another special system in Paris whereby the access to the internet and the cost involved has drastically reduced and this has boosted the surfing activity among business people. French is the official language in France and the work week in France is 38 hours which is longer than other countries. The French have an exceptional high performance rate in terms of productivity and offers the best productivity rates in the world. The main factor being the training given to the work force. In addition, the French people are considered to be creative and innovative. France adopted a policy to develop clusters which is a hub for expertise and industry intelligence. France has the lowest start up costs and cost structure among the European countries as the labor cost, energy and real estate costs are extremely low. France has significant market in real estate which makes it attractive for business investment. 60% of real estate market is owned by foreign investors. Despite excellent skilled resources, the pay rates are exceptionally low. Current labor costs are lower than the EU standards. These advantages make Paris an attractive business destination. Despite these advantages, there is a vast cultural and difference in work patterns between France and US. Munich: Germany is one of the key players in global development and is considered as Europe’s largest and most populous economy. 82% of the population consists of Germans and German is considered as the national language. The German economy is considered both dynamic and conservative. It still continues traditional manufacturing such as chemical products and automobiles. The German economy is one of the dominant forces in the export world market. The government of Germany had reduced a considerable quantity of revenues resulting from VAT. The 30 year old Munich Biotech cluster has experienced a steady growth in the recent years. In 2005, the net revenues from this sector increased by 18% and the government’s investment in R&D accounts to 6%. Although the presence of the German market is small, it is expected to significantly grow in the next few years. The German federal government started its support in 1970 by creating German Research Center for Biotechnology. Germany also has a strong cluster base in Munich which helps in getting its skilled labors. High level of education and vocational training is given to the people and employees; this is one of the biggest strengths of the German economy. Securing supply of highly skilled workforce is very essential for the development and enhancement of biotechnology industry. The discrepancy in standard of living in Munich has not removed even after the government spent a considerable amount of money to bring wages to western standards. There is a very slow growth rate in the private and economic investment. Germany has the largest population and the largest economy in Europe; they are known to have a reputation of being reliable, loyal and perfectionists. Munich has excellent roads and railways networks. The unemployment rate in Germany accounts to 7% of the total population. There are numerous incentives provided to foreign investors and the incentives range from tax subsidies in real estate ,the building industry and 50% research grants on the total cost of the projects. (Kerviler Gwarlann De, Maria Levis, Kiyoshi Nakazawa, Stephanie Sealy & Lars Zimmermann) Budapest: (Biotechnology in Hungary) Scientific talent and innovation is the most famous and most acknowledged of all talents in the world. In 1984, the government realized the need to restructure the biotechnology industry. Budapest was considered to be the best R& D centers in Europe. In 2000, Hungary started a distinct national Research and development program in biotechnology. The private investment is lagging behind international benchmarks. Hungary is the first country to have an organized biotech industry. Companies in Budapest also enjoy tax benefits for investment in basic and applied research. The research center also allows companies to initiate building up joint infrastructure at all the major research hubs. There are number of reasons as to why one needs to invest in Budapest. There are a lot more creative, skilled researchers with overhead cost below the EU average. In order to speed up the economic growth, the government has committed to develop the innovational support system. The city requires a policy to break the present mobility development trends especially in urban areas. Budapest has been ranked the lowest in regional standard of living against 12 other countries. (2004) Conclusion: In conclusion London is the best place for starting up a corporate office as it has a high pool of skilled professionals in the biotech industry. Not only is London well positioned in the global business market, but it has a large multi cultural diversity with more than 300 languages spoken and provides a dynamic environment on its international heritage. Companies are willing to invest more in labor as the quality of work delivered is beyond excellence. Magnitude of professional network, multilingual staff, quality and well trained professionals, the quality of life and central location in terms of finance, commerce and ideas are some of the examples why London maintains its global position as the pre-eminent global cities of the world. Moreover the work pattern and culture between the US and London are very similar. Literary reference Lord Sainsbury, ‘Bio Technology clusters’, Department of Trade and Industry, Aug 1999, Print Tommaso R. Di Marco & Stuart O. Schweitzer,’ health policy and High-Tech Industrial Development’ Massachusetts, US, Edward Elgar Publishing, 2005 The world via London, Think London, Nov 2008, print Rochepeau Alain, The Pharmaceutical Biotechnology Industry in France, French Ministry of Research and New Technologies, Jan 2004, print Kerviler Gwarlann De, Maria Levis, Kiyoshi Nakazawa, Stephanie Sealy & Lars Zimmermann, Biotechnology- Life science in Munich/Germany, May 2007, print Biotechnology in Hungary, 2004, Print Read More