BioM Presents the Munich Biotech Report

Professor Dr Horst Domdey, CEO of Bio^M, presented the results of the research during the “2nd Munich BioTech Forum” which was held in the premises of Wacker Chemie.

The biotechnology industry in Germany has indisputably put a difficult time of consolidation behind it. And Munich has also had its setbacks. Companies like apovia, Axxima Pharmaceuticals, Munich Biotech, Switch Biotech and Xerion Pharmaceuticals were forced to declare bankruptcy. These were all companies working in the field of drug development and with many dozens of employees. They were financed by venture capital and did not succeed to close their respective next round of financing.

Despite these setbacks, Munich still remains leader among the German biotechnology regions, above all with regard to the number of products under clinical development and the maturity of the companies.

Further, especially several of the larger biotechnology companies in the region listed on the stock exchange were able to note really positive developments in the last year.

MediGene succeeded not only in presenting a marketing partner for its first authorised drug but also successfully managed two capital increases, presented encouraging trial results for the phase III study of a second drug candidate and acquired a large portion of the assets of bankrupt Munich Biotech.

In 2004, GPC Biotech achieved listing on the NASDAQ and started a clinical study with the first antibody from its own development. At the beginning of 2005, the company purchased the assets of bankrupt Axxima Pharmaceuticals.

MorphoSys concluded a decisive strategic alliance with Novartis for the development of a therapeutic antibody and acquired the British antibody specialist, Biogenesis, at the beginning of 2005.

“Consolidation always brings losses as well. But as long as some companies are larger and stronger after than before, it serves to strengthen the industry”, according to Prof. Domdey.

Munich Product Pipeline – The Largest in All Germany

Currently, the Munich companies are testing over 70 drug candidates in almost 90 preclinical and clinical studies. Many of these potential drugs are against cancer diseases but the research is also targeted against numerous other indications, such as infectious diseases, central nervous and skin diseases.

The product from MediGene, Eligard^®, was launched already last year. Additionally, 5 substances are either currently in, or have already concluded, phase III clinical trials – the last phase of testing in humans. One preparation of the Scil company against Huntingdon’s Chorea is even undergoing registration at the moment.

More New Companies Founded, Employee Numbers Falling

After the year 2003, in which the BioTech-Region München saw the creation of only three new companies, this number rose nevertheless to seven in 2004. Despite eight insolvencies, in total there are still over 90 small and medium-sized biotechnology companies located in the region and nearly as many branches of large companies, pharmaceutical companies, contract research companies and marketing and sales organisations. The total number of employees in all companies in the region is around 11,000. Owing to continuous consolidation, difficulties in the capital markets and bankruptcies, the number of employees in the small and medium-sized companies fell from about 2,600 last year to about 2,200 now.

Against this backdrop, Roche Diagnostics in Penzburg invested over EUR 150 million alone last year in its research and production facility there and took on over 200 more employees. The pharmaceutical company from Basel has evolved to become the motor for employment in the BioTech-Region München.

Co-Operation Remains Very Important

Since, as is known, the patents of many large pharmaceutical companies are currently expiring, one of the important alternatives to financing on the capital markets is provided by partnering developments from biotechnology with strong partners from the pharmaceutical industry. The Munich biotechnology companies have concluded over 250 licence contracts and development partnerships with other biotechnology and pharmaceutical companies.

Important co-operation contracts last year were the development partnerships of MorphoSys with Novartis or that of Micromet with Serono, which bestowed upon the companies a significant flow of financial means as well as gaining a strong partner.

Despite the great importance of co-operations, long-term successful development depends on the right balance between rounds of finance raising, co-operations, restructuring, stock market listing and mergers. A relaxation of the capital markets for biotechnology is essential for the industry. According to Prof. Horst Domdey, “The first developments of 2005 give hope that the industry as a whole is meanwhile experiencing an uptrend once more”.

The Status Report in german follows below. An english version will be available in the middle of Mai.

Link to more information: Report_german.pdf