Economic situation

In international innovation and competition studies (for example the World Economic Forum or European Innovation Scoreboard) Finland regularly occupies top positions. The highly respected education system, on top of an innovation-friendly infrastructure, is the priniciple reason for this success. This country of just 5 million inhabitants invests 3.5 % of its gross domestic product in research and development. The prominent industries thereby are electronics and electro-technology, forestry, mechanical engineering and metallurgy. The focus on science and research began towards the end of the 80's, when national innovation policies were first introduced (see Research Landscape and Research Policies).

In comparison with other countries, the Finnish biotech scene is relatively small and has correspondingly few companies, placing it in sixth position in Europe. Between 100 and 120 companies can be counted as belonging to the biotechnology sector, although the figures in the different studies vary significantly. In the most recently published study from Critical I, only 66 companies were counted. 84 biotech firms are listed on the website of the Finnish Bioindustry association. Geographically, most Biotech companies have their home in the regions surrounding Helsinki, followed by the regions of Turku, Tampere, Kupio and Oulu.

Two studies into biotechnology which followed OECD guidelines and were carried out by ETLA, the Finnish Office of Statistics, counted 112 biotech firms in 2001, of which 73 were SMEs, and 120 in 2003, of which 112 were SMEs. Of those counted, the majority was active in the field of diagnostics (43), followed by drug discovery (34) and the food & nutrition sector (22). In 2003, a total of 2450 employees in SMEs were counted (in 2001: 2000). The average figures for a Finnish biotech company were calculated as follows: the average company is 7 years old, has about 10 employees on its books, holds approximately 4 patents and spends 180,000 Euros annually on R&D.

Nearly all of the participating companies (76) cooperated closely with universities and had received public funding. At that point in time, private capital totaling 233 million Euros had been invested in biotechnology. Thereby, companies that were cooperating with foreign universities had received the most money: just 33% of the companies which participated in the study were claiming 70% of the total funds.

About a third of the Finnish biotech companies are owned by private venture capital (VC) companies. 24% of the companies are privately owned or belong to the employees of the company. 17% are steered by other enterprises, and 15% are majority-owned by VC institutions such as Sitra, the Finnish National Fund for Research and development.

Table 1: Key economic figures of the Finnish biotech sector

Source: ETLA Survey 2002 and 2004 (for the data of 2001, 2003), Data of 2004 of Critical I 2006

The development of the biotech scene is particularly shaped by the strong chemistry sector - most biotech companies in Finland are occupied with hormones or enzymes, for example Finnzymes. For this reason, it is not surprising that this sector achieves the highest turnover The ETLA study calculated that the contribution by the enzyme sector to the total biotech turnover in 2003 was 34% (150 million Euros), followed by drug discovery (24%: 100 million Euros) and food (20%: 90 million Euros). Altogether, however, the Biotech industry in Finland is not profitable, if only the SMEs are taken into account. In 2003 their sales profits were around 332 million Euros (2001: 200 million Euros). However, the net figure was in fact a deficit of 70 million Euros (2001: a deficit of 72 million Euros).

So far, only five companies are listed on the stock exchange (the now British Ark Therapeutics included) of which only was founded in the 90s, the antibody specialist Biotie (2000). The last IPO was carried out by Inion. This company manufactures degradable biological materials for medical purposes and raised 54 million Euros at the London stock exchange in 2004.

The development of biotechnology in Finland was pushed forward considerably by the success of the ICT industries. The government had hoped to be able to establish a new biotech industry with the help of appropriately robust advancement programs. However, a biotech-Nokia has not yet emerged. In studies on the Finnish biotech industry, the main reason for this is the small size of the pharma industry by international standards, meaning smaller biotech companies as well as individual academic institutions can find only limited domestic partners in the economy. Nevertheless, most biotech companies are concentrated on the field of medicine, although food and biological materials are also strong fields and there is a growth in interest in industrial biotechnology in Finland.