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© Springer Spektrum 2015 cover "Die Biotechnologie-Industrie

Schüler’s Compendium on German biotech industry
- Antidote against investors’ amnesia or biotech beauty contests

April 2018. Julia Schüler presents a timely compendium which provides for insights and transparency of the biotech industry, at least the German-language one 1). The book is a useful antidote against historical amnesia often espoused by biotech investors or beauty contests of a regional bioindustry presented by economic promoters.

With German Gründlichkeit Schüler traces back fleeting understandings of “biotechnology” which evolved during the last centuries. Readers are sensitised to scientific boundary work, i.e. scientific disciplines defining what should be counted or discarded as “biotechnology” at a certain time, for a given network, or in a specific country. An example comes to mind which is not from the brewing science, but one underpinning Bateson’s concept of “genes”: Mendelian inheritance laws. For thirty years Gregor Mendel and his work was not considered “science”, and therefore not to be taken seriously until botanist Carl Correns re-discovered these laws with his own pisum experiments around 1900. Mendel was a monk and published in popular journals of horticulturalists and apiculturists   2).

The description of the German biotech industry is preceded by a thorough description of its pendant in the United States. This is quite important, because The American bioindustry is a popular template for assessing the value of biotech industries in other parts of the world. In addition to entertaining anecdotes and war stories of key executives Julia Schüler presents factual overviews which allow readers independent comparisons and conclusions. There is a chronology of U.S. VCs investing into biotech since 1964. Another chart traces back the development of the American capital market for biotech and contrasts it with the one of the computer industry from 1995 to 2005. Given the author’s faithfulness to true facts one should indulge her when she sticks to the normative notion of “new” biotechnology versus “old” one, a distinction which underpins marketing stereotypes of new biotech being invented and made in America  3). To the reviewer this perspective is arguably due to the author’s engagement with Ernst & Young. Between 2001 and 2009 she co-authored the firm’s annual German bioindustry reports which were complementary to the global EY reports 4). The consulting firm’s biotech country reports rarely questioned the paradigm of the supremacy of the American biotech industry which after all constitute its main clients    5). Notwithstanding and throughout the book Schüler offers many examples of her independent thinking, for example when recounting the history of the Basle Biotech Centre, or the chapter on “Merck Darmstadt – soon 350 years”. Moreover she makes an effort to escape common contrasts between Biotech Europe vs. Biotech America by looking at other geographies. Readers can benefit that Julia Schüler is embedded in a fertilizing intellectual environment. When she describes the Japanese way of technology transfer she can draw on deep knowledge by Rolf Schmid who has been observing Asia and in particular Japan for many decades. A short look back in the history of science would have uncovered more suprise: In the 1880s Japanese drugmakers sent their offspring for education and training to Louis Pasteur in France and Robert Koch or Paul Ehrlich in Germany. Talking to family members the memories are still vivid, and still inform major R&D decisions from time to time though projects are not advertised as “biotech”. Then, there are mind-provoking statements interspersed in the book: “To be honest, companies with biotech activities have existed for around 100 years” she states at one point, and pushes the reader to review cherished convictions.

The development of the German biotech industry is Julia Schüler’s focus. She starts with the post-World War II period and concentrates on public research institutes (e.g. at Cologne) and big players of the German chemicals industry such as BASF, Bayer, Boehringer Mannheim, or Boehringer Ingelheim before circling in on so-called “core” biotech firms starting up in the 80s and 90s. Certainly, public acceptance of genetic engineering is a topic as are issues of capital financings, but the role of private small and medium-sized companies with their ecosystem as well as the pivotal importance of state politics is largely underestimated which also accounts for the central bias of (bio-)technology as self-propelling force, if it only receives the money. Two examples may illustrate what the reviewer considers as the biotech myths.

EY’s German biotech reports well document the predominant role of micro, small and medium-sized biotech firms (also referred as “private companies”) for the industry. These SMEs typically have limited access to the stock market, in particular in Europe. The majority of so-called “core biotech firms” are what may be called “family businesses” designed to support the owners, generating revenues as supplier of kits, instruments or services and espouse mixed financing distant of the typical VC or stock exchange investor. However, several other factors are crucial for the commercial success of these firms. An important growth factor is the recognition of the service by flagship customers and shareholders. The author convincingly shows that for the rise of the American biotech sector, but is not satisfyingly following up the insight for the German biotech industry. Traditional, non-biotech manufacturers were a crucial driver of industry-wide recognition. American Cynamide joined in shareholders of Molecular Genetics. Genencor was supported by Corning materials (1982), DNA Plant Technology by Campbell Soup (1981), or Biogen by International Nickel (1978-1981). A second factor driving growth was the intermediate positioning in academia-industry networks (often associated to flows of key personnel) provided for flexibilities unmatched by vertically integrated flagship customers or investors    6). And third, regulatory and state-aid backing have been playing a pivotal role     7). The story of Biogen as told by the company versus others is instructive.

Schüler describes Biogen as an early transatlantic biotech enterprise. Its R&D headquarters were not at headquarters in Massachusetts, but at Genève (CH). Following Biogen’s company history the decision to move to Genève is portrayed due to hindering municipal ordinances at Cambridge (US), lack of the founder’s (Walter Gilbert) business skills, and a failure of burning too much cash for research. However talking to researchers who worked with Swiss Biogen at the time, the situation is quite different. Biogen as any other high flying biotech company essentially depended on technology development. Walter Gilbert was right to move research close to Charles Weissman who succeeded to clone alfa-interferon and express it in bacteria in Switzerland in 1980. Research at Geneva was performed by an international team of researchers, but American investors as well as business management was not familiar with European culture and grew too quickly uneasy about losing control. This view is corroborated by Friedrich Erwin Rentschler’s work on interferons and the aborted joint venture with Biogen in 1993, memories which Dr Rentschler shared with this reviewer.

In 1974 Rentschler, a family-owned pharma manufacturer started its biotech division at Laupheim (Southern Germany). For a company the size of Rentschler this venture was possible due to its experience in handling viruses and manufacturing vaccines. After World War II a bacteriological laboratory in the vicinity associated itelf with the firm, and they jointly developed an effective vaccine against Foot and Mouth Disease. The vaccine business was later sold to Mérieux, but know how remained with Rentschler. Moreover the company had earned enough cash to self-finance its biotech venture.So, the start-up with biotech was not caused by breaking with the past, but by a fleeting transition where the “new” products critically depended on the “old” ones. At the time Rentschler became interested in interferons. In 1979 the company had gained enough experience to start recombinant cell technologies. It had non-exclusively licensed in patents from Czech microbiologist Jan Vilček, and developed these further from lab to production scale. In 1983 – three years before Biogen – Rentschler was the first company worldwide which received market authorisation for a natural interferon (trade name Fiblaferon). Three years later, when Biogen received its grant from the FDA Rentschler already began GMP-manufacturing of recombinant interferon-gamma at Laupheim and achieved a purity of more than 99% according to its senior CEO. Getting aware of Rentschler’s advance Biogen entered a joint venture with the German company in 1990 in order to manufacture its lead candidate BG9015. The American company manufactured in parallel the substance at Massachusetts, but according to a litigation document, Biogen did not achieve the quality of Rentschler whose interferon was similar to the one of the plaintiff, which was Berlex Laboratories (Schering AG). However in 1993 the joint venture abruptly stopped when a team led by the former CEO of Biogen showed up at Laupheim and tricked the Rentschlers.

This story is part of the dark side of “die Biotechnologie-Industrie”:You have an innovative process, enough capital to finance bringing R&D to the market, an effective medicinal product, but then a small or medium-size company which is living up to text-book expectations is drawn into the maelstrom of companies with big pockets for legal disputes, prospects of setting aside millions for a many years of litigation in a foreign jurisdiction (US vs. Europe resp. Germany). It is to the credit of Julia Schüler, that she provides rich examples anchored in history which allow readers to make up their own mind. Her book is a valuable resource and an entrée to the biotech industry.


Wolf G Kroner

Notes

1) Schüler J (2016): Die Biotechnologie-Industrie. Ein Einführungs-, Übersichts- und Nachschlagwerk. (The Biotech Industry. An Introduction, an overview, a reference book). Berlin / Heidelberg: Springer Spektrum.

2) Rheinberger HJ (2003) Carl Correns’ Experiments with Pisum, 1896-1899. SS. 221-248 in: Holmes FL, Renn J, idem (eds.): Reworking the Bench. Research Notebooks in the History of Science. New York et al.: Kluwer.

3) An exemplar is the jubilee publication exulting the role of American biotechnology, Burrill GS ed. (2006): 20th Anniversary Report on the Industry: Life Sciences: A changing prescription. San Francisco: Author’s Edition.

4) Recent reports starting from the German ones can be accessed via: http://www.ey.com/de/de/industries/life-sciences/life-sciences_publikationen.

5) Kroner WG ed (2005): Bioworld Europe, May: Focus on Biotech Industry Reporting and Statistics.
–   Szaro D, How unbiased can biotech reports be? The EY Global and Americas Director of Health Sciences interviewed by Serge Perriard.
– Hodgson J: Making an Economic Case. Critical I answers BioWorld Europe’s questions on the do’s and don’ts of collecting and analysing biotechnology statistics.
– Macht A: Measuring the economic impacts of the biotech industry. Insight into Destatis’ work as part of the OECD Project on internationally validated and comparable bioindustry statistics.

6) Abels G (2000): Strategische Forschung in den Biowissenschaften. Der Politikprozess zum europäischen Humangenomprogramm. (Strategic research in biosciences. The policy process fort he European human genome program). Berlin: Sigma.

7) Kroner WG (2008): Deutsche Biotech-Förderung à discretion. Staatliche Direktbeihilfen als „verlorene Zuschüsse“. Neue Zürcher Zeitung, (German biotech funding à discretion. Direct state subsidies as „lost grants“). August 8. 

 

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