Germany’s Life Sciences Revolution

Germany’s healthcare market is the largest in Europe, and the reputation of its universities and research institutes is second to none. Now the country is increasingly starting to exploit its potential as an innovation hub for life sciences.

October, 2021

BioNTech and Pfizer’s partnership is just the beginning. The development of the coronavirus vaccine, invented in Germany, has been one of the main milestones in the battle against the global pandemic, saving countless lives. But as remarkable as its effectiveness and far-reaching benefits have been, this innovation is also a symbol of the revolution that is taking place in the life sciences sector.
The vaccine, based on the novel mRNA approach, will earn Mainz-based BioNTech billions in revenue, allowing for the research and development of more revolutionary bio-engineered treatments for other infectious diseases, and perhaps even cancer. Earlier this year, BioNTech’s CEO Uğur Şahin predicted to Spiegel magazine that within a decade and a half a third of new drugs will be based on mRNA technology, ushering in a world where new medicines are made not of active ingredients but of instructions for our bodies.

© ugurhan/Getty Images

This medical breakthrough has come not a moment too soon for the economy. The pandemic has impacted billions of people financially, as businesses and governments have been left managing downturns in trade, tightened border restrictions, and cultural shifts like the rise of remote work and online shopping. Economists looked on nervously as unemployment rates rose and whole sectors required major propping up from governments.

However, these changes also highlighted some underlying strengths in the German economy – one of them being the robustness of its life sciences sector. That’s evident in the range of international businesses that have entered into partnerships with German companies to develop vaccines and other Covid-19 treatments over the past year.

Joining forces to beat the virus

CureVac’s first attempt to develop a corona vaccine unfortunately didn’t have the same efficacy as BioNTech’s, but the Tübingen-based firm remains another world-leading pioneer in mRNA technology. The company’s cofounder Ingmar Hoerr first described its potential use in his 1999 dissertation. The spin-off of the University of Tübingen is largely funded by Dietmar Hopp, cofounder of software giant SAP, and has also received investment from the Bill & Melinda Gates Foundation. CureVac is currently working with pharma giant GlaxoSmithKline on a second-generation mRNA Covid-19 vaccine with an improved response to variants of the virus. Additional cooperation partners include Bayer and Novartis.

Within the space of just a few months in early 2020, Germany blossomed into one of the world’s leading vaccine centers not only in terms of inventing new vaccines but of mass-manufacturing existing ones. As of April 2021, no less than seven coronavirus vaccines were being developed or made in Germany. Many companies in Germany have now developed enough capacity not only to produce their own vaccines but to bottle the vaccines of foreign companies. This is important because bottling is a delicate technical process – an incorrectly bottled vaccine can be ineffective.
That explains why multinational pharma giants Merck Sharp & Dohme, IDT Biologika and GlaxoSmithKline all chose Germany early on in the pandemic as a key manufacturing location. Meanwhile, German engineering companies like Bosch and foreign companies working in Germany like Roche were developing early diagnostic tests.

THE BOTTOM LINE

The pandemic has both highlighted Germany’s strength in the biotech and life sciences and provided a “shot in the arm” to innovation and digitalization. That means plenty of opportunities and advantages for companies setting up shop in Europe’s biggest market.

To understand the potential of Germany’s universities for research and development, it’s worth looking at Daiichi Sankyo’s partnership with Ludwig Maximilian University in Munich. The cooperation followed an appeal made in June 2020 by the state-funded Bavarian Research Foundation, which invited researchers to come up with projects to combat Covid-19. Answering that call was the biological research unit at Daiichi Sankyo Europe, Bio Compounds. It came up with an idea for a collaboration with the Munich university to develop an mRNA vaccine candidate.

The Growth of Biopharmaceuticals in Germany

12.8

Billion Euros in 2019

14.6

Billion Euros in 2020

Biopharmaceuticals have recently seen a steady rise in Germany, both in revenue and market share. / Sources: IQVIA; Boston Consulting Group Analysis

“Germany, especially the southern part, has a dense network of renowned universities, research institutes and pharmaceutical companies with research activities that makes it very attractive to invest in such projects,” says a spokesperson for Daiichi Sankyo.

Accelerating “international cooperation Made in Germany”

One might call this, paradoxically, “international cooperation Made in Germany.” It’s a relatively new phenomenon but one that has been accelerated by the pandemic. “Twenty years ago, research was very much carried out internally within companies,” observed Jürgen Lücke, managing director and senior partner of the Boston Consulting Group, at a press conference called by the German Association of Research-Based Pharmaceutical Companies (vfa) in June. “If you look at the pipelines today, almost everything is a partnership.”

It’s a trend that is set to continue. Frank Mathias, CEO of the southern German biotech firm Rentschler and chairman of the biotechnology group at the vfa, also pointed out how the pandemic had reinvigorated interest in collaboration: “Our company learned a lot from the pandemic, specifically that you can react very quickly if you work together, both beyond borders and beyond competition. Even a few direct competitors have been cooperating.”

»What has changed over the past year is that the state is now much more prepared to invest directly not only in research and development but in manufacturing key medical products in Germany.«

Dr. Gregor Kemper,
Germany Trade & Invest (GTAI) health expert

International collaborations that have been established for decades have also taken sudden quantum leaps. Takeda is one case in point: Japan’s biggest pharma company recently opened a second plant in Singen, Baden-Württemberg, for producing an inoculation against dengue fever (see page 9), taking advantage of 40 years of local know-how, particularly in freeze drying. “The expertise of our colleagues at this location is flowing directly into future vaccine production at the plant,” says Takeda spokesman Andreas Hundt.

Government support

Since 2016, Takeda has invested EUR 200 million in the Singen site. “Setting up a completely new vaccine factory is very complex,” Hundt says. “Such a process can take several years. Now the goal is within reach.” That’s thanks in part to the Baden-Württemberg government, which was quick to provide the necessary planning and building permissions. If all goes well, production of the dengue fever vaccine will begin in 2025.

Hundt says that there is a broad range of reasons for leading pharma companies to partner up in Germany. “Major indications of quality are the well-educated skilled workforce, the excellent technical facilities and the proximity to other sectors – for example, mechanical engineering,” he explains. “That’s a crucial advantage for a business location. Pharmaceuticals are highly complex products that require several challenging steps to ensure consistently high quality. This combination of specialist and technical expertise has developed over many years and can be found in Germany.”

Hundt also underlines the importance of the German capital Berlin, where Takeda’s distribution center is based. “Here in the heart of the capital, the company can communicate and network with all the most important stakeholders,” he says. “From specialist and sector associations, patients’ organizations, and health insurers all the way to health policy politicians.”
Berlin, he adds, also boasts a high concentration of creative companies, start-ups, universities and research institutes specializing in life sciences.

Source: OECD 2019

Source: Global Health Centre at the Graduate Institute, Geneva

Greater Berlin is home to some 21,000 health sector companies, including around 300 in medical technologies, over 240 in biotech and 30 in pharmaceuticals. That makes the city one of Europe’s most important health sector locations.

Sabine Sydow, director of vfa BIO, stresses other advantages. “We keep hearing how much companies value our research institutes, both inside and outside universities – they are highly regarded partners,” she says. The fact that public-private partnerships are very well established in Germany, she adds, is another selling point. “We have the research and we have the technology.”
“What has changed over the past year is that the state is now much more prepared to invest directly not only in research and development but in manufacturing key medical products in Germany,” says GTAI healthcare expert Gregor Kemper. “And another big change was that private investment went through the roof in 2020 – driven not only by BioNTech and CureVac going public but also by smaller companies’ venture-capital rounds.”

The world’s pharmacy

Another non-German company that has thrived in Germany during the pandemic is Roche. The Swiss healthcare giant has maintained four major sites in Germany for several decades, and its expertise in diagnostics was vital to the rapid development and mass production of several Covid-19 tests in the early stages of the pandemic. Roche has committed to constructing a new diagnostic research center and production plants in the southern town of Penzberg at a cost of EUR 420 million over the next few years.

“Germany is an innovation engine for Roche,” says Johannes Ritter, Roche’s head of communications at Penzberg. “Germany was once known as the pharmacy of the world, and now we’ve become what we like to call a ‘scientific factory’ in Germany – it’s that dovetailing of scientific and production expertise that works well.”

4 Reasons why Germany will remain one of the world’s leading life sciences locations for the foreseeable future

1

The Market: Germany is Europe’s biggest health and pharmaceuticals market. Its healthcare spending per capita is among the highest in the world.

2

Expertise: Germany boasts a dense network of world-renowned universities and research institutes that has been a magnet for foreign companies for decades.

3

Innovation: Germany files more biotech patents with the European Patent Office than any other European country.

4

Public Investment: The pandemic showed that the German government is ready to invest significant sums in the biotech sector. In 2020, it put EUR 1.27 billion into the development of Covid-19 vaccines alone.

One measure of how highly Roche regards Germany as a healthcare location is that it has begun to foster digital health innovation platforms for start-ups in the major cities. These include the accelerators Startup Creasphere in Munich and RoX Health in Berlin. Their raison d’être is to transform the German healthcare system by supporting digitalization. Ritter calls this the new “third pillar” of the sector alongside pharmaceuticals and diagnostics.

“Currently, there’s a lot happening in that field in Germany with a big potential,” he explains. “Small companies like start-ups behave in a totally different way to big companies like Roche – they’re potentially faster and more agile, which is where we can learn from them. And we’re not doing this, as you might assume, just to buy up the start-ups someday,” Ritter continues. “On the contrary, we’ve created an environment within our global ecosystem to pilot solutions and services, drive investment, make and share experiences and facilitate international expansion. The idea is to create a win-win situation.”

Productions Sites in Germany

102

USA (Size of Countries not to scale)

44

Germany (165 in all of Europe)

Germany has the most pharmaceutical production sites in Europe, and the second most in the world, based on the number of active substances approved by the EMA. / Source: EMA

Success 15 years in the making

None of this has happened by accident. There are plenty of reasons why one of the most effective Covid-19 vaccines was jointly developed in Germany. Large Western vaccine companies have concentrated 70 percent of their industrial R&D efforts and 80 percent of their worldwide production facilities in Europe.

“General location factors attract foreign pharmaceutical companies,” says vfa spokesman Henrik Jeimke-Karge. “They include a close proximity to the leading machine and packaging manufacturers, as well as a high degree of automation and, with it, high degrees of plant efficiency, productivity and flexibility.”

Moreover, 15 years ago the German government began creating favorable conditions for today’s infection research. In 2006, three ministries established a new initiative in the field of zoonotic (animal-spread) diseases, and in 2015, a research network was set up to study and combat such infections.

As a result, Germany has developed a unique expertise in fighting pandemics. Two crucial aspects are: firstly, the latest analysis and synthesis technology paired with genetic laboratories, high-performance computers and analytic robots; and secondly, highly qualified pharmaceutical scientists coupled with efficient regulatory authorities. Germany currently contributes some EUR 140 million to the EU’s international Coalition for Epidemic Preparedness Innovations (CEPI).

The young but highly trained research team at BioNTech in Mainz worked tirelessly to develop the revolutionary new vaccine against coronavirus in record time. Project “Lightspeed,“ as they called it, took just over a year from launch to approval.

© BioNTech

“Germany is well-known as Europe’s biggest pharma market due to its high per capita healthcare spending,” says GTAI’s Gregor Kemper. “But not everyone is aware of its strength as a life sciences location. Germany accounts for more EPO patent applications in biotechnology than any other European country, and the local pharma industry provides a large labor pool of skilled life sciences professionals. And there’s still a lot of untapped potential.”

Kemper’s own analysis of Germany’s biotechnology industry highlights some crucial points, first and foremost the ongoing expansion in the sector. Both the number of biotech companies and the amount of investments are on the rise (source: BioDeutschland). The industry now supports well over 30,000 employees in Germany and generates around EUR 5 billion in revenue each year. And that’s just the biotech firms.

At the same time, there is still great potential. Kemper points out that while Germany, with its dense network of institutes, can still rely on its traditional research strength, the country lags behind the US and the UK in terms of biotech investments. But that could very well change following the pandemic, which has put the federal republic firmly on the radar.
Germany has begun to redress this imbalance by promoting biotechnology clusters. These “BioRegions” are local initiatives of all sizes that work to advance biotech in Germany. Focusing on the respective specialties of local universities and R&D institutes, these clusters help connect experts to political decision-makers.

The advance of digital health

These biotech advances have gone hand in hand with IT enhancements in the healthcare sector in general. Personalized medical apps have allowed pharma companies to tap into large amounts of real-world data beyond clinical studies.

Recent innovations in Germany’s healthcare market illustrate how those strengths are developing. For example, the German government has begun to foster the use of digital health applications, known as DiGAs, which open up a new range of possibilities when it comes to both diagnosis and treatment.

Robotics Industry Doubles its Revenue

6.1

Billion Euors in 2002

12.8

Billion Euors in 2002

Total revenue from Germany’s robotics and automation industry 2002–2020 / Source: Statista

DiGAs are effectively “digital assistants” – apps that doctors can prescribe and patients can install on smartphones to help monitor and treat health issues. Since October 2020, patients can claim the costs for them through national health insurers. Meanwhile, last year the German Ministry of Health changed the rules to allow for electronic medical prescriptions. As of January 2022, all prescriptions will be digitally available, relying on a secure telematic infrastructure throughout the German healthcare system.

These are systemic changes designed to make patients’ lives more comfortable and convenient. But the benefits go much further. One notable example is ReWalk – a wearable robot exoskeleton with motorized hips and knees that is helping paraplegic people to walk again. It’s a device that utilizes user-initiated mobility through the integration of a wearable brace support, a computer-based control system and motion sensors to detect the patient’s center of gravity.

This product now has a direct sales operation in Berlin and was the first robotic aid to be introduced into Germany’s approved catalogue of therapeutic appliances. That means patients can have the costs covered by their health insurers. The fact that revolutionary devices like ReWalk are available on the German market underlines the country’s commitment to modernizing its healthcare sector by offering state-of-the-art products.

There’s a lot about Germany’s life sciences industry that not so long ago may have sounded like the stuff of science fiction, but as international companies and their German partners are finding out, the future is very much now in this fast-evolving sector.

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