The life science industry is seeing a paradigm shift, where newly established production companies are no longer taking the traditional approach. Instead of insisting on creating Danish jobs, we must create success on our own terms.
The companies of the future will be more virtual, requiring the best skills and resources available. Globally speaking, that talent will be secured by outsourcing all the activities you can get away with.
According to Morten Mølgaard Jensen, the CEO of COBIS, which houses 120 Danish start-ups and smaller life sciences companies:
“Today, a successful life science company often consists of a small core group of really strong employees with very specific skills. They have a large number of agreements with talented external players and service providers who are involved in their business development. The most important task is to gather the threads and follow the development plan that the company has laid down”.
Once such a company gets to the next step – where there is clinical evidence for their idea and it has passed developmental phases – it requires scale-up at an accelerated pace to yield a sustainable business that will create thousands of jobs. Here, Denmark has a big problem: ‘We are generally not competitive enough. It’s about the lack of highly specialised human resources and it’s also about wage pressures’, Jensen explains.
Attracting the next generation of life science start-ups
When it comes to creating jobs in Denmark, the life sciences companies are challenged to meet the expenditures. Although it may seem promising that the life sciences industry has experienced growth in the number of Danish production workplaces, Jensen points out this is only because of:
“Very few employers, like Ferring, Genmab, and Novo Nordisk, who still offer blue collar jobs in Denmark. The next generation of life sciences companies will not have the same preconditions as those that are already established. There will be massive pressure from investors and markets to lower the expenses on production, and you can do that significantly cheaper in many other places than in Denmark. Therefore, I don’t think that we are going to see a new Novo Nordisk.”
Instead, Jensen believes that the next generation of life science companies built in Denmark must be the best in the world to innovate and think new, while identifying and developing the latest technologies and actively bringing them into use in novel ways.
This can create a foundation for the next generation of life sciences companies that gets to that level where it will be attractive for foreign companies or investment funds to build partnerships or take over Danish companies. That is precisely what we just saw with Veloxis and the former EpiTherapeutics, which got sold to Japanese and American life sciences mastodons, respectively.
A balanced ecosystem is a healthy ecosystem
Granted, there are always new companies emerging. Some die while others are on the pathway to becoming the big companies of the future. In fact, the companies that are less than 20 years old account for 50 per cent of the value created in Denmark, according to the 2014 figures from Dansk Industri (while other studies show that start-ups deliver more net jobs than large industrial players).
As Jensen sees it, the major players create growth and stability in the Danish economy, and serve as a valuable link to the ecosystem. That is because they can take on new inventions that emerge in the grassroots environment among start-ups. He points to Novo Nordisk’s significance for the Danish life sciences scene to demonstrate how big and small mutually benefit each other.
For Denmark to remain at the forefront in developing new therapies, vaccines, or treatments, it requires a well-functioning ecosystem with active participation by research institutions, research parks and incubators, venture capital and industry, that – when combined – can rise to the task.
Drawing attention to the political landscape, Jensen remarks:
“I wish that the Danish Minister of Industry would take specific action on creating new incentive structures to create and withhold jobs within the high-tech industries. We generally have favourable terms for doing business in Denmark, but as long as you are challenged on pay conditions from low-income countries around the world, you will have stakeholders that don’t understand why you would put a production link in Denmark when the same benefit is 50 per cent cheaper other places. And it is hardly in Denmark’s interest to participate in a race towards the bottom.”
Refusing to rest on laurels
Minister of Industry, Simon Kollerup acknowledges the intense international competition, but he also emphasises the positive developments of the Danish life sciences sector over the last 10 years:
“Life sciences is an industry with strong international competition, so it is important that we continuously ensure good growth conditions. Fortunately, many stakeholders are indicating that things are going well. The life sciences industry delivers impressive numbers on many parameters. This applies, for example, to exports, which doubled from 2008 to 2018. These are Danish products – produced and sold out of Denmark. But of course, we are listening to input on how we support this sector now and into the future”.
The government is working to create a business climate that provides jobs and ensures healthy Danish companies:
“From 2008 to 2016, we can see that employment in life sciences companies increased by almost 20 per cent and we can see that increase in research and production halls. Of course, we should not rest on our laurels. That is why we are also very concerned about how we can strengthen Danish companies’ competitiveness in the long run,” Kollerup concludes.
The article is a part of a Life Science theme written by the TechSavvy editorial team and distributed in Børsen on December 17 in collaboration with Reach Media. This article is also available on Business Insights here.