WESTERN EUROPE: TRENDS IN BIOTECHNOLOGY COMMERCIALIZATION

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86R00254R000200950001-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 20
• Document Creation Date: December 22, 2016
• Document Release Date: November 24, 2010
• Sequence Number: 1
• Publication Date: February 1, 1985
• Content Type: REPORT

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Directorate of
IntellioenrP
Western Europe:
Trends in Biotechnology
Commercialization
Secret
Secret
SW 85-10021
February 1985
430
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Directorate of Secret
Intelligence
Western Europe:
Trends in Biotechnology
Commercialization
The authors of this paper are
Office of Scientific and
Weapons Research. Comments and queries are
welcome and may be directed to the Chief, Life
Sciences Branch, OSWR
Secret
.SW 85-10021
February 1985
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Western Europe:
Trends in Biotechnology
Commercialization
Key Judgments Although Western Europe currently lags the United States and Japan in
Information available biotechnology applications, we believe that recent governmental and
as of l January 1984 industrial programs to promote biotechnology will enable Western Europe
was used in this report.
to become a strong worldwide competitor in health care and agricultural
markets within six to eight years. West European countries having the
strongest competitive positions are West Germany, the United Kingdom,
Sweden, Switzerland, and France. We believe West European companies
will develop significant strengths in marketing products to Third World
countries.
Although many West European firms are pursuing wide-ranging biotech-
nology interests, we expect competition mainly from large multinational
companies in markets in which they have been traditionally strong. These
markets include the four top areas for biotechnology applications: pharma-
ceuticals, agricultural products, large-scale process technology, and
energy-related applications.
Forecasts of annual worldwide markets for biotechnology-related products
by the year 2000 range from $15 billion to over $100 billion in total
product sales. This market projection is of the same magnitude as the
current world semiconductor market, which is approximately $25 billion.
The estimate of the 1983 worldwide biotechnology market is about $500
million. Better market predictions are not yet possible, because the critical
technical, economic, and political factors affecting future markets are not
yet well understood or defined.
At present the West European countries generally have some top-quality
basic research foundations and some industries and engineering institutes
with strengths in selected areas of application. Nevertheless, biotechnology
developments in Western Europe have been hampered by several problems,
including:
? Shortage of qualified personnel to conduct basic and applied research,
development, and engineering, caused in part by emigration of scientists
and engineers.
? Difficult transitions from the laboratory to the marketplace.
? Relatively few firms engaged in innovative research.
? Lack of cooperation within the European Community.
Secret
SW 85-10021
February 1985
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Both government and industry are working to overcome these deficiencies,
in particular, their support for applied biotechnology research has in-
creased significantly in the past three years. Efforts to promote biotechnol-
ogy in Western Europe include:
? Public funding that is probably equivalent to Japanese public expendi-
tures and that is intended to help stem emigration of scientists as well as
encourage support for commercial developments.
? Financial incentives for small applied research firms.
? Innovative cooperative ventures by industry/government/university in
establishing technology parks and centers for applications development,
and in investing funds.
? Programs to develop trained manpower.
? International development agreements.
Unlike most US Government programs supporting basic research in
biotechnology, these biotechnology-related government programs in West-
ern Europe support product-oriented R&D and are directed toward
developing international competitiveness.
Various development agreements have contributed to the international flow
of industrial proprietary information that could affect US sales. This flow
of information and technology is, and probably will continue to be, a net
loss to the United States. However, we believe US technology can be
enhanced through selective international cooperation and exchanges that
exploit West European strengths. We believe also that biotechnology
applications developed in Western Europe probably will continue to be
transferred to the USSR and its allies.
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Key Judgments
Introduction
Current Status
Highlights of Government Programs and Legal and
Safety Factors Affecting Biotechnology
Details of National Programs
8
Belgium
8
Denmark
8
Finland
9
France
9
Italy
9
Netherlands
10
Spain
10
Sweden
10
Switzerland
II
United Kingdom
11
West Germany
11
DNA Technologies
Areas of Biotechnology Strengths in Western Europe
Known Expenditures of the EEC and of West European
Government Organizations for Biotechnology R&D, 1983
Range of West European Commercial Product Interests in
Biotechnology
Examples of National Efforts To Increase University/
Private-Sector Cooperation
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Western Europe:
Trends in Biotechnology
Commercialization
Biotechnology encompasses the newly developing
techniques of genetic engineering (recombinant DNA
and cell fusion) and biochemical engineering (fermen-
tation and large-scale cell culture). Its application has
the potential to increase industrial productivity great-
ly and to create new products and processes across
such diverse industries as pharmaceuticals, agricul-
ture, process chemicals, energy, intelligent biosensors,
and integrated microelectronics. Biotechnology appli-
cations are expected to result in products with the
following advantages:
? Lower cost.
? Higher purity.
? Larger quantities.
? Decreased pollution.
? Lower energy consumption.
? Unlimited supply.
Additionally, among other driving forces for interest
in and support of biotechnology programs is the
potential for developing new products, increasing
market shares of products, increasing competitiveness,
decreasing dependence on foreign raw materials and
energy, establishing agricultural self-sufficiency, and
attaining future economic security.
Successful commercialization of biotechnology is not
guaranteed. In addition to legal, political, and re-
source issues, many questions remain about the tech-
nical and economic feasibility of commercial applica-
tions. For example, successful commercialization of
biotechnology depends on the efficient and stable
functioning of "engineered" micro-organisms, the
production of functional products, as well as the
development of cost-effective fermentation technol-
ogies and the development of product purification or
isolation technologies.
Despite the uncertainties of commercialization, many
West European corporations have singled out biotech-
nology as having the highest growth potential for the
future and are investing resources now so they will be
able to exploit biotechnology developments competi-
tively in the world markets. Similarly, many West
European governments have programs to encourage
domestic biotechnology commercialization. Table 1
illustrates the broad range of potential products that
could be marketed within the next decade.
energy-related advances.
West European industry and government experts gen-
erally expect wide-scale commercialization of biotech-
nologies over the next five to 15 years. They expect
the pharmaceutical/health-care industry to be the
first to manufacture products using these technol-
ogies. Human insulin and a veterinary vaccine pro-
duced by bacteria, engineered by recombinant DNA
techniques have already been marketed in the United
States and Western Europe. Biotechnological process-
es for producing chemicals or raw material feedstocks
are expected to be developed next (within five to 10
years), followed by certain other agricultural and
Market researchers forecast a $7.3 billion West Euro-
pean market for biotechnology-related pharmaceuti-
cals by 1990. Forecasts of future worldwide markets
range from $15 billion to over $100 billion in total
product sales by the year 2000. The projected markets
for biotechnology-related products represent four to
five times the current world semiconductor market,
which is approximately $25 billion. Current estimates
of worldwide biotechnology markets are about $500
million. Better market predictions are not yet possible,
because the critical technical, economic, and political
factors affecting future markets are not yet well
understood or defined.
This paper assesses the extent to which the national
programs are likely to increase the productivity and
international competitiveness of West European cor-
porations and the extent to which they will thereby
affect future worldwide US commercial competitive-
ness in the multibillion-dollar biotechnology markets.
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Table I
Some Products for Manufacture by
Recombinant DNA Technologies
Agricultural
Plant cultivation
Nitrogen fixation capability
Tolerance for high-salt mediums
Tolerance for low-moisture
mediums
Increased nutritional quality
Food-processing agents Enzymes
Flavorings
Additives
Animal husbandry Vaccines
Growth hormones
Biological
Biological response modifiers
Hormones
Insulin
Human growth
hormone
Treatment of diabetes
Treatment of dwarfism and accel-
eration of wound healing
Erythropoietin Stimulation of red blood cell
production
Secretin Treatment of digestive problems
Somatostatin Treatment of pituitary disease
Interferons Treatment of viral diseases and
cancer
Biologicals
Albumin
Enzymes
Urokinase Dissolving blood clots
Clotting factors Treatment of hemophilia
Bradykinin Treatment of high blood pressure
Glucosidase Enzyme replacement therapy (that
is, Gauche's Disease)
Malaria
Diphtheria
Chemical
Commodity chemicals
Immunization for disease
prevention
Ethanol
Ethylene glycol
Propylene oxide
Salicylic acid
Industrial enzymes
Oxidases
Production of glycols
Production of sugars
Production of phenols from wood
cellulose for plastics
Production of fermentable sugars
from wood cellulose
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Table 1 (continued)
Chemical (continued)
Silk
Polyhydroxybutyrate
Pullulans
Mineral concentrating Concentration of metals
organisms
Uranium
Gold
Copper
Iron
Other metals
Chemicals that organisms Pollution control systems
can degrade
2,4-D/2,4,5-T
2,4,5-Trichlorophenoxya-
cetic acid
Polychlorinated
biphenyls
Petroleum
Mercury
Agent orange (2,4,5-
T/2,4-D)
Pesticides and phenoxy
herbicides
Specialty chemicals
Oils
Lubricants
Surfactants
Energy related
Ethanol Gasohol, fuel
Hydrogen Fuel
Methanol Fuel
Methane Fuel
Generally, West European countries have strong basic
research foundations. Although they are about two
years behind the United States and Japan in develop-
ing biotechnology applications, selected strengths ex-
ist (see table 2). For example, Sweden and West
Germany are second to Japan and probably equal to
the United States in fermentation technology. Swit-
zerland and Sweden are the West European leaders in
large-scale process technologies. Large-scale process
technologies include bioreactor fermentation, isola-
tion, purification and separation technologies, and
enable the scaleup of production processes from lab-
oratory to commercial scales. West Germany also has
significant capabilities in this field.
Specific products under development or corporate
strategies are usually proprietary to the corporation.
Most of our information, therefore, is derived from
open sources. These sources indicate that West Euro-
pean commercial interests in biotechnology research
and development involve a broad range of industrial
sectors, products, and new manufacturing processes.
West European countries are emphasizing the
pharmaceutical and health care, chemical, and agri-
cultural areas in which they are competitive with
conventionally manufactured products. The inset
shows examples of West European corporate interests
and illustrates the broad spectrum of products being
selected for commercialization.
West European countries having the strongest com-
petitive positions are West Germany, the United
Kingdom, Sweden, Switzerland, and France. Den-
mark and the Netherlands are competitive in selected
markets. All of these countries have strong interna-
tional corporations in specific markets. We expect
increasing competition from West European large
international corporations. National government pro-
grams are increasing and probably will be effective in
overcoming deficiencies within six to eight years.
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Table 2
Areas of Biotechnology Strengths
in Western Europe
Belgium
Molecular biology
Denmark
Enzymology
Industrial enzymes
Finland
Agriculture and cellulose utilization
Itch
Netherlands
Spain
Sweden
Agriculture and biomolecular research and
bioengineering
Switzerland
Large-scale fermentation technology
l tilted Kingdom
Agriculture and biology
Agriculture, pharmaceuticals, and chemicals
West Germany
Agriculture and biochemical engineering
Pharmaceutical and fermentation technology
Biotechnology applications development has been slow
in Western Europe because of the following factors:
? Lack cif qualified scientists and engineers. Because
biotechnology is a relatively new field, the number
of experienced personnel is limited. The European
educational system has not met industry needs, and
this problem is exacerbated by a talent drain. The
United Kingdom and West Germany are concerned
with the emigration of their top talent, especially to
the United States. Recent estimates in open litera-
ture indicate that of the 7,000 Ph.D. biotechnolo-
gists worldwide, 4,000 work in the United States.
Only 1,000 work in Western Europe, and 80 percent
of these work in West Germany, Switzerland,
France. and the United Kingdom. Western Europe
is attempting to increase this number and entice
scientists now abroad to return home.
? trot enough firms developing innovative technol-
ogies. Unlike the United States, Europe has more
large corporations than small specialty research
firms funded by venture capital. This is a disadvan-
tage because smaller firms are more flexible and
can more easily focus resources on an innovative
concept. Of an estimated 175 corporations engaged
in advanced biotechnology research and develop-
ment in Western Europe, less than 20 are innovative
specialty firms: some of these, such as Biogen
(Switzerland), Transgene (France), and CellTech
(UK), have excellent reputations.
? Lack of venture capitalfor high-risk investments.
Much of Western Europe's industry has been slow
to capitalize on opportunities related to genetic
engineering and other advanced technologies. A
significant number of West European investors have
favored funding US companies, thereby showing a
lack of confidence in their national firms to earn
profits.
? Inadequate industry/university cooperation. Bio-
technology efforts are hindered by a delay in trans-
ferring accomplishments in the laboratory to the
marketplace. More industry/ university cooperation
is needed to facilitate this transition. The inset lists
some examples of efforts to develop increased
industry/university cooperation.
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Range of West European Commercial
Product Interests in Biotechnology
Country/
Corporation
Denmark
Novo Industri,
AS Danske Suk-
kerfabrikker,
AS
France
Transgene Elf
Aquitaine
Sanofi Rhone-
Poulenc
Netherlands
Gist-Brocades,
NV
Akzo, NV
Sweden
Fort i a/
Pharmacia
Kabi Vitrum,
AB
AC' Biotechnics,
AB
Insulin and industrial enzymes
agriculture, plant genetics, and
plant tissue culture
Interferon, vaccines, pharmaceu-
ticals, and industrial process
applications
Pharmaceuticals, human growth
hormone amino acids, and fer-
mentation technology
Enzymes, fermentation, and im-
mobilized cell technology
Pharmaceuticals and vaccines
Agricultural crop improvements,
reagents, large-scale processes
and equipment, and
pharmaceuticals
Amino acids and fermentation
technology
Human growth hormone, blood
hemophiliac factor VIII, and
pharmaceuticals
Large-scale processes for produc-
tion of chemicals, energy sub-
strates, and pharmaceuticals
Country/
Corporation
Switzerland
Biogen, NV
Hoffmann-
LaRoche
Sandoz
United Kingdom
ICI, Ltd.
Agritech, Ltd.
Celltech, Ltd.
West Germany
Hoechst, AG
Schering, AG
Interferon, vaccines, and
bioprocesses
Pharmaceuticals and interferon
Pharmaceuticals and agricultur-
al crop improvements
Single-cell protein, biopolymers,
chemicals, and fermentation
technology
Agricultural crop improvements
and large-scale food production
technology
Health-care diagnostics and in-
dustrial-scale process technology
Insulin, pharmaceuticals, agro-
chemicals and agricultural crop
improvements
Pharmaceuticals, large-scale pro-
cess, and fermentation technology
Health-care diagnostics and
pharmaceuticals
Amino acids, large-scale produc-
tion technology, and aspartame
(sweetener)
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Examples of National Efforts To Increase
University/Private-Sector Cooperation
Denmark Public and private sources have
coinvested in Genesit, Ltd., a venture
organization established to bridge
research institutes and industry.
France Government and industry sources
are cofunding technology transfer
centers at universities in Paris for a
microbial data bank: Avignon, for
microbial engineering; Toulouse, for
fermentation and biochemical engi-
neering: and Compeigne, for process
engineering.
Sweden Government and industry sources
are cofunding technology parks (at
Lund) and research laboratories at
Uppsala University and Stockholm
University.
United Government and industry sources
Kingdom are cofunding technology parks (at
Leichester and Cambridge), invest-
ing in venture companies (Celltech
Ltd. and Agritech Ltd.), and univer-
sity consortiums.
West Government and industry sources
Germany are eofunding institutes and univer-
sities in Heidelberg, Cologne, Berlin,
and Munich.
Highlights of Government Programs and Legal and
Safety Factors Affecting Biotechnology
The main contribution of government programs sup-
porting biotechnology is to channel resources toward a
specific goal. Once a country's strategy for biotech-
nology development is determined, funding and
manpower priorities are established and policies are
coordinated. This focus probably will consolidate the
national effort in specific areas and expedite results.
For example, various programs involving increased
funding and the creation of high-quality research
centers have been developed to encourage scientists to
remain at home and to return from abroad. We
believe the programs will provide the necessary incen-
tives to reduce Western Europe's shortage of bioscien-
tists.
Government programs will supply a substantial
amount of biotechnology funding. Previous analysis
and reports of the European Economic Community
(EEC) indicate that West European public expendi-
tures probably are equivalent to Japanese and US
public expenditures. West European public funds,
however, are directed toward R&D that is more
applications oriented than that in the United States
(see table 3).
We believe that government programs in Western
Europe also will be instrumental in encouraging coop-
eration among industries and universities. Closer asso-
ciations will smooth the transition from laboratory to
commercial applications, help in training scientists
and engineers, and establish the confidence that is the
basis for investment capital and entrepreneurship.
Governments are supporting both universities and
industries by sponsoring technology centers, universi-
ty programs, tax-incentive plans, and innovative re-
search firms.
The European Economic Community (EEC) supports
programs for research in biotechnology. The EEC has
currently allocated $30 million for a 1982-84 biomole-
cular engineering program focusing first on agricul-
tural applications and development of fermentation
technology, and second on applications in pharmaceu-
ticals, chemicals, and enzyme engineering. Research
programs are aimed primarily at improving the com-
petitiveness of West European industry and agricul-
ture. The European Molecular Biology Organization
(EMBO) in Heidelberg was set up by the EEC in 1971
to undertake research that no one country could
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Table 3
Known Expenditures of the EEC and of West European
Government Organizations for Biotechnology R&D, 1983
EEC
Estimated
Organizations
CIA
Estimate
Total
124.0
179.7
6.0
National Industrial Research Association
NA
ional Government
Walloon Re
19
3
g
.
Flanders Regional Government
14.6
Denmark
2.5
National Industrial Research Association
NA
Finland
National Fund for Research and Development
NA
26.4
(SITRA)
Ministry of Research and Industry
48.0
National Center for Scientific Research
8.5
National Institute for Agricultural Research
4.2
National Agency for Commercialization of
7.0
Research
National Institute for Health and Medical
4.3
Italy
11.0
Research
Ministry of Science and Research
9.0
National Research Council
4.0
Netherlands
8.5
Biotechnology Commission for Industrial
4.3
Spain
Application
Unknown
0.65
Sweden
Federal Board for Technical Research and
6.1
Switzerland
Development
National Science Foundation
United Kingdom
39.0
Department of Industry
Department of Agriculture
Medical Research Council
Science, Engineering, and Research Council
NA
NA
4.5
Agricultural Research Council
British Technology Group
NA
18.0
West Germany
30.6
Ministry of Research and Technology
23.3
a The European Economic Community estimates were prepared
using the same definition of biotechnology and shows a similarity in
magnitude with financial data available from our sources. Accurate
estimates of expenditures are difficult to obtain mainly because of a
lack of a universally accepted definition of biotechnology.
We believe that the effect of these EEC programs will
be hindered because community cooperation in this
field will be difficult and several countries that are the
leaders in the biotechnology industry-notably Swe-
den and Switzerland-are not EEC members. Devel-
opment of community cooperation in the field there-
fore will be a difficult task. We believe that EEC
programs will have little impact on cooperative com-
The Organization for Economic Cooperation Develop-
ment (OECD) in Western Europe has organized an ad
hoc group to study safety and regulations in biotech-
nology. The group will review country positions, iden-
tify criteria that have been or are being adopted for
monitoring or authorizing the use of genetically engi-
neered organisms, and explore ways of monitoring
mercial development of biotechnology.
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their use in the future. The group is to report its
findings and progress to the Committee for Scientific
and Technological Policy of OECD before June 1985.
This is seen as an effort to formulate common West
European policies.
Industrial-supported programs include numerous in-
ternational licensing agreements and joint venture
arrangements. These arrangements are intended to
make up for a lack of basic research and industrial
technology or to secure marketing positions. Also, our
data indicate that two international companies con-
ducted cooperative research and development to se-
cure a strong competitive position for both companies.
The two companies will exchange complementary
technology as well as divide markets geographically.
These measures will allow the two companies to
compete effectively internationally and secure a posi-
tion in the future for other companies.
In addition to government and university support, we
expect biotechnology commercialization to be facili-
tated by changes in legal and safety requirements, as
well as by technology transfer. We expect West
European countries to modify existing laws and legal
procedures affecting biotechnology. Some countries
have begun the process of modernizing patent laws.
Problems related to patent law presently include lack
of clear definitions, lack of international uniformity
and continuity (including such factors as requirements
for microbial culture banking), and enforcement is-
sues. Also, because of the long leadtimes required for
biotechnology commercialization, patent periods
probably will be extended to encourage R&D for
commercial applications. Instances of countries giving
their own firms or international firms making signifi-
cant domestic investments preferential treatment in
regulatory and legal process probably will increase to
provide advantages for domestic interests.
As experience in industrial-scale production and con-
fidence in the safety of the technology are gained, we
expect to see a relaxation in regulatory guidelines for
commercial production developments. West European
countries are watching the United States and will
probably take cues from US activities and experi-
ences. West European regulatory guidelines for
recombinant DNA R&D, which are similar to guide-
lines promulgated by the US National Institutes of
Health, are voluntary for industry. US industrial-
scale production of a product above 10 liters requires
approval by the appropriate government agency. Di-
rect human applications of genetic engineering tech-
niques have not provided much controversy or debate
in Western Europe because they seem remote and
hence are not an issue. As long as regulations continue
to become less restrictive, we believe that the West
Europeans will not change their guidelines signifi- 25X1
cantly from those of the United States in the near
future.
Belgium
The Belgium National Industrial Research Associa-
tion coordinates R&D projects at various research
institutes. Priority areas are genetic engineering,
chemical production, fermentation technology, plant
improvements, monoclonal antibodies, and immobi-
lized enzyme technology for production. The recent
reform of the Belgium national government has en-
couraged regional governments to develop active in-
dustrial policies for renewal of industry through the
development of new technologies. The Walloon re-
gional government is investing $19 million for 1983-
84 on biotechnology R&D, with an emphasis on
fermentation. The Flemish regional government is
investing $15 million.
Denmark
Public and private sources in Denmark spent $74
million for biotechnology R&D in 1983. The Govern.
ment of Denmark is planning to increase investments
and to increase funding for education in biotechnolo-
gy. It is looking for measures that will increase
cooperation between government and industry to ex-
pedite technology transfer from the laboratory to
commercial development. These plans aim at stimu-
lating Danish industry to apply biotechnology compet-
itively and to increase export markets. The Danes see
an increased demand for quality researchers, and they
are recruiting international talent as well as proposing
creative arrangements to allow personnel to work in
both university and industry environments.
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Danish industries will have a significant impact on
world markets for pharmaceuticals and industrial
enzymes. Novo industri, AS and Nordisk Insulin are
two of the world's largest companies producing insulin
and/or industrial enzymes. Ninety-eight percent of
Novo's markets are foreign; its products are distribut-
ed in as many as 120 countries.
Finland
The Finnish National Fund for Research and Devel-
opment (SITRA) is financing innovative basic re-
search in genetic engineering. SITRA and several
firms formed Genesit to support research in
recombinant DNA and the industrial applications of
biotechnology. Genesit discovered secretion vectors in
Bacillus subtilis during a three-year research project
and has applied for a patent. Genesit will act as a
bridge between research institutes and its corporate
shareholders-Alko Oy, Farmos Group, Metsaliiton
Teollisuus, Nestle Petroleum, Suomen sokeri Oy, and
Valio. We have no information on levels of funding.
France
France has named biotechnology as one of its six
high-priority technologies of the future. The French
expect a $66 billion biotechnology world market by
then and believe that only a few large groups will be
competitive. To achieve future economic objectives,
science and technology improvements are essential.
The government intends to decrease the deficiencies
in basic research and industrial development. Specific
goals for the biotechnology industry are to capture 10
percent of the world market by 1992, to decrease the
need for foreign imports of oil, and to increase the use
of biomass as feedstocks for chemicals.
The Ministry of Research and Industry makes policy
and sets funding levels for the developing French
biotechnology industry. The ministry is coordinating
government/university/industry cooperation and is
providing financial assistance to firms. A three-year
mobilization program that began in 1981 was formu-
lated to help France catch up with Japan, the United
Kingdom, and the United States. The objectives of
the program are to decrease dependence on foreign
technology, patents, and licensing; increase the num-
ber of qualified trained researchers; increase and
coordinate the links between government, universities,
and industry; and increase industrial incentives. In
addition, loans administered by an industrial modern-
ization fund will be extended at low interest rates and
lease credits will be available to induce enterprises to
acquire capital equipment. Additional measures to
promote biotechnology and other high-technology ar-
eas are:
? Establishment of four technology transfer centers.
? Two-year leave of absence for employees wishing to
start their own enterprises.
? Tax exemptions for industrial enterprises created
after 1983 that eliminate direct taxes during their
first three years of operation.
? Options by local communities to grant newly creat-
ed enterprises exemptions from business and real
estate taxes.
? Establishment of a national export school to provide
a specialization in the export-import field.
The Ministry for Research and Industry budgeted
$105 million for biotechnology promotion and report-
edly will increase its 1984 budget to $124 million.
French industry, indifferent in the past, is now show-
ing interest. Targeted areas for industrial application
of biotechnology are microbiology (requires importing
of foreign talent), fermentation technology (France is
weaker than West Germany, the United Kingdom,
and Japan as well as the United States), enzyme
engineering, immunology, and agriculture. A center
for plant genetic engineering will be created to aid
and coordinate all the projects in this field.
Contracts with the EEC, Japan, Canada, Norway,
Sweden, and Austria will be sought. International
agreements, particularly with Japan, are seen as
methods for strengthening the weaker sectors. Gov-
ernment research institutions and industries will set
up projects for industrial application development.
France will concentrate on those areas where consid-
erable work has been done and markets are already
established.
Italy
Although the government spent only $750,000 on
biotechnology R&D in 1980, the Ministry for Scien-
tific Research is proposing a combined government
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and industry support program that would allocate $91
million over five years to support R&D. The alloca-
tion includes $45 million from the government, $31
million from industry, and $8 million from the Na-
tional Research Council. (Salaries of researchers are
not included in these funding levels.) Industry interest
and investment in biotechnology R&D is recent and is
increasing.
Netherlands
The Committee on Biotechnology, a Cabinet-level
organization with members from the Ministry of
Economic Affairs and the Ministry of Education and
Science, will spend $30 million over the next seven
years for industrial innovation in biotechnology. Most
of this allocation is for agriculture, food processing,
chemicals, pharmaceuticals, and waste treatment;
education programs to increase the number of quality
researchers have also been recommended.
Industry will have access to government-sponsored
R&D if they provide 50 percent of funding. In
addition, the Ministry of Economic Affairs is offering
firms the following lucrative incentives for developing
products and processes in the Netherlands: 70-percent
loan of development costs; interest at 5 percent;
repayment of interest and principal required only
upon successful sale of the products; up to 15 years to
repay: and industry retention of rights and controls.
Spain
Spain will target biotechnology for industrial applica-
tions development. The Spanish Government sees
biotechnology as an aid to the lagging drug industry,
which has shrunk with the closing of about 30 firms.
Strong overseas competition, punitive price controls,
and overly strict regulatory procedures are all in part
to blame. The government has moved to restore
balance to the industry by financing six projects on
drug-related biotechnology through the Industrial and
Technological Research Council. It also invested
$650,000 for a 51-percent share in a joint industrial
venture with Sobrina Laboratories to establish Im-
munologic y Genetics Aplicado, SA.
Sweden
The Swedish 1983/84 biotechnology budget is small.
Only S&T programs have escaped government cuts.
The Council for Planning and Coordination of Re-
search (FRN) considers biotechnology to be of impor-
tance to Swedish industry. Since April 1983 FRN has
been working on a study plan to map out and
coordinate various programs in an attempt to formu-
late a national policy. The Ministry of Industry's
National Board for Technical Development gives
biotechnology a high priority and will receive an
increase in its current budget. Biological processes
have only been exploited to a limited extent by
industry, primarily in the pharmaceutical and diag-
nostics field. Planned applications are in forestry and
agriculture and chemical industry including biological
measurement and control techniques, separation tech-
nology, and genetic engineering. The Council for
Forestry and Agricultural Research, which is subordi-
nate to the Ministry of Agriculture, is responsible for
long-term basic research including biotechnology, soil
ecology, and fishery biology. It received a 21.8-
percent increase over last year's budget to intensify
efforts in priority areas such as food and soil ecology.
The Swedish National Board for Technical Develop-
ment administers government funding in biotechnolo-
gy. In 1981-82 the government spent $1.9 million and
private industry was estimated to have spent $3
million on biotechnology R&D. The government level
for biotechnology support was $5.3 million for 1982-
83. Support is expected to increase to $6.1 million for
1983. The government also is funding the construction
of a biology laboratory at the University of Stockholm
at the $25 million level that is to be completed in
1984. This effort is to help increase industrial interna-
tional competitiveness and stimulate industry and
academic cooperation.
Industrial interest in biotechnology is increasing, and
contacts with the university are developing. The
Swedish industry is positioning itself securely. The
Swedes will compete internationally very well, espe-
cially as suppliers of materials and equipment for
biotechnology development. Agriculture and pharma-
ceuticals also will be emphasized. There is a Founda-
tion for Biotechnical Research in Scandinavia that
raises money for R&D, disseminates information, and
helps direct research to finished products.
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Switzerland
The Swiss Government involvement in genetic engi-
neering and biotechnology is gaining momentum.
Both federal and cantonal governments are sponsoring
R&D in biotechnology. Five cantonal universities
have programs in biotechnology-related basic sciences
that are funded by the cantonal government. The
federal government also supports specific projects at
the cantonal universities, but no funding estimates are
available. In 1981 federal funding established the
Institute of Biotechnology in Zurich. A second unit to
study waste treatment and environmental engineering
problems was built at the Ecole Polytechnique Feder-
ale de Lausanne. The government provides major
funding for molecular biology centers at the universi-
ties of Zurich and Geneva and at the University of
Basel's Biocenter. Federal funding supports the Fed-
eral Institute of Technology (ETH) in Zurich, one of
Europe's leading research centers. The ETH is devel-
oping bioreactors for plant and animal growth and
also separation equipment.
The Swiss National Foundation is the main conduit
for government funds, but it funds only half of the
cost of submitted projects. The other half comes from
industries, which do most of their own development.
Biotechnologists complain that Swiss industry prefers
investment abroad.
United Kingdom
Government support for biotechnology R&D has been
increasing in the United Kingdom since 1981, espe-
cially for product and process development. In April
1982 an interdepartmental committee was created to
coordinate government, industry, and university ef-
forts in the development of industrial applications.
Membership includes the Medical Research Council,
Agricultural Research Council (ARC), Science and
Engineering Research Council, the Public Health
Laboratory Service, and the Center for Applied Mi-
crobiology and Research. The Department of Indus-
try is providing $32 million over three years for
support of biotechnology industrial applications. It
will invest in pilot development projects enabling the
private sector to develop products and processes. The
department wants to attract overseas companies to
establish branches in the United Kingdom. So far,
2,500 companies have approached the department for
money. The British Technology Group (BTG) provides
equity and loan finance for innovative ventures. The
British Government and BTG commitments equal
$90 million. BTG is funding 14 biotechnology projects
and corporate ventures including Celltech, Ltd. and
Agritech, Ltd.
West Germany
In addition to a general emphasis on basic and generic
applied research in biotechnology, West Germany is
supporting biotechnology development in pharmaceu-
ticals and plant agriculture (that is, developing crops
resistant to disease and environmental stresses). Con-
tinued support should result in a firmly competitive
position for West Germany in these fields. West
Germany's Ministry for Research and Technology
(BMFT) spent $23.3 million in 1983 and will spend
$26-48 million in 1984 to support industrial and basic
biotechnology research projects. The ministry is pre-
pared to increase its biotechnology support if enough
qualified bioscientists could be found to staff projects.
BMFT's goals are to improve the general conditions
for industrial research and development and to pro-
mote university and industry cooperation. Funds go
directly to universities, industrial laboratories, the
German Research Foundation, Institute for Biotech-
nology, and other institutions. The BMFT will provide
50 percent of the funding for two or more companies
to engage in joint R&D ventures. This is to make up
for the lack of small specialty genetic engineering
companies and the lack of entrepreneurship. The
BMFT is funding demonstration projects for large-
scale production of single-cell protein and advanced
fermentation bioreactors. Increased promotion meas-
ures and tax benefits are being used as industry
incentives, as well as for foreign travel for biotechnol-
ogy scientists.
The universities are offering more courses in microbi-
ology, genetics, and biochemistry that are oriented
toward preparing students for employment in industry
and are establishing new biotechnology laboratories
and expanding present facilities. Additionally, large
companies support research at West German universi-
ties-Bayer, AG at Cologne Max Planck, BASF at
25X1
25X1
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Heidelberg, and Schering, AG with the City of Berlin
at the Genetic Engineering Research Institute of the
Max Planck Institute. These programs encourage the
exchange of ideas among university and industry
scientists.
Four regional centers for genetic engineering are
being established to help West Germany catch up in
this field and to encourage the return of German
scientists from abroad. Pharmaceuticals, biological
engineering, and plant breeding are also targeted for
development to make West Germany competitive
internationally.
Secret I
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By 1990 we expect the main competition for the
biotechnology-related market to be among the West
European multinational firms and their US and Japa-
nese counterparts. Although West European firms
will not be at a significant disadvantage in employing
biotechnology developments, they will be slower in
commercializing them and in competing with US
firms on a wide scale. However, they may be highly
competitive in selected markets where traditional
strengths exist (for example, Novo Industries, AS in
insulin production and Hoechst, AG in pharmaceuti-
cal production). Almost all West European countries
will keep pace in research methodologies and will add
significantly to the world's knowledge of biotechnolo-
gy.
Although only two to three years old, national pro-
grams and individual corporate efforts to commercial-
ize biotechnology already have helped West European
scientists, engineers, and businessmen understand the
importance of being on the leading edge of biotechnol-
ogy developments. Selected achievements testify to
the competence of West European scientists, but
wide-scale engineering developments are still lacking
as is the case for the United States and Japan. We
believe that these programs and efforts are laying the
groundwork for engineering developments and will
accelerate Western Europe's competition position.
The extent to which Western Europe can become
competitive in commercial and industrial develop-
ments in biotechnology will depend heavily on the
success of government and industry programs. We
judge that they will be successful and that West
European multinational firms will be competitive in
biotechnology markets within six to eight years.
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Secret
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