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News 2008

October 2008

Sector calls for a change in thinking

So is the glass half-full, or is it half-empty? Germany’s biotech sector couldn’t formulate a clear response to that question at the Biopolitics Conference in the framework of the BIOTECHNICA 2008, but debate between entrepreneurs and policymakers was passionate. Whether financing, tax policies or approval – every biotech company and scientist has problems they think belong at the top of the political agenda. At the Conference, attended by around 200 participants, high level experts discussed a wide range of current issues in 8 parallel workshops and a subsequent plenum. "There hasn’t yet been a big German success story company, but a lot has changed behind the scenes," said Dr. Peter Lange from the German Federal Ministry of Education and Research (BMBF), and went on to call for a more prominent founding culture. There were also positive signals from the business sector: "German biotechnology is starting to appear on a lot more radar screens in the industry," said Dr. Karsten Henco from HS Life Sciences AG, referring to recent company acquisitions. At the end of the event, which was organised by German biotech organisations and supported by the BMBF, the need for action in different areas was formulated for presentation to politicians. "It’s not about wishing for things, but about assuming a shared responsibility," said spokesman for the German Bioregions Dr. Kai Uwe Bindseil from BioTOP. At the end of the conference, Dr. Stephan Sieber (along with Thomas Böttcher) from the LMU Munich, Prof. Annette Kaiser from the FH Rhein-Sieg and Dr. Tobias May of HZI was awarded the Bioregions’ Innovation Prize.

Copyright (C) BIOCOM AG

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July 2008

Statement by BIO Deutschland on the Genetic Diagnostics Law

At the end of July, a hearing on the Draft Genetic Diagnostics Law was held in Bonn, prompting BIO Deutschland to make a statement in which it asked for improvements to be made to the German Federal Health Ministry’s draft. BIO Deutschland’s view is that the current draft treats consumers like minors and will cause conflict in the private sphere. Peter Heinrich, President of the Board of BIO Deutschland, said that consumers will look for advice on genetic diagnostics abroad, if a more citizen-oriented and practical solution than that provided by the current draft is not found. "This will damage innovative small and medium-sized diagnostics companies located in Germany and will lead to patients being left to deal alone with the results of all types of unregulated genetics analyses outside the German legal system," Heinrich went on to explain.

As a result, one of BIO Deutschland’s demands is that the law should distinguish between genetic testing for personal and medical purposes. In addition, the association advocates a stronger differentiation in the so-called provision of doctors rule so that gaps in patients’ growing needs for information can be filled. BIO Deutschland is also in favour of including the genetic testing used to determine parentage in a context other than the Genetics Diagnostics Law.

In its statement, BIO Deutschland welcomes that the Federal Ministry of Health’s draft law will provide the basis for setting parameters for genetic testing in Germany and prevent disadvantages resulting from genetic characteristics. However, Peter Pohl, Chairperson of BIO Deutschland’s Working Group on Competition and Regulatory Policy, added: "By no means may the state, which in this legislation specifically declares its aim to respect and protect human dignity and the right to information-based self-determination, be allowed to use loopholes to dictate to consumers."

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BIO Deutschland Attends the Experts’ Meeting on Advanced Technologies at the German Federal Ministry of Education and Research

BIO Deutschland was invited to a meeting at the Biotechnology Department of the German Federal Ministry of Education and Research as a representative of the "young biotechnology industry" to discuss central issues concerning advanced technologies. Topics discussed included the role of advanced technologies in Germany as a high tech location in terms of fundamental innovations that can reach new markets and the consequences they have for the Federal Government’s research and innovation policies.

BIO Deutschland spoke about the sector’s current issues and pointed out the importance of innovative small and medium-sized enterprises to the economy.

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June 2008

Meeting of the Working Group on Competition and Regulatory Policy at the Beginning of June

At the beginning of June, BIO Deutschland’s Working Group on Competition and Regulatory Policy met on the premises of Eurofins MediGenomix GmbH in Martinsried. Topics on the agenda included unfair competition in the fields of SNP and DNA forensic services, as well as the preparation for a meeting with the Jülich Research Institute, the project manager for the German Federal Ministry of Education and Research, during the Biotechnica 2008 in Hanover. A suggestion by BIO Deutschland on criteria in the tendering procedure used by the Federal Ministry of Education and Research is one of the subjects to be discussed at this meeting.

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Successful Second Business Development Conference Held in Munich

At the beginning of June, BIO Deutschland, in cooperation with EBE (European Biopharmaceutical Enterprises) organised an exclusive conference in Munich for the second time. Some 100 CEOs and executives from large and medium-sized (bio)-pharmaceutical companies from Europe and the USA had the opportunity to network intensively and actively.

The conference was supported by international companies such as Biogen Idec, Boehringer Ingelheim, Genzyme, Roche, Amgen and Nomura Code and was held at the Hotel Le Meridien on 5 and 6 June. The two main conference topics were (1) new successful business development strategies and (2) to what extent are good management and innovation decisive in the success of a company?

Managers from biotech and pharmaceutical companies from Europe and abroad discussed concrete case studies in Munich and spoke intensively about questions concerning business development and joint partnerships. During the conference there was also a debate about the extent to which the new generations of innovative drugs will make a new type of business cooperation necessary.

As a result of the extraordinarily good response, BIO Deutschland and EBE are planning to co-host the conference in Germany again in 2009.

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Statement by the German Federal Finance Minister, Peer Steinbrück, in Response to BIO Deutschland’s Criticism of the Tougher Regulations for Taxation on Investments

In the middle of June, BIO Deutschland wrote to the German Federal Finance Minister, Peer Steinbrück, to give its views on the planned tougher measures to be included in Paragraph 8 of the Corporate Tax Law. In a letter to Steinbrück, the President of the Board of BIO Deutschland and CEO of MediGene AG, Peter Heinrich, stated that an increase in the tax burden on investors dramatically contradicted the earlier promises of solidarity with small and medium-sized enterprises (SMEs) made by the Federal Government.

The Federal Ministry of Finance introduced the draft on the tighter measures a short notice as a supplement to the Draft Annual Tax Law of 2009. According to the draft, Paragraph 8 of the Corporation Tax Law is to be amended so that in corporations (for example, incorporated, joint stock and limited companies), dividends from free floats and profits from the divestiture of free float holdings in corporations will no longer be exempt from taxation but will instead be subject to corporation tax. The free float consists of all holdings of less than 10 per cent of the capital. This would fundamentally change corporate tax legislation as this type of dividend and profits from divestiture have been exempt from tax to date (five per cent of the dividends and profits from divestiture are regarded as non-deductible operating expenses). Corporations with free floats would thus be taxed significantly more highly or possibly even more than once in the future. Investors who keep their free float holdings in limited companies would be certain to change their investment strategy in the short or medium term as a result of further tougher measures affecting conditions for investments in Germany.

Commenting on the planned limitation of the German affiliation privilege as a result of the tightening of Paragraph 8 of the Corporation Tax Law, BIO Deutschland board member and tax specialist Jan Schmidt-Brand explained that "The legislators would specifically reduce profits to institutional investors, should the latter choose an investment form that is typical of the venture capital financing of innovative SMEs." Schmidt-Brand added that the state would also reduce its tax revenue in the long run.

Using EU regulations as an argument is not acceptable, according to Dirk Honold, who co-chairs BIO Deutschland’s Working Group on Finance and Taxation with Schmidt-Brand. Honold said, "In the light of the favourable innovation conditions in other EU member states, it would be preferable to remove the disadvantages facing innovative foreign investors rather than making conditions for German investors worse." He added that this would lead investors to Germany, who would make innovations possible.

The Finance Minister answered BIO Deutschland’s letter at the beginning of July. He wrote that the suggested amendment was a response to a breach of treaty case against Germany, in which the EU Commission disapproved of Germany’s unequal taxation of foreign and domestic dividends. According to the Minister, the aim of taxing income from free floats is to ensure equal treatment. In this way, the tax deduction on returns on capital investments from foreign dividends would be ensured in the future and tax deficits of around €1 billion per year would be avoided.

In his reply, Peer Steinbrück added that the regulation did not specifically apply to recently founded companies financed by risk capital. He pointed out that "the Federal Government consistently (provides) support to precisely this type of company" and gave the legislative proceedings on the Law on the Modernisation of the Conditions for Capital Investments (MoRaKG) as an example. BIO Deutschland welcomed the passing of this law in the Lower House (Bundestag) at the end of June. At the time, Peter Heinrich commented that the law was not ideal for the sector’s needs but that it at least showed that Germany was not completely forgetting about innovative entrepreneurs. However, as Heinrich went on to explain, it is vital to active SMEs in advanced technologies that the government keeps its promise to monitor the effect of the law and, if necessary, to improve it.

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Meeting of the Working Group on German-US Cooperation Held in San Diego

At this year’s BIO International Convention held in San Diego in mid-June, BIO Deutschland’s Working Group on German-US Cooperation hosted a meeting during which the main topic of discussion was "External Communications – New Rules for a Globalising World". The meeting focussed on challenges in the area of PR work and investor relations in the context of differences between the USA and Europe. Dr Christian Itin, CEO of Micromet Inc., Elias Papatheodorou, CEO of Novosom AG, Constantine Theodoropulos, President of Boston Communications and Pam Lord, Vice President of Porter Novelli Life Sciences, gave presentations at the meeting.

During the discussion following the presentations, many participants from Europe and the USA had the chance to obtain further information about the differences between Germany and the USA as regards the standards and demands of successful PR/IR work.

The meeting took place as an "affiliated event" as part of the 2008 BIO International Convention thanks to the support of the chairperson of the working group, Dr Henning Mennenöh (Hogan & Hartson), Dr Kristina Sinemus (Genius GmbH), Dr Julia Schüler (Ernst & Young AG) and Carola Schropp (EBD Group).

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BIO Deutschland Accompanies Government Delegation to China

At the end of June, the founding meeting of the German-Chinese Working Group on Medical Economics and Biotechnology was held in the provincial capital city of Changsha. The meeting was co-chaired by the Deputy Head of the Department for Industrial Policy at the German Federal Ministry of Economics and Technology, Dr Manfred Schubert, and the Deputy Head of the Chinese Department for the High Tech Industry at the National Development and Reform Commission (NDRC), Mr Ren Zhiwu. Members of the German delegation included representatives from business and science, as well as representatives from the Federal Economics Ministry and the German Embassy. Dr Pablo Serrano (BIO Deutschland), Uwe Ahrens (CEO Co.don® AG), Dr Bernward Garthoff (Bayer AG, DIB), Dr Norbert Stöhr (Bayer China Ltd) und Dr Finn Zedler (Qiagen China) were among the members of the German delegation. The Chinese side was represented by members of the NDRC and various research institutes, as well as by representatives from industry associations and chambers of commerce and industry. Altogether around 50 people took part in the meeting.

The meeting was used to set objectives and in particular to decide on the working group’s future main areas of activity and work procedures. Both sides made good use of the opportunity and made substantial contributions by giving presentations on their institutions and projects. BIO Deutschland gave a presentation on the latest figures from recent surveys in order to provide the Chinese side with an overview of the performance characteristics and the structure of innovative biotech SMEs in Germany.

The primary aim of the working group’s meeting was to decide on topics for the bilateral cooperation as concretely as possible and to set up corresponding sub-groups. The task of these sub-groups will be to investigate how synergies can be used and how cooperation between the two countries can be further developed. Biotechnology and genetic engineering, including regenerative medicine and molecular diagnostics, were among the most important topics.

The German delegation was also invited to attend the opening of the Chinese trade fair, BioIndustry China, on 21 June 2008, where regional pavilions, state institutes, bioparks and a few companies were provided with a presentation platform of around 10,000m² of exhibition space.

The China Bioindustry Convention took place after the trade fair opening and gave the Chinese bio-industry an opportunity to present its work. Around 700 people attended the convention. The lectures on topics including traditional Chinese medicine, regrowable raw materials, conventional hybrid rice cultivation, the commissioned production of antibodies, and vitamins were given by representatives of the many Chinese state institutions rather than by companies.

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May 2008

Position Paper on Industrial Biotechnology is Completed

The German Platform for White Biotechnology, to which BIO Deutschland belongs, completed a position paper on industrial biotechnology at the end of May.

Germany is a worldwide heavyweight in the field of white biotechnology. Expertise, the quality of scientific and technical institutes, and the capacity and performance of manufacturing plants make German the No. 1 in Europe. On a worldwide level, Germany shares the top position with the USA. The position paper describes some representative contributions made by industrial biotechnology to climate protection and sustainability and uses many different examples to illustrate the variety of the fields of application of this technology.

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German Pavilion at Biotech China: Contact Platform for the Biotech Market of the Future

Biotech China was held from 28 to 30 May in the Shanghai International Exhibition Centre (INTEX) and provided a communication platform for biotechnology in Asia for the second time. Germany was represented for the first time at the fair with a shared stand funded by the German Federal Economics Ministry. BIO Deutschland accompanied and advised the German participants. 41 per cent of the exhibitors came from outside China and there were over 5000 trade visitors from 29 countries.

121 exhibitors from 15 countries exhibited their products and innovations in a space of 3,700m². Exhibitors included the German Stand and the companies Sarstedt, Millipore, Merck Chemicals, Roche Diagnostics and Sartorius. While the majority of the exhibitors at last year’s fair came from Asia, this year many companies from Germany and the USA and Canada were also represented. Besides the German Stand, biotech associations and trade and industry promoters from Austria, Spain and the USA also attended the fair. In addition, delegations from Spain, Canada and the USA were represented.

The programme of events for international exhibitors included an evening reception at the German Consulate-General and a visit to a modern biotech industrial estate in Shanghai, which provides excellent infrastructure for the work of research institutes and many international biotechnology and pharmaceutical companies.

The three-day fair was complemented by an Innovation Forum, where exhibitors gave presentations on their firms and products.

The recruitment of specialised staff was also an important topic in Shanghai. The Bio Career Day provided a career platform on 30 May, where companies from the international life science industry were able to introduce themselves as employers and meet potential employees in individual interviews. The companies who took part included Fosun – one of the largest Chinese pharmaceutical companies – Abbott, Qiagen and Invitrogen.

Next year, Biotech China will be h eld in Shanghai again from 1 to 3 June 2009. The German Federal Economics Ministry has once again included this exhibitor platform in Germany’s official programme of foreign trade fairs so that next year it will also be possible for companies to exhibit on the German Stand.

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BIO Deutschland Criticises Tougher Regulations for Taxation on Investments

In the middle of May, BIO Deutschland asked the German Federal Minister of Finance, Peer Steinbrück, to make a statement on the planned measures to tighten Paragraph 8 of the Corporation Tax Law. Peter Heinrich, President of the Board of BIO Deutschland, said: "The Finance Minister is continuing along the road paved by the corporate tax reform and making conditions for the financing of innovations in German small and medium-sized enterprises worse." In his letter to Steinbrück, Heinrich explained that the increase of the tax burden on investors in these companies is in dramatic contrast to the promises of solidarity with SMEs previously expressed by the Federal Government.

Commenting on the planned limitation of the German affiliation privilege as a result of the tightening of Paragraph 8 of the Corporation Tax Law, BIO Deutschland board member and tax specialist Jan Schmidt-Brand explained that "The legislators would specifically reduce profits to institutional investors, should the latter choose an investment form that is typical of the venture capital financing of innovative SMEs." Schmidt-Brand added that the state would also reduce its tax revenue in the long run.

Using EU regulations as an argument is not acceptable, according to Dirk Honold, who co-chairs BIO Deutschland’s Working Group on Finance and Taxation with Schmidt-Brand. Honold said, "In the light of the favourable innovation conditions in other EU member states, it would be preferable to remove the disadvantages facing innovative foreign investors rather than making conditions for German investors worse." He added that this would lead investors to Germany, who would make innovations possible.

The Federal Ministry of Finance introduced the draft on the tighter measures at short notice as a supplement to the Draft Annual Tax Law of 2009. According to the draft, Paragraph 8 of the Corporation Tax Law is to be amended so that in corporations (for example, incorporated, joint stock and limited companies), dividends from free floats and profits from the divestiture of free float holdings in corporations will no longer be exempt from taxation but will instead be subject to corporation tax. The free float consists of all holdings of less than 10 per cent of the capital. This would fundamentally change corporate tax legislation as this type of dividend and profits from divestiture have been exempt from tax to date (five per cent of the dividends and profits from divestiture are regarded as non-deductible operating expenses). Corporations with free floats would thus be taxed significantly more highly or possibly even more than once in the future. Investors who keep their free float holdings in limited companies would be certain to change their investment strategy in the short or medium term as a result of further tougher measures affecting the conditions for investments in Germany.

The development of high tech products – including and particularly in advanced technologies such as biotechnology – is crucial for the future of our economy. This was recently confirmed by the Expert Commission for Research and Innovation in a report commissioned by the Federal Government. The financing of new, innovative companies with outside capital is generally not possible because of the high risk in product development. As a result, access to venture capital is essential to small, innovative companies.

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Meeting of the Working Group on Finance and Taxation at BioEquity in Amsterdam

In the run-up to BioEquity in Amsterdam, the EBD Group invited members to the thirteenth meeting of the Working Group on Finance and Taxation. The following topics were discussed:

From Project Evaluation to Portfolio Management – Best Practices and Pitfalls: Iver Twelsiek, CFA PWC – Valuation and Strategy – LS Team.

Venture Capital Perspectives on the Biotechnology Industry from the Benelux: Christina Takke, Ph.D., Principal, Forbion Capital Partners.

Capital Markets and Biotechnology in the Benelux: Maurice Laudy, CFCM Head Life Sciences; Gerald Verweij, Head of Equity Capital Markets, Amsterdam; Christoph Osterbrink, CFCM, Frankfurt Fortis Merchant Banking.

Deficit Carried Forward – Approaches to and Discussion on a Constitutional Complaint: Wolfgang Weitnauer, Weitnauer Attorneys.

State-of-Play in the Legislative Procedure on the Law on the Modernisation of Conditions for Capital Investments (MoRaKG) and on the Limitation of Risks in Financial Investment and the Report by the Expert Commission for Research and Innovation: Antje Liebers, KPMG; Dirk Honold, BRAIN AG.

In order to make the group’s work more efficient and to deal with several topics at the same time, specific working groups that will prepare certain subjects between the meetings and develop their content were set up. The working group decided to focus on the following areas:

• Tax Issues Resulting from Deficit Carried Forward – Dealing with the Current Legislation
• Tax Incentives in Research Promotion – Suggestions for Amendments to the Legislation
• Law on the Modernisation of Accounting – Effects on Biotech Companies
• Capital Market Issues

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200th Member of BIO Deutschland: Glycotope GmbH from Berlin

In the past few weeks, two more companies became members of BIO Deutschland: bitop AG from Witten and the Berlin-based company, Glyotope GmbH, which is the association’s 200th member.

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Participation in the German Remuneration Survey and an Overview of MBAs

Nine years ago, some biotechnology companies started a study on remuneration (the German Remuneration Survey) on their own initiative. Since then, this study has been very successfully carried out on an annual basis, in cooperation with a remuneration expert from the USA. In this year’s study, BIO Deutschland’s Working Group on Human Resources negotiated a special discount of 30% for members of the association who took part in the survey for the first time.

The study on salaries is tailored to the needs of the biotech sector and resulted in intensive cooperation with those responsible for personnel in the participating companies.

The special features of this extensive analysis are that

• it is constantly expanded and new positions are added in accordance with growth and changes in the companies;
• the participating companies are thus provided with exactly the sort of detailed information that is needed in order to pay staff the going rates and
• a valuable network of participants has developed, which is used often and in a variety of ways.

Only biotechnology companies are allowed to take part in the survey. The companies have to employ staff in Germany but the size of the company and the number of employees are not of crucial importance. The data belong exclusively to the participating company and may not be sold. The data is not available to other firms nor is it published.

In addition, the working group recently compiled an overview of MBA programmes specialising in healthcare/life sciences. BIO Deutschland members may request a copy of the list from our office, which will shortly also be available on the association’s homepage.

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BIO Deutschland Holds its Third Parliamentary Evening in Berlin

At the beginning of May, BIO Deutschland held its third information evening in Berlin on the topics of biotechnology and genetic engineering. Around 40 guests from ministries and industrial enterprises from the biotech sector attended. The aim of the event was to discuss innovations in biotechnology in Germany, to present examples of success stories from the sector and to provide an insight into factors influencing success.

Following an introduction to the subject matter by Peter Heinrich (President of the Board of BIO Deutschland and CEO of MediGene AG), short presentations were given on industrial biotechnology and its function in the biologisation of key industries (Holger Zinke, BRAIN AG) and on the process from the product concept to the European approval of the Icatibant drug (Jochen Knolle, Jerini AG). Participants also learned about the importance of the protection of intellectual property as a prerequisite for innovation (Rainer Wessel, Ganymed Pharmaceuticals AG) and the parameters for financing R&D (Jan Schmidt-Brand, Heidelberg Pharma AG).

During the dinner after the presentations, members of the Bundestag and representatives from the Ministry of Education and Research and the Ministry of Economics and Technology were able to learn more about the background to the economic potential of German biotechnology from members of the board of BIO Deutschland, chairpersons of the working groups, businesspeople from Berlin and representatives from the BioRegions’ working team.

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Demand Met: The Main Translation Costs for EU Patents Are Dropped

Two years ago, experts from BIO Deutschland’s Working Group on Intellectual Property and Technical Contracts submitted a statement for consultation by the European Commission to Erik Nooteboom, Head of the EU Unit on Industrial Property at the Internal Market Directorate-General. The document recommended, inter alia, the rapid ratification of the London Agreement by which the costs for bundles of patents were to be drastically reduced. Now that the required number of member states of the European Patent Agreement has ratified the London Agreement and the instruments of ratification have been officially deposited, it will come into effect on 1 May 2008.

The London Agreement means that the member states in the agreement that share an official language with one of the three official languages of the European Patent Office are now no longer required to translate a patent during its national registration.

Each of the member states of the London Agreement that does not have an official language in common with one of the three official languages of the European Patent Office is to stipulate one of these official languages and forego a translation of the patent if the European patent is written in this language or translated into it and is submitted according to the regulation of Article 65, Clause 1 of the European Patent Convention. At the same time, these member states will preserve their right to demand that the patent claims are translated into their own official language. The London Agreement member states may demand a complete translation of the patent to their own official language only in cases of legal proceedings involving patent infringement.

In accordance with current German legislation, the London Agreement will only come into effect in Germany on the first day of the fourth month after it comes into force, that is, on 1 September 2008. The agreement will come into force in the other member states of the European Patent Convention according to individual national regulations.

According to figures provided by the European Patent Office, translation costs involved in the nationalisation of European patents will decrease on average by an expected 45% following the accession of all the member states of the European Patent Convention.

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April 2008

Analytica 2008: BIO Deutschland Represented in Various Forums

BIO Deutschland’s Working Group on Human Resources took part in the Jobvector Career Day during this year’s Analytica trade fair from 1 – 4 April in Munich. Bettina Kipp, Director and Head of Business Development at Immatics, gave a presentation on the topic of "Strategic Personnel Work in Small and Large Biotech Companies". BIO Deutschland members who are interested in Ms Kipp’s comments are welcome to request a copy of her presentation from the BIO Deutschland office by calling 030-2648 4087 or sending an e-mail to info@biodeutschland.org.

Peter Heinrich, President of the Board of BIO Deutschland and CEO of MediGene AG, took part in the Finance Day in the Innovations & Technology Forum, which was held for the first time as part of the Analytica. The title of his presentation was "Possible Finance and Business Development Strategies for Sustainable Capital Endowment in Biotech Companies".

Viola Bronsema, Managing Director of BIO Deutschland, gave a presentation on the topic of "Biotechnology SMEs – the Motor for Innovations and Job Creation" at the Business and Markets forum.

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Second Board Meeting of 2008 Held in Stuttgart

On 25 April, the BIO Deutschland board met for the second time this year. The agenda of the meeting that was held in Stuttgart was as follows:

• New members
• Finances in the first quarter of 2008 and prospects for the end of the year
• Lobby activities
• Press and PR work
• Events

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BIO Deutschland Meets Representatives of the CDU/CSU Members of Parliament

In cooperation with the Konrad Adenauer Foundation, BIO Deutschland organised a meeting between biotech companies, representatives of the CDU/CSU members of parliament and staff from ministries, scientific institutes and other lobby groups. More than 20 participants had the opportunity to talk intensively about current conditions in the biotechnology industry. The Bundestag member, Katherina Reiche, who is also a member of the Federal Board of the CDU, opened the session with a presentation on the general conditions faced by innovative biotech small and medium-sized enterprises. In her presentation, she not only emphasised the employment potential of the branch, but also dealt with current topics such as the amendment to the Genetic Engineering and Stem Cell Law. In addition, she raised the topic of the current bottlenecks in start-up and follow-up financing in the biotechnology industry and the effects of the corporate tax reform and the Law on the Modernisation of Conditions for Capital Investments (MoRaKG).

Olaf Wilhelm, a member of the board of BIO Deutschland and CEO of Wilex AG, described his experiences in the foundation and development of a biotechnology company. He made clear what obstacles an innovative company has to face in order to develop a new type of drug and what entrepreneurial risk both founders and investors take in this process.

Marion Jung, Director of the venture capital company EarlyBird GmbH, emphasised in her presentation how the current bottleneck in equity capital financing in Germany has a negative impact on the success factors of the foundation of technology-oriented companies. For instance, in comparison with the USA, where €18.4 billion was raised from venture capital funds, only €0.2 billion was raised in Germany.

Viola Bronsema, Managing Director of BIO Deutschland, underscored the recommendations made by the German Federal Government’s Expert Commission on Research and Innovation. The commission recommends targeted support for small and medium-sized enterprises (SME) in their investments in new technology. The latest corporate tax reform has an inhibiting effect on innovations in important advanced technologies and especially in small and medium-sized enterprises, Viola Bronsema added. She said that this is why the MoRaKG must quickly come into force. This law represents a small but significant step towards the targeted support of innovation development in SMEs.

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Second Successful CFO Biotechnology Summit Meeting in Frankfurt

The German Stock Exchange in Frankfurt hosted the second nationwide summit meeting of biotechnology finance experts in the middle of April. The one-day forum, known in the sector as the Biotech CFO Summit, brought together some 80 experts from the finance sector of the biotechnology industry, who exchanged views during podium discussions and presentations. Subjects discussed ranged from the effects of the tax legislation to risks and obstacles involved in floating a company on the stock exchange and included the US capital market and company mergers.

The agenda of the CFO summit meeting was organised by BIO Deutschland’s Working Group on Finance and Taxation, under the management of Dirk Honold, Acting CFO of Brain AG, and Jan Schmidt-Brand, a member of the board of BIO Deutschland and CEO/CFO of Heidelberg Pharma AG. The event was generously supported by the German Stock Exchange as a platinum sponsor, the gold sponsors CMS Hasche Sigle, General Electrics Healthcare Financial Services, KMPG, PricewaterhouseCoopers and SAP, as well as by BIO Deutschland’s media partner, BusinessWire.

Commenting on this year’s summit meeting in Frankfurt, Jan Schmidt-Brand said, "This type of experts meeting is needed in order to make the business model of innovative biotechnology companies successful despite the currently more difficult conditions facing research and development intensive companies, especially when it comes to finding finance." Dirk Honold was happy to be able to offer this expert platform and said, "In the light of the latest corporate tax reform and the Law on the Modernisation of Conditions for Capital Investments, it is important that biotech financial experts intensively discuss ways how biotechnology companies can expand so that they can do justice to the great willingness to take risks on the part of entrepreneurs, staff and investors."

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Board of BIO Deutschland Attends Brussels Day

The BIO Deutschland board members, Rainer Wessel (CEO of GANYMED Pharmaceuticals AG, Mainz) and Jan Schmidt-Brand (CEO and CFO of Heidelberg Pharma AG) represented the sector’s concerns in meetings with European Parliament members at Brussels Day at EuropaBio on 1 and 2 April. At a dinner attended by the national industrial associations, members of the EU Parliament and Permanent Representatives from the member states, current issues were first discussed in a small and informal setting. The following day, the national delegations attended meetings at the European Parliament.

The two BIO Deutschland board members’ main topics in their talks with Alexander Radwan (CDU/CSU), Rainer Wieland (CDU/CSU) and Jorgo Chatzimarkakis (FDP) were tax conditions for innovative small and medium-sized enterprises in Europe and the obstacles faced by this type of company when they register a patent. The authorisation and the cultivation of GM crops, the use of animals in the development of pharmaceutical agents and the need to include both advanced technologies and entrepreneurship in political discussions and public regard were also discussed.

The two businessmen found that the elected representatives were most interested in their concerns. Wessel said, "I was pleased by how quickly the topic of small entity status in patent registrations was followed up by one of the members of parliament after our meeting." It is possible to discuss other subjects, such as tax conditions, in the sense of best practice on the European level, but they are exclusively a national issue when it comes to their application. "However, the financing of research and development in general and venture capital for innovative entrepreneurs in particular, obviously also in the light of the so-called Lisbon targets, is a central issue in Europe," Schmidt-Brand added. He stressed that it is also necessary to talk clearly about the parameters for equity capital investments if one really wants three per cent of GNP to go to research.

Viola Bronsema, who accompanied the German delegation to Brussels in her capacity as Managing Director of BIO Deutschland, praised the European biotechnology association: "EuropaBio provides an excellent platform in Brussels for the concerns of the national industry associations and their member firms." She explained that BIO Deutschland, as the German sector association, had lobbied for the continuing high priority treatment of small and medium-sized enterprises (SMEs) and emerging enterprises by European interest groups. This work has paid off very well – the title of this year’s Brussels Day at EuropaBio was "Biotech SMEs: Motors for Innovation in Europe".

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March 2008

BIO Deutschland Attends the EuropaBio Meeting in Brussels

Dr Viola Bronsema, Managing Director of BIO Deutschland, attended the EuropaBio conference in Brussels on 18 March and participated in the National Associations Council, the Healthcare Council and the Emerging Enterprises Council meetings.

Reports were made on current EU country issues and topics discussed included EU lobbying, the Small Business Act for Europe and the Risk-Sharing Finance Facility.

The successor to Johan Vanhemelrijck, the Secretary General of EuropaBio, will be named at the beginning of April. Vanhemelrijck will continue to serve EuropaBio in an advisory capacity.

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BIO Deutschland’s First Strategy Conference and First Board Meeting of 2008

On 29 February, the board of BIO Deutschland, the chairpersons of the working groups and of the BioRegions’ working team met at Lake Starnberg near Munich to discuss the association’s strategy for the coming years. At the board dinner after the meeting, the association’s supporting members also gave their input to the topics that had been discussed earlier.

The most important subjects on which future association activities will focus are:

• Entrepreneurship
• Venture capital, the capital market, investment banking
• Communication about opportunities and potential
• Taxation conditions
• Licensing, partnering, technology transfer
• EU law; EU harmonisation
• Intellectual property

On 1 March, the board of BIO Deutschland held its first meeting of 2008 in order to discuss subjects including the association’s aims until 2010 and their implementation, as well as the events and measures planned for 2008.

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February 2008

Meeting of the Working Group on Human Resources [formerly the Working Group on Education and the Labour Market (HR)

On 19 February, the Working Group on Education and the Labour Market (HR) met in Munich and changed its name to the Working Group on Human Resources during the course of the meeting.

The 19 participants had two short presentations on the following topics:

• Models for Employee Investment in Public Companies and Private Limited Companies
• The Latest Remuneration Figures in the Biotech and Pharmaceutical Sectors

The working group decided that it would cover the following subjects:

• Remuneration and survey on remuneration
• Compilation of an overview of training and further training opportunities in the pharmaceuticals and biotech sectors
• Organisation of (business studies) training workshops for the member companies
• Internationalisation in the area of human resources
• Provision of further training courses in the area of personnel development and staff retention for member companies
• Analysis of the job advantages in biotech and Big Pharma: strategic personnel work in small and large biotech companies as well as possible differentiation from the pharmaceutical sector
• Participation in employment portals in the internet; evaluation and improvement of the Eurobiojobs job porta

n addition, Professor Dr Sabine Köpper (PKCie Management Consultants) was unanimously elected as chairperson of the working group.

The working group’s next meeting will be held on 25 September from 10.00 until around 17.00 in Mannheim. The following topics are currently on the agenda:

• Management of growth and organisation development in biotech companies: presentation of the working group’s results followed by discussion
• MBA courses for staff from biotech companies: presentation of the working group’s results followed by discussion
• Study on remuneration
• Evaluation / suggestions for improvement of the Eurobiojobs job portal
• Planning of the working group’s fourth meeting

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Meeting of the Working Group on Innovations, Entrepreneurship and Employment Held at the Beginning of February in Berlin

The fourth meeting of BIO Deutschland’s Working Group on Innovations, Entrepreneurship and Employment was held in Berlin at the beginning of February.

The group discussed the following topics:

• New ideas on supporting innovation in biotechnology
• General conditions and research funding
• Entrepreneurship
• The working group’s objectives

At the next meeting on 27 May in Munich, a concrete action plan for the working group’s objectives will be drafted.

After the meeting, some of the working group members met a journalist from the Handelsblatt newspaper for a background briefing about the biotech branch.

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Men’s Rights in the New Genetic Diagnostics Law

At the end of February, the Lower House of the German Parliament (Bundestag) approved an amendment to Paragraph 1598 (a) of the Civil Law Code, by which the clarification of parentage using DNA analysis will be legalised and regulated. In the future, fathers will now have significantly stronger rights to ascertain the paternity of a child in cases where this is not clear.

BIO Deutschland already commented on this issue in a position paper published at the end of 2007, in which it argued that the existing family relations should be protected and that further legal or administrative proceedings should be avoided by making it legally possible to commission the genetic analyses used to ascertain parentage without the permission of all those involved, that is, the father, mother and/or the child.

Parliament complied with BIO Deutschland’s demands in that men have now received a stronger legal right to allow their biological paternity to be forensically tested without having to contest legal paternity, as was previously the case. The law takes into account the need to clarify doubt concerning the paternity of a child without damaging the personal relations of those involved. Marriage and the family are thus protected, while personality rights are also safeguarded.

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Statement by the Working Group on Industrial Property Rights and Technical Contracts on European Patent Jurisdiction

Eleven members of BIO Deutschland’s Working Group on Industrial Property Rights and Technical Contracts took part in a telephone conference at the end of February to discuss the subject of European patent jurisdiction for nullity and infringement actions.

The working group advocates a three-tiered procedure for nullity suits and infringement actions in the area of European patents and the national patents that stem from them. The court of first instance (trial court) should be located where the respondent company is based and the language used in the proceedings should be the local language. The second instance should be a central European court based in one of the EU member states. The courts of first and second instance should be made up of judges who are qualified in both technology and law. The third instance (court of final appeal) should be the European Court of Justice. In this case, the hitherto division of the case into two parts (nullity suit and infringement action) can be lifted.

Reasons given for maintaining national jurisdiction in Germany included the short duration of court proceedings, the relatively low costs and the competence of the local courts.

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BIO Deutschland Demands Better Conditions for R&D Investments

BIO Deutschland fully supports the recommendations made by the German Federal Government’s Expert Commission on Research and Innovation, which were published at the end of February. The commission recommends targeted support for small and medium-sized enterprises (SMEs) in their investments in new technology. "The latest corporate tax reform has an inhibiting effect on innovation in important advanced technologies above all and in small and medium-sized enterprises in particular," Peter Heinrich, President of the Board of the industry association, BIO Deutschland, stated. He added that this is one reason why the Law on the Modernisation of Conditions for Capital Investments (MoRaKG) must quickly come into force and that this law outlines small but important steps towards the support of innovation development in SMEs. Heinrich also pointed out that the next step must be towards tax incentives for research and development, especially in innovative small and medium-sized enterprises, as is already the case in other European countries. BIO Deutschland demands that innovative technology companies be taken into account and supported, as is the case in other European countries. These necessary amendments do not imply the creation of further exceptions, which would be contrary to the further aim of taxation simplification. However, additions to and further development of the tax legislation are vital as these are of decisive importance in making Germany stronger as an internationally competitive location for research and development.

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Meeting of the Working Group on Finance and Taxation in Heidelberg in Mid-February

In the middle of February, the Working Group on Finance and Taxation met at Heidelberg Technology Park. Topics on the agenda included:

• Liability of executive bodies
• Directors and Officers liability insurance in biotechnology – an overview
• The CFO’s insurance risks
• EIB financing of R&D and innovation
• State-of-play in the legislative procedure on the Law on the Modernisation of Conditions for Capital Investments and on the Limitation of Risks in Financial Investments (MoRaKG)

The next meeting will be held the day before the BioEquity conference (27 May) from 14.00 – 19.00 in the Hotel Okura in Amsterdam. After the meeting, the working group plans to invite members to dinner in one of the hotel’s three restaurants. Following the dinner, the working group members are invited to the BioEquity opening event at 21.30.

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Stem Cells: BIO Deutschland Advocates Moving the Cut-Off Date

In the context of a debate on stem cells held at the Lower House of the German Parliament (Bundestag) in the middle of February, BIO Deutschland issued a statement in which it advocated moving the cut-off date for the import of embryonic stem cells from 1 January 2002 to 1 May 2007. In addition, BIO Deutschland urged that the Stem Cell Law should unequivocally apply to Germany only – and thus stop the threat of charges being pressed against Germany-based scientists when they use newer human embryonic stem cell lines in research outside Germany. Professor Felicia Rosenthal, a member of the board of BIO Deutschland and Managing Director of CellGenix GmbH stressed, "It is not yet clear whether and with what type of stem cell the desired therapeutic aims can be reached. However, in order to be able to use ethically viable adult or reprogrammed stem cells in the future in therapies that are useful to human beings, our researchers must be able to compare these with human embryonic stem cell lines that are suitable for clinical application." Rosenthal pointed out that this is not possible with stem cell lines that were created before 1 January 2002.

Dr Peter Heinrich, President of the Board of BIO Deutschland and CEO of MediGene AG stated: "We must not allow restrictive laws to endanger Germany’s excellent international position in the field of regenerative medicine and to force scientists with future-oriented projects in research institutes and particularly in innovative small and medium-sized enterprises to work abroad."

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Results of the Member Survey Are Now Available: Economic Conditions and the Capital Market Are Still Important Issues. General Satisfaction with the Association’s Work to Date.

The results of the member survey of December 2007 are now available. Responses were provided by some 30 per cent (n = 55) of the total number of members surveyed and were evaluated. The following are the most important results:

• The majority of responses came from the area of biomedicine (more than 50 per cent), followed by the BioRegions (11 per cent) and consulting and media (9 per cent).
• Topics such as the support of biotechnology in Germany (83 per cent), venture capital, the capital market, investment banking (76 per cent), economic and tax conditions (around 70 per cent), a united stand by German biotech organisations (68 per cent) and intellectual property, licensing and technology transfer (66 per cent) were among those listed as the most important.
• According to the member firms, the exchange of information and discussion on current developments, as well as the improvement of general conditions in Germany, are the most important functions of the working groups – the representation of the company’s own interests are of less importance.
• Around half of the surveyed members (48 per cent) are in favour of maintaining the events offered by BIO Deutschland. Some 36 per cent support a consolidation of these events.
• More than 90 per cent of the surveyed members find the BIO Deutschland Newsletter informative. News from the board and the working groups are considered to be of greatest interest, followed by reports on lobby activities and events.
• More than 96 per cent of the surveyed companies are happy with Transkript as BIO Deutschland’s official journal. (Member companies of BIO Deutschland receive Transkript free of charge.)
• More than 96 per cent of those surveyed are satisfied or very happy with the association’s work to date. In 2006, this figure was 74 per cent. The number of those surveyed who responded that they were very happy doubled from around 23 per cent in 2006 to 46 per cent in 2007.

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January 2008

Meeting of the Working Group on Competition and Regulatory Policy

At the end of January, BIO Deutschland’s Working Group on Competition and Regulatory Policy met in Bernried on the premises of the biotech company Epidauros AG. The agenda topics included a report on the progress and state-of-play in the talks on unfair competition caused by large-scale research institutes that provide DNA sequencing services. One of the next steps is the planned meeting with the German Federal Ministry of Education and Research’s project management, the Jülich Research Centre.

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Hearing on the Labelling of New Types of Food

On 16 January 2008, BIO Deutschland took part in the hearing on "Regulations on New Types of Food Products – Labelling of GM-Free Feed in Animal Products" at the Standing Committee for Food, Agriculture and Consumer Protection at the Lower House of the German Parliament (Bundestag). The issue for discussion concerned the planned amendment of the regulation by which it will be permitted to label food products as "GM-free". The plan is to replace the very rigid regulation in force to date, which is hardly used in Germany, with a new regulation that will allow the GM-free label to be used for products that come from animals which were fed (over a certain period of time) with GM-free manufactured feedstuffs. The use of genetic engineering in other animal husbandry and animal food product manufacturing is not supposed to be included in the label. This means that the label "GM-free" does not exclude, for example, the use of recombinant medication and feed and food additives produced with the use of genetic engineering, such as vitamins and amino acids, in animal husbandry and food production.

Three main groups emerged over the course of the hearing:

• Those who believed that the draft regulation would be acceptable if the "GM-free" label were replaced by, for instance, the label "GM-free feedstuff".
• Those who were of the opinion that the original rigid regulation should be maintained as any amendment would only confuse consumers.
• Those who agreed with the draft regulation as it stands.

The possible effects of the new draft regulation on consumer demand were also discussed. In this context, the representative of the Austrian Working Group for GM-Free Food was able to report on experiences in his country. The largest dairy in Austria registered a drop in turnover of 6% before the introduction of labelling on GM. In the meantime – and despite a price increase of €0.15 per litre – there has been a 12% increase in turnover in milk labelled as "GM-Free".

In this regard, the German Raiffeisen Association added that the supply of "GM-free" feedstuffs is significantly higher than demand. At the same time, there are not enough "GM-free" feedstuffs to feed all animals in Germany. In particular, protein feed (soya) is scarcely available any more as a non-GM product. The demand for protein feedstuff in Europe accounts for a fifth of the demand worldwide and is declining. As a result, it is to be expected that an increasing trend away from the use of GM soya products in Europe will not significantly affect global demand.

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Statement by BIO Deutschland on the Coexistence Regulations for New Types of Starch Potatoes

In mid-January 2008, the German Federal Ministry of Agriculture asked BIO Deutschland and other plant biotechnology lobby groups for statements on the subject of coexistence regulations for potatoes.

BIO Deutschland’s standpoint was that the coexistence regulations involved in the amendments to the Law on Genetic Engineering should meet the aim of the EU Regulation EG 1829/2003, that is, the mixing of GM potatoes with non-GM products should be kept below the threshold value of 0.9%. In addition, BIO Deutschland argued that a good working practice for potato farming should take both current scientific knowledge into account as well as the fact that potatoes tend to self-fertilise and also do not have any natural outcrossing transfer partners.

In this context, Dr Viola Bronsema, Managing Director of BIO Deutschland, called for the amendment to the Genetic Engineering Law to bear in mind the needs of small and medium-sized enterprises and of research. She pointed out that many aspects, which primarily target large concerns, actually affect small companies, research institutes and farmers. Dr Bronsema added that legal certainty and the guarantee of economic diversity should be the focus of the current discussions.

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