Economic Trends of Biotechnology in Germany

Economic Trends of Biotechnology in Germany

Author: Vera Köster (Photo: © VCI)

At their annual press conference on June 5, 2013, the chairman of the German Association of Biotechnology Industries (DIB; Deutsche Industrievereinigung Biotechnologie), Dr. Matthias Braun, reported on trends and demands from the industrial sector to the federal government.

According to a trend survey by the DIB, the biotech industry in Germany can expect a slight growth of sales this year. 80 % of the surveyed companies expect better business for the next few months. The majority of the DIB members recorded rising sales since the beginning of the year.
However, despite the good development, Dr. Braun thinks we should not look to euphoric in the year 2013. The general economic conditions are in total difficult, particularly in Europe. The European debt and confidence crisis continues to weigh on the real economy, and is not limited to the southern states of the EU. Also German companies are missing markets, they can only compensate for this better due to their strength in exports to Asia. However, the confidence among the companies is growing that the situation will not escalate further and will slowly come out of the stagnation phase. Under these conditions, the economy in 2013 will slowly stabilize.

The forecast of the economic development refers to two of the three areas of biotechnology, medical, and industrial. Still there is no creation of value in Germany in the field of plant biotechnology.


According to the Association of Research-Based Pharmaceutical Companies (vfa; Verband der Forschenden Arzneimittelhersteller), the total pharma market grew only by 2 % last year. However, 2012, biopharmaceuticals recorded a significant increase in Germany of 11 % to 6 billion euros (net total in the pharmacy and clinic market, taking into account the 16-% compulsory discount). For the first time, biopharmaceuticals reached more than a fifth of the market (21 %). This rising share of the total pharmaceutical market illustrates the growing importance of biopharmaceuticals.
In the manufacturing of biopharmaceuticals, Germany is not only European champion, but after the US, the second largest production site worldwide. However, as in all areas of innovation: standstill is regression, says Braun.

According to the International Service for the Acquisition of Agri-biotech Applications (ISAAA) the cultivation area of genetically modified (GM) plants in 2012 has increased worldwide to 170.3 million hectares or by 6 % (2011: 160 million hectares). This area corresponds to the global size of the total agricultural area in the EU27. In the EU and in Germany the cultivation of GM crops has decoupled from the global trend, so that the value of the cultivation will this year and in the future be generated outside of Germany and Europe.


Biotechnology is naturally a research-intensive industry. Half of the companies surveyed plan to expand their research activities in 2013. In contrast, only 8 % plan a reduction of expenditure on research and development. About 50 % of the companies plan to invest in 2013 in more or larger projects.

With approx. 75 %, a clear majority of DIB member companies have called for eliminating tax obstacles to innovation in Germany by the next Federal Government. Braun emphazizes that the industry needs reliable and economic growth-enhancing conditions to obtain research and innovation in Germany.

The DIB also is committed to the introduction of a tax research funding in addition to the existing project funding. Germany currently has a clear location disadvantage compared to other states that already have implemented such a promotion.
Innovation is the essential driving force of the chemical, pharmaceutical and biotech industry. It is associated with high costs and development risks. For example, the total cost for R&D and authorization for a single new drug amounts to about 800 million U.S. dollars. The total cost is, in fact, many times higher, as the companies also finance all developments done in the same period that never reach the market.

Specifically, the DIB Chairman called for the debureaucratization of the pharmaceutical sector in Germany to ensure and strengthen the medicare.

According to the Federal Association of the Pharmaceutical Industry (BPI) assessing the benefit of the Pharmaceutical Market Restructuring Act (AMNOG; Arzneimittelmarktneuordnungsgesetz) will partially prevent the refunding of investment into R&D. The act was meant to have a fair balancing of interests between ensuring patient’s access to innovative medicines and reasonable expenses of the community of insurers. Now it seems to only look at short-term oriented savings without taking care of the quality of supply.

Biotechnology provides innovations that will enable sustainable food production, alternative energy, bio-based raw materials, and personalized medicine. Political market interventions, such as in plant biotechnology or the pharmaceutical sector, jeopardize investments in the innovation and production location Germany, Braun said.

With conventional techniques of plant breeding neither the rising demand for food and feed stuff nor for renewable raw materials for material and energy can be covered. The timelines for progress in the classical technologies can’t keep up with the demands of our society. Using conventional productivity to feed the next billion people, approximately the agricultural acreage of South America would be needed in addition to the existing. Without biotechnology finding answers, this will not work according to Braun; not in Germany, nor worldwide.

Existing barriers to innovation in biotechnology along the value chain must be eliminated. The future Federal Government of Germany must create an internationally competitive framework. This means: a reliable control of the supply of raw materials for industrial biotechnology, speedy European approval procedures for biotech products on a scientific basis, and a more secure, but also significantly accelerated market access.

With the upcoming negotiations on a comprehensive free trade zone between Europe and the United States, the German and European policy is now at a crossroad. Washington criticizes the European approval process as too slow. The European Authority for Food Safety (EFSA; Europäische Behörde für Lebensmittelsicherheit) needs longer than the authorities in the United States or any other country – although the EFSA has never rated a GM organism from economic production of the US as unsafe.
The EU has newly registered only five GM organisms last year, with an average processing time of 40 months – in the U.S. it takes only 1.5 years for import and cultivation. Currently, a total of 74 applications of the EFSA for new or re-authorization of individual GM organisms hang in the balance. Moreover, the EU has for more than twelve years, approved for cultivation not a single GM product that is of economic importance in the United States.
GM plants are approved in increasing numbers in North and South America, Asia, Africa, and Australia. Due to this global application, it may be accidentally or technically unavoidable that repeatedly traces of GMOs may be found in seeds or food. On the other hand, the global spread of GM plants offers the EU the possibility to assess any concerns about effects in a real environment of data. Without a comprehensive technical solution including food, Braun says, it is increasingly difficult for Europe to purchase agricultural commodities on international markets.

Braun concludes that if Germany wants to maintain the powerhouse of biotechnology for the business location, this is only possible if the conditions for red, white and green biotechnology are not based on mediocrity, but on an international top position. This includes for him deregulation of the pharmaceutical sector to strengthen health care, that tax law must be innovation and investment-friendly, and that the EU Commission and the Member States should stick to the laws that they created themselves, as for sustainable biomass we need plant biotechnology. Otherwise there will be no bio economy.

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