Sweden is fast staking a claim as one of Europe’s premier biotech hotspots thanks to a holistic approach to research projects, a strong institutional ecosystem, and increasingly easy access to funding at the early stages of biotech companies’ development.
“The Swedish innovation powerhouse is propelled by our excellent academic and research institutions, and the support they provide to talented entrepreneurs,” proclaims Helena Strigård, director general of SwedenBio, the national industry organization for the life sciences, with over 250 members. “This is exemplified by the fact that within the field of precision medicine for instance, 75 percent of biotech and medtech startups are university spin-offs. Foreign multinationals and national champions eager to access innovation have understood what Sweden has to offer and are actively building bridges with the local ecosystem,” she continues.
Foreign multinationals and national champions eager to access innovation have understood what Sweden has to offer and are actively building bridges with the local ecosystem
One of Sweden’s recent success stories is BioArctic, a biotech focused on developing immunotherapies for disorders of the central nervous system (CNS). Originally founded in 2003 to develop discoveries made at Uppsala University, BioArctic has struck up partnerships with larger firms such as Eisai and AbbVie, as well as maintaining continued links to academic institutions. CEO Gunilla Osswald outlines that BioArctic’s “broad innovative portfolio spanning early discovery to Phase III, strong collaborations with strategic partners and universities, and our solid financial situation make us a unique biopharma company, not only in Sweden but globally.”
Until the late 1990s, Sweden’s biopharmaceutical expertise was concentrated in two companies, Astra and Pharmacia. However, after Astra merged with Zeneca to form AstraZeneca, and Pharmacia was acquired by Pfizer, Sweden lost the headquarters of both firms and, effectively, the two crown jewels of its life sciences industry. Moreover, AstraZeneca subsequently closed down its R&D sites in Lund and Södertälje.
However, this period has ended up laying the groundwork for Sweden’s collaborative biotech ecosystem today. Many Swedish biotechs have been formed by former Astra and Pharmacia employees and the former sites transformed into life sciences mini hubs. For example, while 900 people formerly worked at AstraZeneca’s R&D site in Lund, there are now 1,600 people working at the site.
“It is a completely new way of working compared to ten or 20 years ago,” asserts Osswald. “At BioArctic alone, we have a team of 50 people. It is simply amazing what can be accomplished when a small agile biotech company works hand in hand with Big Pharma companies.”
Besides having a strong research ecosystem, another fundamental aspect of building a successful biotech hub is access to funding, and Sweden excels at that, too. Biotech startups in the country have benefited from being able to access public funding at an early stage via the NASDAQ First North for small- and medium-sized companies.
“Swedish companies have been going public at an earlier stage of development, which they wouldn’t do in the US, and that has to do with the Swedish retail investors that fund a big part of the smaller biotech companies here. It’s a unique feature of the Swedish biotech ecosystem that a company can go public early on and attract funding from retail investors,” argues Peter Zerhouni, CEO of InDex Pharmaceuticals, a Swedish biotech focusing on immunological diseases that went public in 2016 to finance the phase II studies of their lead drug asset, Cobitolimod.
But while the initial local funding goes a long way to getting off the ground, companies are struggling to attract subsequent investment. Zerhouni explains that “the downside is that the retail market might not be deep enough to support subsequent stages of development which require more significant amounts of capital. On many occasions, these investors are not professionals, so it’s hard for them to determine the quality of the companies. It is sometimes more about marketing than actual drug development.”
The solution might be predicated on access to better access to international investment. However, while a USD 100 million company might be considered a small-cap company in the US, there are not yet many of that size in Sweden. “Swedish biotech companies need to market themselves better internationally, to US financial investors in particular. Everyone will agree that Swedish company valuations are much lower,” adds Zerhouni.
One last source of funding, and one that was crucial to BioArctic’s recent achievements is public financing. “Support from public authorities has been a decisive factor in our success. We have received several non-dilutive grants from Vinnova, the Swedish innovation agency. Although the amounts were relatively small, they came at critical times in the company’s development,” reveals Osswald.