Switzerland’s pharma industry is moving beyond staid conservatism and embracing risk in order to compete internationally and foster a new culture of innovation.

Switzerland is frequently considered one of the most entrepreneurial and competitive countries in the world. As Thomas Cunei, secretary general of Interpharma, the association that represents 92 percent of Switzerland’s pharmaceutical market for patent-protected, reimbursable medicines, enthuses, “we have a strong entrepreneurial spirit in this country. As a small nation, we have never been able to afford the luxury of being inward looking.”

Yet a weakness that has been identified is that founders sometimes lack ambition. As the Global Entrepreneurship Monitor (GEM), the world’s foremost entrepreneurship report highlighted, Switzerland shows no great potential with regard to creating new jobs via young companies. Professor Dr. Robert Riener, head of the recently created Department of Health Sciences and Technology at ETH Zurich, has found that “it can be difficult to find young entrepreneurs that are interested or prepared to take research to the market. Sometimes we have even had an idea for a spinoff company, but did not have anyone who was prepared to invest in it and take the necessary risks.” Such risk aversion can be seen in the lack of seed funding for spinoffs, though the situation is evolving. “In fact, there are now more seed funders willing to invest up to 1 million Swiss Francs (1.01 million USD), but there is still a gap for projects in the 2 million Swiss Francs (2.03 million USD) range and above” adds Dr. Riener.

Closing such a gap requires a shift in entrepreneurial mindset. As Professor Edwin Constable, vice rector for research at The University of Basel, Switzerland’s oldest university, remarks, “there remains a different culture in the US and Europe. In America, there is no shame in creating a failed spinoff, where as in Switzerland it is seen as something to avoid at all costs. This creates a conservative mindset, leading to our academics being rather risk adverse. They do not want to make a commitment to a spinoff unless they can be guaranteed that it is going to succeed, yet 95 percent of spinoffs do not exist after five years.”

Yet a clear orientation towards innovation and international markets has always been a major Swiss strength. As Martin Naville, CEO of the Swiss-American Chamber of Commerce notes, “Swiss companies have traditionally been fast when it comes to exporting to the US. As a country, we are particularly skilled at selling to North America, an environment with plenty of complexities…we are far ahead of the likes of Germany and France when it comes to taking advantage of the latest trends in the US.” Such a statement is backed up by the facts. Swiss exports to the US have more than doubled over the last 12 years, from 10.6 percent of total exports in 2004 to 14.5 percent in H1 2016, with pharmaceuticals accounting for approximately 45 percent of total exports to the US. According to Pamela Alex, country manager and head of Global Innovative Pharma in Switzerland at Pfizer, one thing that unites both Switzerland and the United States is an embrace of innovation, “I do not see the Swiss as risk-adverse, but rather very conscious of where they take risks” she remarks. For Professor Constable the “environment has changed for the better over last ten years. It is a train that is moving in the right direction, but it has not yet reached its final destination.” Indeed, one noticeable trend over recent years is that a fear of failure has lessened, and according to GEM in 2013 it was even lower than in the USA.

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Writer: Zachary Burnside