Interview: Nuno Arantes-Oliveira, President, P-BIO, Portugal

photo-7Nuno Arantes-Oliveira, President of P-BIO, Portugal’s Biotechnology Industry Organization, the country’s sole association for biotechnology companies, discusses the state of the biotech industry today in Portugal, and the ways in which the industry can consolidate and attract overseas investment to stimulate growth.   After a harsh economic downturn over the past few years, what does the biotech sector in Portugal look like today? It is a small but growing industry. Biotech typically refers to entrepreneurial companies developing new drugs and devices based on innovative technologies. In that sense, the sector is comprised of about 30 companies, the majority of which are within health, in areas like drug development, diagnostics, or devices. Most are very small and new academic spin-offs. Most companies have been started recently by people educated abroad in top research institutes and universities, many of whom wanted to return to Portugal but not to its academic setting. The weakness of the biotech sector has been the companies’ lack of capacity to grow beyond the early stages. A few years ago, there were some barriers to entrepreneurship for startup companies but that does not happen anymore. Portugal is objectively an entrepreneurial country, as the number of people who start businesses is very high. The issue is that most of that entrepreneurship is based on necessity: people start restaurants and shops, not so much opportunity-based entrepreneurship like high-tech industries. However, this is changing and it is relatively easy to start a technology-based company in Portugal. Today there are facilities, incubators, seed funding and venture competitions, which allow for creation—now the issue is growth. There are no large private venture capital funds that invest heavily in Portuguese biotech. Historically, there has been some state venture capital that dabbles in several industries and private generalist venture capital from banks. The recently created Portugal Ventures seems to be an example of the state rationally investing in specific fields including biotech, which historically has been a problem. Furthermore, there are only a few large companies investing in biotech innovation. And Portugal’s largest companies in some sectors are relatively small; in the pharma industry the largest, Bial, is mid-sized by international standards. They do not have the capacity typically required to acquire startups or start funds to invest in startups. The sector has strong links to academia, spread between Lisbon, Coimbra, and Porto. Some companies are funded by business angels, state funds, European grants, and venture capital but to a limited extent. You do not have many cases of companies raising many millions of Euros, only hundreds of thousands or a couple million. There are not many alternatives for larger scale funding and growth for companies beyond that. What could be done for Portugal to make it more attractive? For angel investors and VCs, it is tricky. Specialized VC investors typically invest locally. Unless you are able to bring an office of a large venture fund to Lisbon, then it is difficult. If you are in Silicon Valley and you want to invest in a high risk startup, you will not invest in Lisbon, even if there are very good ideas. The geographic and cultural distance still makes a difference in this business. That does not mean that specific companies cannot attract deals if, for example, they are founded and headquartered in the US to attract money like we did with Alfama. Portugal needs to create the conditions for those very best companies to be able to grow as well as if they had started anywhere else in the world, without barriers to growth. In general, there are stimuli that could be created and still do not exist now. For instance other countries have social security benefits; employers do not have to pay social security if they are an innovative company. In terms of policy and organization, Portugal needs focus.
Portugal has good science, hospitals, doctors, institutes, but there is no niche of expertise. As a country or region, it is hard to attract big pharma investments unless you are clearly among the best in the world at something specific.
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