Biotechnology could develop into a new pillar of the economy like information technology. Experts say that its role as the growth engine for the Finnish economy will probably be based on a combination of some new and old know-how, such as the bio sector and paper production.

The possibilities presented by biotechnology in Finland are assessed in a new book entitled 'Biotekniikka - tietoon perustuvaa liiketoiminta' (Biotechnology - business based on knowledge) from the Research Institute of the Finnish Economy (ETLA). The latest research information about the biotechnology industry, the expectations linked with it and its prospects have been collected in the book.

Small markets not enough

A relatively large amount of public R&D support and credit has been granted to the biotechnology sector for just over ten years in Finland: if bio-centres are included, almost EUR 400 million. New companies were being established in their greatest number midway through the 1990s. Some of them already have clearly defined businesses, but there are also many projects still at the development stage.

Although companies are at the moment functioning on a limited amount of sales, growth expectations are high. Right from the outset companies have their eyes very firmly set on exports, because the small Finnish markets are not enough to cover the products' high development costs.

Lack of big companies

Venture capital investing in the sector is not very advanced and is hugely dependent on IT's financing markets. More venture capital investments, both domesic and foreign, would be needed for development. Withdrawing from investments has been a problem, because it is difficult to obtain a stock exchange quotation. The sale of companies is expected to become more widespread - a major portion of the purchasers coming from abroad.

In Finland there are few big companies in the field that could expand the production of successful innovations onto an industrial scale. In pharmaceuticals development, for example, what usually happens is that small biotechnology companies sell the rights to their inventions to big, international pharmaceuticals companies that develop the semi-finished medicinal products into the finished item.

Growth lasts years

The annual growth in the biotechnology sector is expected to be between 10 and 18 per cent by 2006. This is a fairly high rate, if not unusually fast.

The added value in the sector is the same size as that in the forest industry at the beginning of the 1950s and the electronics industry in the mid-1970s. If the biotechnology sector were to achieve the same growth as the electronics industry, about 30 years would elapse to reach its present level. If the growth were to follow the forest industry's pace, it would take 50 years. If the growth rate were to remain as forecast at the moment, the forest and electronics industry level would be achieved within 15 to 30 years.

The development into the engine for the economy will probably come through a combination of new and old know-how, such as the bio sector and paper production, the bio sector and informatics and the bio sector and nutrition.

Source: Terttu Luukkonen (toim.) Biotekniikka - tietoon perustuvaa liiketoimintaa, ETLA 2004.

>> European bio-sector at a transitional stage (10.9.2004)

An international pharmaceuticals company Aventis and the Finnish biotechnology company Biotie Therapies are cooperating in developing an orally-taken drug for the treatment and prevention of blood coagulating disorders.
Photo: Aventis Photo Archive