Swiss biotech sector performs exceptionally at all levels

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03.05.2022
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The Swiss biotech industry has experienced another year of growth. According to the new Swiss Biotech Report, revenues, investment in R&D and the number of employees have risen significantly.

The Swiss biotech industry is made up of a good 300 companies. Over 250 of them are research-based businesses. In 2021, the companies showed an excellent performance and were able to boost their economic importance once again. The number of jobs increased by 9.5% to around 18,000. More than CHF 2.5 billion was invested in R&D. At the same time the liquidity of the companies rose to a new record level.

Higher revenues

The positive development was made possible by higher income. The Swiss biotech industry generated revenues of CHF 6.7 billion, compared to CHF4.9 billion in 2020. Such significant uptick was mainly driven by an increase in product sales, favorable one-time events from collaboration and licensing deals, as well as a general positive advancement of the product pipeline and, as a result of that, regulatory approvals continuing at very high levels. Swissmedic, the Swiss agency for therapeutic products, approved 45 new drugs in 2021, which was again higher than the 42 approvals for innovative new drugs in 2020. 

More partnerships, less investment

In the area of collaborations and licensing arrangements, many successful new partnerships were established in 2021, with the most prominent one being the collaboration between Lonza and the US biotech Moderna to large scale produce in Visp one of the urgently needed, mRNA-based Covid vaccines.

In contrast, the level of capital investments was slightly below the previous year. A total of CHF3.3 billion was invested in private and public Swiss biotech companies in 2021. In the previous year, the figure was CHF 3.5 billion.

Five IPOs either involved Swiss companies or used SIX Swiss Exchange as a platform. NLS Therapeutics, VectivBio, and Sophia Genetics all had their public market debut on Nasdaq during the 2021 spring/summer timeframe. The latter two were even able to execute successfully their “green shoe”. Idorsia also benefited from the favorable financial climate and placed a CHF 600 million convertible bond on SIX Swiss Exchange at the end of July 2021.

2021 saw Swiss companies involved in a large number of mergers and acquisition transactions as well as collaboration and license agreements. Several Swiss biotech companies were acquired in 2021 by either (big) pharma or other biotech companies: Mestex was acquired by Grünenthal Pharma; Novartis acquired Cellerys and Inositec was acquired by Vifor Pharma, which itself was later acquired by Australia headquartered CSL Behring.

«Last year, we expressed some caution that the COVID pandemic might take its toll and that the Swiss inclination not to intervene in the free market, and to avoid providing direct government support for venture-based startups and small/mid-sized R&D companies, could backfire and weaken the innovative power of Switzerland. However, record levels of financing in 2020 and 2021 suggest that not only Swiss, but global biotech investors continue to recognize the attractiveness of investment opportunities on offer. commented Michael Altorfer, CEO, Swiss Biotech Association.

Positive outlook

Frederik Schmachtenberg, EY Partner, Global Life Sciences Lead for Financial Accounting Advisory Services, expects most of the trends to continue in 2022. "However, capital is not easily available at the moment and the competition for capital remains high. For biotech companies, this has fostered and will continue to foster a lot more interest in licensing and collaboration activity, representing an alternative way of funding for biotech companies." In addition, out-licensing may allow to better exploit the potential of new drugs even in foreign and for some Swiss biotech companies more remote markets, such as China. Schmachtenberg also expects M&A activity to increase, also because the valuations of some biotech companies have come down in 2021 and 2022. "The stock market correction can be expected to lead to more acquisitions by Big Pharma," he adds.

Schmachtenberg does not foresee an end to the growth of the biotech industry: "While maybe sometimes new avenues need to be found, the positive development can be expected to continue in 2022."

The report can be downloaded from the website of Swiss Biotech.

(Press release / SK)

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