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Global Business Update Norwegian Biotech Faces The Funding Gap By Suzanne Elvidge, contributing editor N orway is known worldwide for its offshore industries, including oil, gas, and fishing, as well as mining and forestry, but what is perhaps less well-known is that the country has an emerging biotechnology industry, including biopharma, medical biotechnology, and biorefining (the process of refining products from biomass such as waste from the fishery or timber industries). "There are quite a large number of biotechnology start-ups in Norway, spinning out from universities and research institutions," says Øystein Rønning, special adviser at the Research Council of Norway. "Most of these are in the biopharma sector, but others include marine biotechnology, such as fish feed and fish genetics." One of the drivers for the industry is the Norwegian government's national strategy for biotechnology, which is targeting the environmentally sound provision of healthcare, food, clean water, and energy for a growing global population. The strategy runs from 2011 to 2020 and has been designed to balance basic and applied research, innovation, and commercialization in biotechnology. It is backed by the Research Council of Norway and Innovation Norway, an organization that promotes and supports innovation in industry. A BIOTECH INDUSTRY WITH POTENTIAL The Norwegian pharmaceutical industry has a long history, growing out of the country's long heritage in the biomedical sciences. However, biotechnology in Norway is still a relative newcomer, only emerging in the 1990s. "There is a lot of potential, with Norway having plenty of resources for biotech- 38 LifeScienceLeader.com nology, such as biomass from industries such as fishing, agriculture, and timber," says Jan Buch Andersen, who sits on the boards of Industrial Biotech Network Norway, Barents Biocentre Lab, and the BIOTEK2021 Program in the Research Council of Norway, and is also business development director at Tromsø-based ArcticZymes. "Norwegian biotechnology has the basic tools, but the industry is not yet established. There has been phenomenal growth of biotechnology in Denmark, which is a smaller country. If it can be achieved in Denmark, it is also achievable in Norway." FACING THE FUNDING GAP One of the key challenges facing biotechnology in Norway is the funding gap. While the country is not alone in this, it is a particular problem for this region because its economics are so tightly focused on high-value and low-risk technologies such as oil and gas. Investors are reluctant to put money into higher-risk projects such as biotech while returns are virtually guaranteed from the offshore industries. "The offshore oil and gas industries are high volume and high profit, and so private capital and investment is more likely to go to these; so it is hard to get money for other industries such as biotechnology and ICT (information and communications technology). This will be the biggest chalJuly 2013 lenge and will need both governmental and private investment," says Rønning. This gap in funding means that few of the Norwegian start-ups are becoming sustainable, according to Rønning, and those that do become targets of mergers and acquisitions or move away from Norway, further depleting the embryonic industry. Ole Jørgen Marvik, sector head of health and life sciences at Innovation Norway, has also seen this investment deficit. He says, "We would like to see more projects and could in fact have invested more in the biotech sector. Our grant volumes for healthcare projects have been flat for the past three years, and I suspect that companies are struggling to raise private capital to match the public funding opportunities." To try to bridge the gap, a number of key sources of financing and support have been put in place recently that could have potential to move the industry forward. These come from both private and public sources. COMPANIES FINDING THE FUNDING While finding private funding and venture capital is hard for Norwegian biotech companies, particularly those that are working on early-stage research, there have been some recent success stories. For example, in 2012, Targovax secured NOK18.5 million (around $3.1 million) in public and private