When the cornerstone of the Danish pharmaceutical industry was laid 100 years ago, it was to a large extent at home in private houses and basement laboratories belonging to the founders of the later pharmaceutical giants. 50 years later, the digital revolution was kicked off by IT entrepreneurs, who several decades and several billion dollars later still maintain the image of a modest start as garage inventors.
And now the life science industry has come full circle: the big pharmaceutical companies have opened the floodgates and are actively supporting an innovation environment of small and medium-sized companies. This is not least due to—or made possible by—technological development that has brought advanced biotech tools within the financial reach of start-up companies.
“Biotechnology has been democratized. Today, you can basically just go down to the supermarket and buy some baker’s yeast, which you can use for genetic engineering in the kitchen at home. It’s not completely legal, but it’s possible. And we see a tendency for innovation to move out of the large companies to a community of small entrepreneurs,” says Jens Nielsen.
He is the CEO of the BioInnovation Institute (BII), a non-profit incubator for small early-stage life science companies. BII is supported by the Novo Nordisk Foundation, and since its establishment in November 2018, 68 scale-ups have been through the accelerator programmes and have been supported with a total of DKK 260 million.
The emergence of an entrepreneurial environment in the life science industry is aided by a technological convergence, which entails a need for collaboration across highly specialized areas.
“It’s a kind of green transition, where we see an emerging convergence—in a positive way—of chemistry, biotechnology, engineering, and also IT for that matter,” Jens Nielsen says.
Despite its name, the BioInnovation Institute is not focused only on biological research and development, but supports all technologies. They just need to have “a strong element of life science”, Jens Nielsen says.
“We are completely agnostic when it comes to technology. We don’t support entrepreneurs with an app that can help people lose weight. They must aim for something that can be clinically validated and scientifically proven. But we are also starting to be able to use IT not only as a platform used in hospitals or to support decision making, but also for actual treatment and diagnostics,” he says.
At BII, in addition to help with growing their business, entrepreneurs can also get access to laboratories if they are working on projects that require wet labs.
“We don’t only have the laboratory, but can also provide all the equipment so that our entrepreneurs can come in and do experiments from day one. Not having to start by spending money on equipment makes a big difference for a tiny company,” Jens Nielsen says.
The mix of laboratory work and digital development has helped to move a larger part of drug development out of the domain of solely large companies.
“It’s not unrealistic to fully replace animal testing with in silico testing (computer simulation, ed.) within a couple of years,” Jens Nielsen says.
He adds, however, that innovation in drug development is facing a very conservative industry and very conservative investors:
“BII has three advisory boards, which consist of investors from different industries: bioindustrials, health tech, and pharmaceuticals or therapeutics. We clearly see that the latter are the most conservative because investors know exactly what the industry wants.”
Jens Nielsen sees more potential in the other two areas:
“Health tech and bioindustrials are more influenced by the Wild West. There’s a great deal of enthusiasm both for developing and investing in new technologies in those two areas, but right now it’s moving in many directions,” he says.
Within health tech, he experiences a great desire for entrepreneurship and not only in the development of new devices, in which Danish companies already have a leading position, but also in pure digital solutions. He also sees more entrepreneurs in drug development, but it does not include the same variation in ideas.
“Over the last 20 years, the pharmaceutical industry has developed a well-oiled innovation machine that takes research from universities, makes a spinout, and matures with venture capital until a certain stage where they are bought by big pharma or it all starts all over again. The system has been almost perfected here in the last four or five years, and the pharmaceutical industry is also by far the largest investor in innovation in Denmark,” Jens Nielsen says.
Pharmaceutical companies still carry out a lot of research and development in-house, especially if, like Novo Nordisk, Lundbeck, and LEO Pharma, they target a more narrow segment—not in the number of patients or the size of the market, but in the breadth of the diseases for which they are developing drugs.
“Pharmaceutical companies working on drugs against many diseases can no longer fill the pipeline with drug candidates based solely on their own leads, so they have begun to source external innovation,” says Jens Nielsen, who has a master’s degree in biochemistry from DTU, where he also wrote his PhD.
He has been a university professor for many years, first at DTU, then at Chalmers University of Technology in Gothenburg; he has published more than 800 scientific papers, educated more than 100 PhD students, and obtained several patents.
“Academic patents can be valuable enough, but university patents are usually a by-product of research. Patents are created in a completely different way in a commercial context, and sometimes it would probably have been better if the university had waited to patent a technology until it was further developed and could make an interesting case targeted at a specific market,” Jens Nielsen says.
The CEO does not find IP protection to be a serious issue for entrepreneurs in the shared laboratories at BII.
“They are in such different segments and so focused on their own journey that they like to collaborate on common things. Tips for making a good presentation for an investor, who to talk to at the authorities, finding a good researcher in the area, etc.,” he says.
Jens Nielsen sees it as an end in itself to pull the young entrepreneurs out of the universities’ incubators, even though for many students they provide an opportunity to create their first start-up. In his experience, it is healthy to separate academia from the innovation environment.
“If a spinout goes to their laboratory, they will stay students. It’s important for us to build our own laboratories and have facilities so that we can pull people out of the universities. When you walk through a new door into a different environment full of other people who are focused on financing, something happens to the culture,” he explains.
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