Pharmaceutical Hub Switzerland Zurich-Zug-Lucerne

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PHARMACEUTICAL HUB SWITZERLAND ZURICH-ZUG-LUCERNE

TABLE OF CONTENTS

Preface 4

Pharmaceutical Industry in Switzerland 6 Swiss Pharma Clusters 8 Growth Driver Pharmaceuticals 10

Zurich-Zug-Lucerne Region 20 Innovation Capacity 30 Inward Investment Factors 36 Outlook 44

Company Profiles 46 Glossary 62

PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE 3 PREFACE

Thomas B. Cueni Secretary General Interpharma

Switzerland – attractive for global pharmaceutical companies If asked about the Swiss economy, people usually first think of banks, chocolate, tourism or watches. These industries are indeed of major importance for the national economy. Yet an industry that is often missing in this list, despite having emerged as one of the leading lights in the Swiss economy over the last century, is the pharmaceutical sector. The aim of this publication on the Zurich-Zug-Lu- cerne cluster is to show the importance of the pharmaceutical industry for the Swiss economy, which is by no means confined only to Basel.

The importance of the pharmaceutical industry for Swit- zerland is reflected in the figures: in total more than 40,000 people work directly for the pharmaceutical companies. If the indirect work created through ancillary industries is included, as many as 170,000 jobs are related to the pharmaceutical industry. Moreover, it accounts for around one-third of all Swiss exports, and the productivity of the industry is four times as high as that of the economy as a whole. Three big clusters – the Lake Geneva area, the Basel region and Zurich-Zug-Lucerne – account for the lion’s share of the gross value added of the Swiss pharmaceutical industry.

4 PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE The Zurich-Zug-Lucerne cluster can compete on various counts: not only do the three cantons offer an attractive environment in regulatory and fiscal terms, but they are also readily accessible thanks to excellent transportation infrastructure and attract highly qualified people. All this has led to a number of international companies establish- ing their headquarters in this region and contributing to dynamic economic growth thanks to their investments in research and development.

Within just a few decades, Zurich-Zug-Lucerne has developed into a leading life sciences cluster for the agrochemical, biotechnology, medical technology and pharmaceutical sectors, all of which are heavily engaged in research. In the Zurich-Zug-Lucerne region, the life sciences industry accounts for one out of every four francs earned in exports today – twice what it was in 2000. This is due amongst the things to the increase in research activity, which has led to the region today already filing around 60 patent applications a year for every million inhabitants.

The Zurich-Zug-Lucerne cluster also offers, albeit to a lightly lesser extent, attractive medium to long-term growth prospects: the research institute BAK Basel Eco- nomics forecasts an annual value-added growth of more than 4 percent for the regional pharmaceutical industry up to 2020. The role of the pharmaceutical sector in the region is thus likely to grow further in the future as well. And perhaps this sector will one day be known as a flag- ship industry of the Swiss economy like the watchmaking industry.

PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE 5 PHARMACEUTICAL INDUSTRY IN SWITZERLAND

4 9.1% times more pro- average annual growth rate ductive than overall of GVA (2000–2012) economy (2012)

24 66 billion CHF billion CHF of nominal GVA (2012) exports (2013) 40 000 employees (2012)

Pharmaceutical industry in Switzerland, including all direct and indirect effects, 2012 – nominal GVA: 43 billion CHF – employees: 172 000 Source: FSO, Polynomics, 2014.

6 PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE The pharmaceutical industry impacts the Swiss economy both directly and indirectly. The direct economic importance of the pharmaceutical industry can be measured for example by the number of employees, the value of exports or the gross value added (GVA). The latter is defined as the increase in the value of goods resulting from the production process and is calculated by deducting the value of intermediate goods and services from the total production value. The GVA of the pharmaceutical industry has grown on average by more than 9 percent annually over the last decade and is thus far higher than the GVA of other industries.

The indirect economic importance of the industry arises from its interdependencies with companies from other industries, from the wage earnings of its employees and from the tax revenue from the companies. All these factors create an additional demand for consumer goods and services, which in turn generate approximately 130,000 jobs in other industries.

PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE 7 SWISS PHARMA CLUSTERS

n Basel region n Ticino n Lake Geneva area n Schaffhausen n Zurich-Zug-Lucerne n Valais

Roughly 75% per cent of the gross value added (GVA) in the Swiss pharmaceutical industry in 2012 has been generated by the Basel Region, Lake Geneva area

and Zurich-Zug-Lucerne. 2014. BAKBASEL, Source:

8 PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE Basel region The pharmaceutical cluster Basel is home to the headquarters of pharmaceutical companies steeped in tradi- tion, such as Boehringer Ingelheim, Novartis and Roche, as well as the biopharmaceutical company Actelion.

Lake Geneva area The cantons of Bern, Fribourg, Geneva and Vaud consti- tute the Lake Geneva cluster and are home to the Swiss branches of GlaxoSmithKline, Merck Serono, Sanofi and UCB.

Zurich-Zug-Lucerne The Zurich-Zug-Lucerne cluster has grown into an attractive centre for international life sciences companies and is home to the following companies: AbbVie, Alcon, Amgen, AstraZeneca, Bayer, Biogen Idec, Bristol-Myers Squibb, Gilead, Janssen, Lundbeck, Merck, MSD (Merck Sharp & Dohme), Novartis, Pfizer, Roche and Vifor Pharma.

Schaffhausen-Ticino-Valais Besides the big pharma clusters, there are three smaller clusters in Switzerland: In Canton Schaffhausen, the pharmaceutical industry plays an important role for the local

Source: BAKBASEL, 2014. BAKBASEL, Source: economy and is based on the activities of Cilag, a subsidiary of the pharmaceutical company Janssen that is part of the Johnson & Johnson group. In the Ticino cluster, the pharmaceutical industry has grown historically and now includes several medium-sized companies. Canton of Val- ais plays a strategic role as supplier of chemical inputs for the pharmaceutical production.

PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE 9 GROWTH DRIVER PHARMACEUTICALS

10 DER PHARMA STANDORT SCHWEIZ / ZÜRICH-ZUG Established in the second half of the 19th century, the pharmaceutical industry quickly assumed an important place in the Swiss economy and remains one of the strong- est growth industries to this day. This is due not only to the historical significance of the pharmaceutical industry in the region of Basel, but also to the attractive business environment of Switzerland as a whole.

For the fourth time in succession, Switzerland was ranked first in the Global Innovation Index of the World Intellectual Property Organization (WIPO) in 2014. Switzerland’s capacity for innovation is an essential precondition for a prosperous pharmaceutical industry. Other factors such as tax, accessibility and a large pool of highly trained employees are attracting leading companies in the fields of pharmaceuticals, biotechnology and other related industries to Switzerland.

Thanks to its innovation capacity, the pharmaceutical industry typically achieves an above-average level of productivity, and the productivity growth rate also usually outstrips that of industry as a whole.

PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE 11 GROWTH DRIVER PHARMACEUTICALS

Major importance of Swiss pharmaceutical industry In an international comparison of average value-added growth rate, the Swiss pharmaceutical industry came out top: between 2000 and 2012, the Swiss pharmaceutical industry showed an average annual growth of just over 9 percent, ahead of Germany and the Netherlands and more than twice as high as that of the UK and the USA.

The value added of the Swiss pharmaceutical industry is also impressive as a proportion of the overall economy, with the industry generating more than almost four percent of Switzerland’s Gross Domestic Product (GDP). Even in second-placed Belgium, this proportion is below two percent. The contribution of the pharmaceutical industry to GDP has thus steadily grown over recent years. As a consequence, the importance of the industry for the Swiss economy as a whole has also grown.

12 PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE GROWTH RATE OF VALUE ADDED IN THE PHARMA INDUSTRY Annual average growth rate per year (in %), 2000-2012

Switzerland 9.1 Netherlands 6.1 Germany 6.0 Denmark 4.3 Sweden 4.1 UK 3.6 USA 3.2 France 1.8 Italy 1.4 0% 2% 4% 6% 8% 10% Source: BAKBASEL, 2014.*

VALUE ADDED IN PHARMA RELATIVE TO TOTAL ECONOMY Share of GDP (in %), 2012

Switzerland 3.9 Belgium 1.7 Germany 1.4 Denmark 1.1 Italy 0.9 USA 0.8 Japan 0.8 UK 0.7 Netherlands 0.6 France 0.5 0% 1% 2% 3% 4% Source: BAKBASEL, 2014.*

* International data according to BAKBASEL database 2013, Swiss data according to ESA 2010.

PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE 13 GROWTH DRIVER PHARMACEUTICALS

VALUE ADDED IN THE SWISS PHARMA INDUSTRY Nominal GVA (in m CHF) Real GVA (index, 1997 = 100)

20 000 400

15 000 300

10 000 200

5 000 100

0 0 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 Source: FSO, BAKBASEL, 2014.

VALUE ADDED IN PHARMA RELATIVE TO TOTAL ECONOMY Share of nominal GVA in GDP (in %)

4.0% 3.9

3.0%

2.0%

1.0%

0.0% 97 99 01 03 05 07 09 11 12 Source: FSO, BAKBASEL, 2014.

14 PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE EMPLOYEES IN THE SWISS PHARMA INDUSTRY Number of persons

40 000

30 000

20 000

10 000

0 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 Source: FSO, BAKBASEL, 2014.

Strong dynamism of the Swiss pharmaceutical industry The nominal gross value added of the Swiss pharmaceutical industry has almost tripled in the past 15 years and stood at around 24 billion Swiss francs in 2012. When adjusted for inflation, the gross value added has actually quadrupled over the same period. And the number of employees has also steadily increased in the last two decades, reaching more than 40,000 for the first time in 2012.

While the number of employees working in Switzerland’s pharmaceutical industry accounts for about one percent of all employees in Switzerland, the corresponding value-added constitutes almost four percent of the economy as a whole. This ratio reflects above-average productivity of the pharmaceutical industry relative to the overall economy.

PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE 15 GROWTH DRIVER PHARMACEUTICALS

Relevance of pharmaceutical exports The value of pharmaceutical exports has tripled over the past decade and currently stands at 66 billion Swiss francs. At the same time, pharmaceutical exports also accounted for an increasing proportion of Swiss exports overall: in 2013, around one out of three Swiss francs earned through exports was generated by the pharmaceutical industry.

Since 2005, exports of pharmaceutical products have increasingly shifted towards the BRIC states – Brazil, Rus- sia, India and China – and to the USA, while the proportion exported to Europe has fallen. The recent crisis in the Eurozone and the strong Swiss franc are likely to be the main reasons for this decrease. Nonetheless, Europe con- tinues to be the most important export market for Swiss pharmaceuticals.

16 PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE SWISS PHARMA EXPORTS Share of total exports (in %)

2000 2013

18% 34%

82% 66%

Pharmaceutical exports Pharmaceutical exports 22 bn CHF 66 bn CHF Source: FCA, BAKBASEL, 2014. Pharmaceutical exports Rest

SWISS PHARMA EXPORTS ACCORDING TO DESTINATIONS Share of destinations (in %)

2005

67% 11% 5% 3% 14%

2013

57% 15% 4% 7% 17% Source: FCA, BAKBASEL, 2014. Europe USA Japan BRIC Rest

PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE 17 GROWTH DRIVER PHARMACEUTICALS

Competitive thanks to high productivity The pharmaceutical sector exhibits the highest productivity of all Swiss industries: on average, a worker generates goods and services worth 626,000 Swiss francs per year, which is about four times as high as the productivity in the overall economy. This high productivity is due to the research intensity and the highly specialized production processes of the pharmaceutical industry.

The productivity of Switzerland’s life sciences industry also holds up exceptionally well when compared with other countries. After correcting for purchasing power, it amounts to 286,000 US dollars, which puts Switzerland in first place. Only the three US clusters Boston, New York and San Francisco Bay Area and also Øresund can somewhat keep pace in terms of their labour productivity.

18 PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE LABOUR PRODUCTIVITY OF SWISS INDUSTRIES Nominal GVA per employee (FTE, in 1 000 CHF), 2012

Pharma 626 Energy 347 Financial sector 286 Chemicals 200 Information, communication 188 Investment goods 161 Food, tobacco 157 Total economy 156 Transport 131 0 100 200 300 400 500 600 700 Source: FSO, BAKBASEL, 2014.

LABOUR PRODUCTIVITY OF LIFE SCIENCES INDUSTRY Nominal GVA per employee (in 1 000 USD PPP), 2012

Switzerland Boston Øresund SF Bay Area New York Paris Milan London Munich 0 50 100 150 200 250 300 Source: FSO, BAKBASEL, 2014.* Total economy Life sciences

* International data according to BAKBASEL database 2013, Swiss data according to ESA 2010.

PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE 19 ZURICH-ZUG-LUCERNE REGION ZURICH-ZUG-LUCERNE REGION

The manufacture of medical devices is lumped together with the life sciences industry. This includes the agrochemical, biotechnology, medical technology and pharmaceutical sectors, all of which are heavily engaged in research.

The Zurich-Zug-Lucerne region has established itself as a national leader in medical technology. The high quality of life (opportunities for first-class education, good accessibility, a central location etc.), the availability of qualified personnel and synergies with the medical technology industry already in place have increasingly attracted major pharmaceutical companies as well.

The companies settling in the region in recent years have led to a sharp increase in the number of employees in the life sciences cluster of the Zurich-Zug-Lucerne region.

PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE 21 ZURICH-ZUG-LUCERNE REGION

COMPOSITION OF THE LIFE SCIENCES INDUSTRY Share in total of employees (in %), 2012 2% Switzerland 55% 7% 36%

Zurich 7% 10% 83%

Zug 4%5% 91%

Lucerne 20% 4% 12% 64%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Source: FSO, BAKBASEL, 2014.

Pharmaceutical industry Agrochemical industry R&D in biotechnology Medical technology

22 PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE Zurich-Zug-Lucerne as important life sciences cluster While the pharmaceutical industry is the biggest life sciences employer on the national average, it is medical technology that accounts for a particularly high proportion of life sciences employees in the Zurich-Zug-Lucerne cluster. The medtech industry accounts for more than 80 percent of employees in the life sciences sector in Can- tons Zurich and Zug, and 64 percent in Canton Lucerne.

However, the figures available do not tell the full story. There are two reasons for this: firstly a substantial proportion of employees in the pharmaceutical industry – especially at headquarters – are registered in the official sta- tistics not under “manufacture of pharmaceutical products” (NOGA Dept. 21), but under “management and administration of companies” (NOGA Dept. 70). Since the latter are not counted as part of the pharmaceutical sector, the share of employees in the pharmaceutical industry shown in the accompanying chart is too small.

Secondly, productivity – the value added divided by the number of employees – in the pharmaceutical industry is somewhat higher than in the medtech sector. In other words, the pharmaceutical industry generates more value added than medical technology with the same number of employees. But the distribution according to employees does not do justice to this situation, and the share contrib- uted by the pharmaceutical industry is likely to be higher in reality.

PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE 23 ZURICH-ZUG-LUCERNE REGION

R&D EXPENDITURE AT REGIONAL UNIVERSITIES Share in total of Switzerland (in %), 2011

34% 30% 23% 20%

12% 10% 10% 8%

0% Zurich Geneva Vaud Basel-Stadt Bern Source: FSO, BAKBASEL, 2014.

Zurich: university research centre Since the pharmaceutical industry is a research-intensive sector, an important pharmaceutical hub is defined not only by the establishment of important companies, but also by research activity.

As a university centre, Canton Zurich plays a crucial role here with its Federal Institute of Technology (ETH) and the University of Zurich.

This is shown by the high research spending at the universities of Canton Zurich, which account for around 34 percent of all Swiss expenditure on research and development (R&D) at universities.

24 PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE Zug: site under development Canton Zug has been the site of many development projects by pharmaceutical companies, especially Novartis and Roche, in the past few years. The demand for qualified personnel here has been steadily growing: The people especially in demand are researchers, engineers, IT experts and also sales and marketing specialists.

In 2013, for example, Novartis opened a new site in Rot- kreuz for the divisions of Novartis Pharma Schweiz, Novar- tis Consumer Health, Sandoz Pharmaceuticals and Alcon Switzerland. Altogether, the four divisions employ around 480 people – more than 300 of them in Rotkreuz.

But aside from the Swiss pharmaceutical companies, various international companies, such as Amgen and Biogen Idec, also operate their international business from Can- ton Zug.

PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE 25 ZURICH-ZUG-LUCERNE REGION

Rotkreuz: centre of medical technology Zug is developing as a business hub not only in the pharmaceutical sector, but also in life sciences generally. For example, Roche has established its diagnostics division in Rotkreuz. Diagnostic equipment is used, amongst other things, for blood tests in laboratories and hospitals. Scien- tists, engineers, IT specialists and other highly qualified people are in demand for developing the software used in the various systems and devices.

With more than 2,200 employees at its headquarters in Rotkreuz, Roche Diagnostics International is now the largest private-sector employer in Canton Zug. The ever more detail know-how in molecular biology allows increasingly precise systems and equipment to be developed. For years, therefore, there has been an above-average global demand for the products and services of the diagnostics industry.

26 PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE Lucerne: pharmaceutical industry as important regional employer The geographical position of Lucerne makes it a favoured pharmaceutical site: centrally located, the Lucerne region offers access to the airports of Zurich and Basel-Mulhouse within an hour by road or rail and a high quality of life. The central location and outstanding infrastructure facilitate access to highly qualified people and scientific exchange with leading universities and research institutions.

In 2011, as part of the global merger of its parent company Merck & Co., Inc. with Schering-Plough in the USA, the healthcare company Merck Sharp & Dohme (MSD) decided not only to establish its Swiss headquarters in the Lucerne region, but also to develop the site further and make it an international site with a global central function. For Scher- ing Plough Inc., Lucerne was always an important site in Switzerland with an international focus. Today, MSD employs more than 600 highly qualified people at 4 sites and is thus one of the most important regional employers.

PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE 27 ZURICH-ZUG-LUCERNE REGION

Growing regional importance of exports Life sciences exports as a percentage of total exports in the Zurich-Zug-Lucerne region have almost doubled in the past decade from 15 percent to 28 percent. In terms of value, regional life sciences industry exports increased from 3.4 to 7.5 billion Swiss francs in the years from 2000 to 2013.

Most life sciences exports still come from the pharmaceutical industry. In 2013, regional pharmaceutical companies exported products worth almost 5 billion Swiss francs. This corresponds to 18 percent of the total exports of the region.

The proportion of life sciences exports to the USA was almost three times as high in 2013 as it was in 2005. The above-average level of life sciences exports by Swiss standards is probably due to the establishment of Ameri- can pharmaceutical companies in the region of Zurich- Zug-Lucerne.

28 PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE LIFE SCIENCES EXPORTS OF ZURICH-ZUG-LUCERNE Share of total exports (in %)

2000 2013

9% 5% 1% 18%

9% 1%

85% 72%

Life sciences exports Life sciences exports 3.4 bn CHF 7.5 bn CHF Source: FCA, BAKBASEL, 2014. Pharmaceuticals Medical devices Agrochemicals Rest

LIFE SCIENCES EXPORTS OF ZURICH-ZUG-LUCERNE Share of destinations (in %)

2005 1% 73% 8% 16% 2% 2013

49% 22% 3% 5% 21% Source: FCA, BAKBASEL, 2014. Europe USA Japan BRIC Rest

PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE 29 INNOVATION CAPACITY

30 DER PHARMA STANDORT SCHWEIZ / ZÜRICH-ZUG Innovation – the commercial implementation of new ideas and inventions – is one of the most important growth factors of a modern economy. In knowledge-intensive sectors, competitiveness is measured not by price, but rather by the capacity for innovation.

An example of the innovation skills of the Zurich-Zug-Lu- cerne region is the biotechnology company Glycart. Founded in 2000 as a spin-off from the ETH Zurich, a mul- tinational team is engaged in research and development of products at its research centre in Schlieren. Glycart was acquired by Roche in 2005, since when it has made a sustained contribution to the provision of new cancer treatments.

The following sections show the framework conditions that influence the capacity of the Zurich-Zug-Lucerne region for innovation. The indicators analysed include research and development expenditure, patent density and the research quality of regional universities.

PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE 31 INNOVATION CAPACITY

RESEARCH AND DEVELOPMENT EXPENDITURE Share of regional GDP (in %), 2011

Boston 3.3 1.2 1.3 Switzerland 3.4 1.3 0.1 Munich 3.7 0.5 0.5 SF Bay Area 3.6 0.3 0.4 Zurich-Zug-Lucerne 1.8 1.7 0.1 Oxford 1.9 0.7 0.5 Paris 1.8 0.6 0.5 New York 1.1 0.7 0.1 Milan 0.7 0.2 0.2 0% 1% 2% 3% 4% 5% 6% Source: FSO, BAKBASEL, 2014. Private sector expenditure University expenditure Rest

High investments in R&D Overall, as a proportion of the regional Gross Domestic Product (GDP) of Zurich-Zug-Lucerne, R&D expenditure stands at about 3.5 percent. The region as a whole shows a very balanced funding of R&D expenditure, around half coming from the private sector and the other half from the public sector.

However, the cantons differ in their financing structures. While research spending in the cantons of Lucerne and Zug comes almost entirely from the private sector, Zurich benefits from its major universities (ETH and University of Zurich) and public funding.

32 PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE REGISTERED PATENTS Number per million inhabitants, 2011

Boston 91 63 SF Bay Area 68 64 Switzerland 33 40 Zurich-Zug-Lucerne 24 37 Munich 21 31 Paris 20 12 New York 12 10 Milan 13 5 London 9 5 0 20 40 60 80 100 120 140 160 Source: OECD PatReg, BAKBASEL, 2014. Pharmaceutical area Rest of life sciences

Catch-up potential in patent applications In the Zurich-Zug-Lucerne region, almost 25 patent applications per million inhabitants are filed every year in the field of pharmaceuticals. This puts the region slightly below the national average for Switzerland and well below the US American clusters of Boston and the San Francisco Bay Area, where more than 60 patent applications per million inhabitants are filed every year.

If the other life sciences sectors are added, the Zurich- Zug-Lucerne region arrives at around 60 patents per million inhabitants per year. This increase reflects the major importance of medical technology R&D in this region.

PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE 33 INNOVATION CAPACITY

High quality of regional universities By international standards, the universities of the Zurich- Zug-Lucerne region perform well and achieve an outstanding rating especially on the broad Shanghai Index. In the comparison of life sciences sites, for example, the region is ranked second behind the San Francisco Bay Area, well ahead of the Swiss average. And in the ranking of the world’s 100 best universities in the field of life sciences and agricultural sciences, the Zurich-Zug-Lucerne cluster can also hold its own with the best centres.

Shanghai Index The Academic Ranking of World Universities (ARWU) evaluates 1,000 universities around the world every year based on six indicators in four areas (quality of education and teaching staff, research output and size of institutions).

34 PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE SHANGHAI INDEX Average number of points per university, 2012

SF Bay Area 50 Zurich-Zug-Lucerne 34 Boston 32 Munich 30 London 25 Switzerland 24 Øresund 24 New York 23 Paris 20 0 10 20 30 40 50 60 Source: ARWU, BAKBASEL, 2014.

SPECIALIZED SHANGHAI INDEX IN LIFE AND AGRICULTURE SCIENCES Average number of points per university, 2012

SF Bay Area 72 Boston 69 New York 55 London 53 Switzerland 52 Zurich-Zug-Lucerne 52 Munich 47 Øresund 47 Paris 43 0 20 40 60 80 Source: ARWU, BAKBASEL, 2014.

PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE 35 INWARD INVESTMENT FACTORS

36 PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE In the course of globalization, companies are increasingly faced with decisions on where best to locate. While costs cannot be underestimated, non-quantifiable factors are also important elements of such decisions.

It is therefore essential for regions to constantly monitor and compare their own inward investment factors with those of other business locations. While hard factors such as taxation and regulations play an important role for companies, a qualified workforce is more interested in soft factors, such as education and training opportunities and the availability of research institutions.

The innovation-intensive pharmaceutical industry needs a wide selection of specialists, such as researchers, engineers, IT professionals and marketing experts. These people are increasingly mobile today and make decisions on where they want to work according to their life circum- stances. Soft factors therefore play an increasingly important role in the attractiveness of business locations.

PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE 37 INWARD INVESTMENT FACTORS

A highly attractive location Inward investment factors substantially influence the growth potential of a region. The Attractiveness Index was developed by BAKBASEL to quantify this growth potential and make it internationally comparable. It includes four of the most important inward investment factors – taxation, accessibility, regulation and innovation – and indexes their scores for each region.

Canton Zug comes out on top in the international comparison of attractiveness with a score of almost 120 points. This is due in particular to the region’s attractive tax system, good accessibility and strong innovation skills. Zurich and Lucerne follow in second and fourth place, respec- tively, and are likewise well ahead of international clusters such as Milan, Paris and Oxford.

38 PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE COMPOSITION OF THE BAKBASEL ATTRACTIVENESS INDEX

30% 30%

Taxation Accessibility 20% 20% Regulation Innovation Source: BAKBASEL, 2014. BAKBASEL, Source:

BAKBASEL ATTRACTIVENESS INDEX Index (100 = average of Western Europe), 2012

Zug 119.7 Zurich 118.7 Cambridge 116.6 Lucerne 113.8 London 112.0 Oxford 110.5 Munich 108.8 Paris 106.8 Milan 100.2 100 105 110 115 120 Source: BAKBASEL, 2014. BAKBASEL, Source:

PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE 39 INWARD INVESTMENT FACTORS

BAKBASEL REGULATION INDEX

3.0 France

2.0

Denmark Germany 1.0 Switzerland Italy England USA

REGULATION OF LABOUR MARKET 0.0 0.50 0.60 0.70 0.80 0.90 1.00 1.10 1.20 1.30 Source: Fraser Institute, OECD, BAKBASEL, 2014. REGULATION OF PRODUCT MARKET

Low levels of regulation The intensity of market regulation has a significant impact on the attractiveness and the growth of a business location.

An international comparison of the way labour and product markets are regulated shows that Switzerland has rel- atively low levels of regulation. Only the Anglo-Saxon countries have even lower levels of regulation, whereas France, Germany and Italy are subject to much stricter regulation in both markets.

Measure of regulation (Regulation Index) Indexed valuation based on indicators elaborated by the OECD and the Fraser Institute (0 = low level of regulation; 6 = high level of regulation).

40 PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE BAKBASEL TAXATION INDEX

New York 0.40

SF Bay Area Paris Boston 0.30

Munich London 0.20 Zurich Milan Øresund Zug Lucerne

TAXATION OF COMPANIES OF TAXATION 0.10 0.15 0.20 0.25 0.30 0.35 0.40 0.45 0.50 0.55 0.60 Source: ZEW, BAKBASEL, 2014. TAXATION OF HIGHLY QUALIFIED MANPOWER

Attractive taxation system An international comparison shows that the Swiss regions enjoy a substantial advantage with their taxation system. None of the other life sciences clusters can offer a taxation system as attractive as that of the Swiss regions. Both the tax burden on highly qualified employees and the taxation of companies in the international life sciences clusters are around twice as high as they are in the Zurich- Zug-Lucerne region.

Measure of taxation (Taxation Index) Effective average tax rate that considers all relevant tax rates and rules for a profitable company investment or a highly qualified worker.

PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE 41 INWARD INVESTMENT FACTORS

BAKBASEL ACCESSIBILITY INDEX Index (100 = average of Western Europe), 2012

London 119.6 Paris 118.7 Zurich 113.4 Munich 111.0 Zug 110.7 New York 110.3 Lucerne 108.6 Milan 107.6 Boston 106.6 100 105 110 115 120 125 Source: IVT, BAKBASEL, 2014.

Excellent accessibility Accessibility is an important inward investment factor, because with increasing globalization the geographic location and transportation system of a region influence the degree to which it can participate in economic growth.

In an international comparison with other life sciences clusters, Canton Zurich comes out best in Switzerland in terms of accessibility, while Cantons Lucerne and Zug benefit above all from their proximity to Zurich and its air- port.

Measure of accessibility (Accessibility Index) Indexed value that quantifies the accessibility of a region. It takes into account the time spent travelling, the frequency of connections and the attractiveness of the destinations (European regions weighted by their GDP).

42 PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE AVAILABILITY OF INTERNATIONAL SCHOOLS Number of offered programs per million inhabitants, 2013

Zurich-Zug-Lucerne 10 Switzerland 9 New York 5 London 5 SF Bay Area 3 Boston 3 Munich 3 Milan 2 Paris 1 0 2 4 6 8 10 12 Source: IBO, BAKBASEL, 2014.

Large number of international schools The availability of international schools is a soft factor and thus relevant for recruiting highly qualified people. Zurich and also (in view of the size of their populations) Lucerne and Zug have a large number of international school pro- grammes. By international standards, therefore, the Zurich-Zug-Lucerne region enjoys top spot ahead of Lon- don, New York and Paris.

Availability of international schools Number of courses offered by the International Baccalaureate Organization.

PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE 43 OUTLOOK

44 PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE LONG-TERM GROWTH FORECASTS Estimated annual growth of GVA, 2015-2020

4.2% Switzerland 1.8%

Zurich 4.4% 1.8%

Zug 4.3% 2.3%

4.0% Lucerne 1.9%

0% 1% 2% 3% 4% 5% Source: BAKBASEL, 2014. BAKBASEL, Source: Pharma Total economy

Forecasts for the pharmaceutical industry by BAK Basel Economics predict a value-added growth of at least 4 percent in the Zurich-Zug-Lucerne region from 2015 to 2020. This growth is likely to be twice as high as that of the overall economy. It is thus probable that the Zurich-Zug-Lu- cerne region will also become increasingly important in the future as a life sciences cluster and will attract other companies.

PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE 45 COMPANY PROFILES

AbbVie AbbVie is a global, research-based biopharmaceutical company dedicated to the treatment of serious, mostly chronic diseases. Research and innovation are the foundations on which entrepreneurial activity is built. The therapeutic areas include immunology, virology, nephrology, neurology, anaesthesiology and oncology. AbbVie also has a strong pipeline. In the area of hepatitis C, AbbVie concluded what until now is the largest Phase III trial programme at the beginning of 2014 for fully oral, interferon-free therapy for the treatment of hepatitis C genotype 1 and received approval for the product from Swissmedic at the end of 2014. The global company with operations in more than 170 countries employs around 25,000 people. Around 130 highly motivated employees work at the headquarters of its Swiss branch in Baar (ZG). www.abbvie.ch

46 PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE Alcon Alcon was founded in Fort Worth, Texas, in 1945 and has grown from a small optician’s business to the world’s leading eye-care company and the second-largest division of Novartis. With its three businesses of Surgical, Pharma- ceutical and Vision Care, Alcon offers the most comprehen- sive range of eye-care products. Alcon employs more than 25,000 people in 75 countries worldwide and sells its products in 180 markets. At its four sites in Switzerland – Fribourg (FR), Geneva (GE), Rotkreuz (ZG) and Schaff- hausen (SH) – Alcon employs around 650 people in marketing, sales and customer service as well as research and production. www.alcon.ch

PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE 47 COMPANY PROFILES

Amgen Amgen Inc., which is based in Thousand Oaks, California, was founded in 1980 as Applied Molecular Genetics Inc. and is one of the pioneers of industrial biotechnology. In 1989, Amgen established its European headquarters in Switzerland – and in 2002 the Swiss subsidiary followed. Amgen is committed to researching the latest biomedical prospects for the benefit of patients with serious diseases. The focus here is on the development, manufacture and marketing of innovative therapeutics for human medicine. Using modern methods of gene technology, Amgen is working intensively on deciphering the complexity of diseases and understanding the fundamental principles of human biology. www.amgen.ch

48 PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE AstraZeneca AstraZeneca is a global biopharmaceutical company spe- cializing in the research, development, manufacture and marketing of prescription medicines. The company employs around 120 highly qualified people in Switzerland in Medical, Market Access, Sales, Marketing, Finance, Business Partnering and Human Resources. The most important therapeutic areas are cardiovascular diseases and metabolic disorders, cancer and also respiratory, inflammatory and autoimmune diseases. AstraZeneca is also active in the fields of gastroenterology, infectious diseases and neurosciences, where the company invests in selective activities and cooperations. www.astrazeneca.com/schweiz

PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE 49 COMPANY PROFILES

Bayer Bayer was founded in 1862 and is a global life sciences company today that combines expertise in both healthcare and food security. Our focus on innovation is the key to the leading position we hold in our fields of expertise and the valuable contributions we make to society. Bayer employs more than 1,000 people in Switzerland today at its headquarters in Zurich and at other sites. We help patients by preventing, alleviating and curing diseases and improving methods of diagnosis. And we help to ensure an adequate supply of high-quality food and ani- mal feed and renewable plant-based raw materials. www.bayer.ch

50 PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE Biogen Idec The biotechnology company Biogen was founded in Geneva in 1978. In the 1980s, the company moved its headquarters to Boston, where the company engaged in research on the development of new medicines using recombinant DNA technology. The Nobel Prize has been conferred on two founding members of the company in the shape of Walter Gilbert (Chemistry) and Phillip Sharp (Med- icine). The headquarters of Biogen Idec International has been located in Zug since 2004. This is also the site of the Swiss subsidiary. In Switzerland, the company currently employs over 375 people. As one of today’s leading bio- tech companies, Biogen Idec researches and develops innovative treatments for patients with autoimmune and neurodegenerative diseases as well as for haemophilia. www.biogenidec.ch

PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE 51 COMPANY PROFILES

Bristol-Myers Squibb Bristol-Myers Squibb is a world leading biopharmaceutical company that is focused on helping patients overcome serious diseases through the research, development and provision of innovative medicines. The company aspires to be a leader in its fields of research. In the fight against cancer, cardiovascular diseases, hepatitis B, HIV/AIDS and rheumatoid arthritis it thus strives to provide people all over the world with life-improving treatments through its medicines. Bristol-Myers Squibb has already had a pres- ence in the Swiss pharmaceutical market for more than 50 years and in view of the importance of the site nationwide, the Swiss subsidiary is closely involved in international research. The company employs a total of 81 people in the Zug region. www1.bms.ch

52 PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE Gilead / Gilead Sciences Switzerland Sàrl Gilead is a leading pharmaceutical company with headquarters in California, USA, which develops innovative medicines for life-threatening diseases. A major concern of Gilead is to provide patients with medicines that are highly effective and easy to use in day-to-day life, e.g. through the combination of several active ingredients in one tablet. The range of treatments includes e.g. products for the treatment of HIV/AIDS, hepatitis B and C and cancer. At the same time, patients in developing countries are given access to innovative medicines at affordable prices through Gilead’s ACCESS programme. The company, with core competency in research and development and a cor- respondingly high-quality pipeline, has more than 7,000 employees worldwide. The Swiss branch based in Zug currently employs around 30 people. www.gilead.com

Janssen Janssen is a subsidiary of Johnson & Johnson and is one of the world’s leading research-based pharmaceutical companies with 40,000 employees worldwide and branches in around 50 countries. The Swiss branch of Janssen, which is based in Zug, employs around 100 people. Janssen is engaged in research primarily in the therapeutic fields of oncology, immunology, infectious diseases, neurosciences and also cardiovascular and metabolic disorders. Janssen has developed more than 80 medicines to date, including some ground-breaking substances, which help countless patients throughout the world. Five medicines have been included in the WHO list of essential medicines. www.janssen-cilag.ch

54 PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE Lundbeck Lundbeck (Schweiz) AG is the subsidiary of the Danish pharmaceutical company of the same name and was established in 1948. The pharmaceutical company H. Lundbeck A/S is majority owned by the Lundbeck Founda- tion, which was established in 1954. The Lundbeck Foun- dation grants funds amounting to 60 to 80 million francs a year for independent research. The company H. Lundbeck A/S invests in the research of new medicines for the treatment of diseases of the central nervous system, such as depression, anxiety disorders, schizophrenia, bipolar dis- order, alcohol dependence, Alzheimer’s dementia and Par- kinson’s disease. Lundbeck is actively committed to improving knowledge about diseases and their impact on the quality of life of patients and on those around them. The company employs 46 people in Switzerland. www.lundbeck.com/ch

PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE 55 COMPANY PROFILES

Merck Merck KGaA, with its headquarters in Darmstadt, Ger- many, is a global pharmaceutical and chemical company with more than 40,000 employees in 67 countries. Merck Serono is the largest division of Merck and is committed to the improvement of health and the development of new treatments. It is focused on highly specialized therapeutic areas, such as cancer, multiple sclerosis and infertility. Merck helps patients cope with life and strives to improve and prolong life for patients. The company employs more than 1,400 people in Switzerland at sites in Aubonne, Coin- sins, Corsier-sur-Vevey, Eysins, Zug, Altdorf and Schaff- hausen. While active ingredients for medicines are pro- duced in Altdorf, among other things, the site in Zug serves as the sales organization of Merck Serono for Switzerland. www.merck.ch

56 PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE MSD (Merck Sharp & Dohme) MSD is a world leading company that is focused on health and well-being. MSD is the protected name outside of Canada and the USA of Merck & Co., Inc., with headquarters in Kenil- worth, New Jersey, USA. The headquarters of MSD in Switzer- land are in Lucerne. At a total of four sites, the company employs more than 600 highly qualified people from all over the world in research and development, production, global central functions as well as marketing for human and veteri- nary medicine. Not only is the Swiss market serviced from Lucerne, but also more than 70 branches in the European region, the Middle East, Africa, Brazil, India and China are sup- ported from there. MSD in Switzerland is committed to the improvement of healthcare skills and supports medical research projects. www.msd.ch

PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE 57 COMPANY PROFILES

Novartis Pharma Schweiz Novartis Pharma Schweiz is a subsidiary of the international Novartis Group. At its site in Rotkreuz, the company shares a modern office building with the three other Novartis divisions OTC, Alcon and Sandoz. Novartis Pharma Schweiz is the largest of these four divisions – and, in terms of sales, is also the largest pharmaceutical company on the Swiss market. The 230 or so employees of this business unit market the more than 100 prescription medicines of the Novartis Group in Switzerland. The most important therapeutic areas include, for example, neurological disorders, eye care, transplanta- tion medicine, general medicine, oncology and influenza vaccines. www.novartispharma.ch

58 PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE Pfizer “Working together for a healthier world”: Pfizer follows this guiding principle worldwide. The biopharmaceutical company stands for the successful research and development of innovative medicines – and has done for more than 160 years. Pfizer thus makes an important contribution to the prevention and treatment not only of widespread disorders, but also of rare diseases. In Switzerland, Pfizer has been based in Zurich since 1959. With around 200 employees and a product range comprising more than 120 medicines, Pfizer AG is one of the most important pharmaceutical companies in the country. It is the objective of Pfizer AG to make an important contribution to the healthcare of the local population. www.pfizer.ch

PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE 59 COMPANY PROFILES

Roche site in Rotkreuz Roche Diagnostics International AG in Rotkreuz, Canton Zug, is one of the world’s leading suppliers of diagnostic system solutions for hospitals, laboratories and medical practices. The company is part of the Diagnostics Division of the Roche Group with headquarters in Basel. Roche Diagnostics Inter- national AG has been based in Canton Zug since 1969, where it employs more than 2,200 people from over 50 nations today. All the central functions of the diagnostics business are housed together at the Rotkreuz site. Rotkreuz is home to the headquarters of Professional Diagnostics, which sup- plies diagnostic analytical systems and workflow solutions for laboratories, hospitals and doctors. The site is also a global centre of the business unit Molecular Diagnostics, which develops molecular diagnostic reagents and test systems. The headquarters of the EMEA / LATAM region is also located in Rotkreuz, as is the Swiss sales organization of the Diagnostics Division. www.roche.ch/rotkreuz

60 PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE Vifor Pharma Vifor Pharma, the pharmaceutical division of the Galenica Group, is one of the world’s leading companies in the research, development, production and marketing of pharmaceutical products for the treatment of iron deficiency disorders. The company also offers a diversified portfolio of prescription medicines and over-the-counter (OTC) products. The international headquarters is located in Glattbrugg (Zurich). Vifor Pharma also has four sites in Switzerland for production and research & development. The company employs more than 1,000 people in Glattbrugg, St. Gallen, Villars-sur-Glâne (Fribourg), Ettin- gen (Baselland) and Meyrin (Geneva). www.viforpharma.ch www.viforpharma.com

PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE 61 GLOSSARY

ARWU Academic Ranking of World Universities ESA European System of Accounts FCA Federal Customs Administration, Switzerland FSO Federal Statistical Office, Switzerland FTE Full-time equivalent GDP Gross Domestic Product GVA Gross value added IBO International Baccalaureate Organization IVT Institute for Transport Planning and Systems NOGA Nomenclature générale des activités économiques OECD Organization for Economic Co-operation and Development PPP Purchasing power parity ZEW Centre for European Economic Research

Note: The source “BAKBASEL, 2014” refers to data from September 2014.

62 PHARMACEUTICAL HUB SWITZERLAND / ZURICH-ZUG-LUCERNE Publishing information Publisher: Interpharma Association of research-based pharmaceutical companies in Switzerland Petersgraben 35 P.O. Box 4009 Basel Phone: +41 61 264 34 00 E-mail: [email protected]

The content of this brochure can also be found on the website of Interpharma at www.interpharma.ch. Readers are free to download and use the charts in their latest version for their own purposes provided the sources are properly quoted.

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