INDUSTRY OVERVIEW The Pharmaceutical Industry in Germany
ISSUE 2017/2018 THE PHARMACEUTICAL INDUSTRY IN GERMANY An Ideal Location for Research, Production and Sales
Germany offers the perfect location for the de- global growth markets, with the pharmaceutical velopment, production and sale of world-class industry in Germany already a significant global pharmaceuticals. The country benefits from industry player. Germany is home to Europe’s larg- cutting-edge research, a long production tradition est – and the world’s fourth largest – pharma- and immediate market access to pharmaceuticals. ceuticals market. A highly attractive R&D location, Global demand for pharmaceuticals is growing the country ranks first and second in clinical trial continuously as the result of a growing world terms in Europe and the world respectively. Hav- population and demographic change. Together ing established itself as the “world’s pharmacy” as with significant research advances, especially in part of a tradition of medical innovation, Germany the field of medical biotechnology, these develop- is also the world’s leading medical biopharmaceu- ments are providing a spur to the pharmaceutical ticals producer – second only to the USA. industry worldwide. The healthcare industry has evolved to become one of the most important
Sweden Finland
Russia
Germany’s pharma- h by plane ceutical industry – Norway 3 at the market Estonia crossroads of
Europe Latvia
1.5 h Lithuania Denmark RU Belarus Ireland
UK Netherlands Poland 15 h 30 h by train Belgium GERMANY Ukraine Luxembourg Czechia Slovak Moldova Republic France Austria Hungary Romania Switzerland 12 h Slovenia Croatia Serbia Bosnia- Herzegovina Bulgaria Kosovo Montenegro h by truck Italy 24 Macedonia Portugal Albania Turkey Greece Spain
Malta
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The Industry in Numbers
In 2014, healthcare spending in Germany totaled In Germany the generic volume share is much EUR 328 billion (more than four percent increase higher, having reached 77 percent in 2015 with a compared to 2013). This equates to 11.2 percent value of more than EUR 2 billion. Beyond conven- of German GDP (EUR 4,050 per capita). Of this tional medicines, natural medicines have gained a sum, 14 percent is spent on pharmaceutical significant share of the German pharmaceuticals products. Increased demand for medicines and market. Herbals and homeopathic medicines play the introduction of new drugs onto the market an increasingly significant role, particularly in the are the main drivers of spending growth accor- self-medication market. ding to the OECD.
With its domestic pharmaceutical industry consisting of companies such as Bayer, BASF and Revenue and Growth in Germany’s Hoechst, Germany has a historical reputation as Pharmaceutical Industry the world’s pharmacy. The sector enjoys market stability. In 2014, the pharmaceutical industry Revenue in EUR billion consisted of more than 640 companies, employing Growth in percent 5.7 5.6 a workforce of 112,500. Pharmaceutical companies 5.4 can be found in all parts of Germany, with higher concentrations around the cities of Hamburg, Berlin, Cologne, Frankfurt, and Munich. With rev- enue of EUR 38 billion in 2015, Germany is the 2.0 1.6 world’s fourth-largest pharmaceuticals market. 380
Germany’s share of the global pharmaceutical 36 2 34 2
market remained at around 13.5 percent. The 32 6 31 9 pharmaceutical industry in Germany imported pharmaceuticals to the value of almost EUR 41 2011 2012 2013 2014 2015 billion in 2015 and recorded an export rate of nearly 66 percent in 2014. Source: Federal Statistical Office 2015
Pharmaceutical spending in the statutory health insurance sector reached a new high of EUR 37 billion in 2015, recording an annual spending increase of 4.3 percent or more than EUR 1.5 Employment in the Pharmaceutical Industry by billion. The number of packages sold in the Ger- Country 2015 man pharmacy market increased three percent from 1.43 billion in 2014 to 1.47 billion in 2015.
Germn 112,475 The annual increase in the German pharmacy market – both in euro and unit transaction vol- umes – was largely achieved through prescription Fr nce 92,650 drugs and pharmacy medicine. Generic medicines considerably contribute to European drug supply. Germany aims to balance between rewarding U 64,000 innovations through attractive pricing while, at the same time, fostering generics. In most European countries, the market share of generic It l 63,000 medicines in volume terms exceeds 40 percent of generics-eligible segments. Source: EFPIA 2016
3 MARKET OPPORTUNITIES Largest Health Economy
Growing Market Healthcare Expenditure in Germany Catering to the largest population in Europe (81 in EUR billion million), Germany’s healthcare sector is a highly attractive market with significant growth oppor- tunities. A steady increase in life expectancy levels has led to a rise of chronic and age-related illnesses. Improved health awareness has further increased consumer demand for medicinal prod- ucts and therapies. In 2014, healthcare spending 328 315
in Germany exceeded EUR 328 billion, not in- 303 296 cluding out-of-pocket expenditure for health- care (equivalent to 11.2 percent of GDP).
Health Insurance Opportunities Germany provides ready access to a stable mar- 2011 2012 2013 2014
ket of healthcare consumers with a clear and Source: Federal Statistical Office 2015 adequately distributed expenditure system. The German healthcare system is funded by govern- ment and private contributions. The public system is largely financed by members’ contributions total healthcare expenses in 2015. Private health as payroll taxes by the employer and employed, insurance companies reimbursed an additional with the rest coming from government subsidies. EUR 23.2 billion of medical expenses. The remain- With around 88 percent of the German popula- ing amount is covered by government budgets, tion enrolled in a public health insurance plan, the state-mandated long-term care insurers, the social public health insurance system plays the major role pension fund, state-mandated accident insurance in the allocation of healthcare funds. An additional providers, employers, and private households. eleven percent of the population opts for private More than 20 percent of the publicly insured pop- health insurance. Germany’s 123 public health ulation has an additional private health insurance insurance providers covered EUR 213.7 billion of policy to complement their basic healthcare provi- sion. A recent development has been the trend amongst private individuals to spend more money on out-of-pocket medicine and therapy purchases. Pharmaceutical Market Share Differentiation Most out-of-pocket payments are made to pur- share of revenue chase over-the-counter (OTC) drugs and in the form of co-payments for prescribed drugs.
Hospital Demographic Change market (13%) Longer life expectancy levels and declining fertil- Pharmacy Over-the-counter 12% Homeopathics 1% ity rates mean that older people account for a market (87%) Herbal medicines 2% larger proportion of the population in Germany. At least one quarter of the population will be over 65 Prescription only 75% Biotech 19% years of age in 2050. The proportion of the popu- lation aged over 80 is expected to almost triple between 2010 and 2050 (rising from 5 percent to
Chemical products 65% 15 percent). Accelerating urbanization and more sedentary lifestyles lead to higher obesity rates and chronic diseases such as diabetes. According to the World Health Organization, worldwide chronic disease prevalence is expected to rise by 57 percent by the year 2020. Increased demand Prescription Product made on healthcare systems due to noncommuni- status type cable disease has become a major concern. Source: IMS Health Report 2016
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Production Location
High Production Standards Chemical Industry Strength Germany is an ideal production location for Pharmaceutical companies also benefit from research-intensive, high-grade products. It places the strong international position of the German a high value on technology; this stemming from chemical industry. As a location for the production the country’s long history of developing and man- of chemicals, Germany places first in Europe and ufacturing high-quality pharmaceutical products. third globally – accounting for a quarter of Euro- The country’s particular strength lies in producing pean chemical production in 2015. A number of complex products where containment and sterile outstanding chemical parks in Germany offer environments are critical. Hundreds of thousands specific infrastructural benefits to potential of highly skilled employees in medical-technical, pharmaceutical industry investors. pharmaceutical-technical and engineering back- grounds enable companies to utilize efficient and complex production processes. EU Pharmaceutical Industry Production 2014 Major Production Location in EUR billion Germany counts among the world’s top five phar- maceutical production locations, with a production volume of EUR 30.4 billion in 2014 (equivalent to an almost five percent increase over 2013). Within 30 4 29 0 the European Union, no other country produces more drugs than Germany. Internationally, Ger- many also has the largest fermentation capaci- 21 0 19 319 3 ties – second only to the USA – and is home to 17 5 the very latest facilities for biomanufacturing. 17 5 13 9 Pharmaceutical companies in Germany also ben- efit from close proximity to leading machinery 13 9 and equipment manufacturers, ensuring continu- ous production and minimal downtimes. Germn It l Fr nce Irel nd U Sp n
Contract Manufacturing Source: EFPIA 2016 Organizations (CMOs) Germany is also home to many strong and com- petent contract-manufacturing cooperation part- ners. International and national clients can obtain Pharmaceutical Production Value in Germany all of the services they require – from initial in EUR billion product idea to the final product – at moderate cost. Boehringer Ingelheim, for example, is the only company in the world that is active across the entire biopharmaceutical process chain. This 304 enables faster timelines and simpler coordination 29 0 27 7 of processes worldwide. The Federal Ministry for 26 9 26 9 Economic Affairs and Energy’s “Health – Made in Germany” initiative implemented by GTAI can help identify possible partners. Its “German Biomanu- facturing Guide” provides a comprehensive over- view of biomanufacturing companies currently active in Germany.
2010 2011 2012 2013 2014 www.health-made-in-germany.com/ → guide-to-cmo Source: BPI, VfA 2016
5 MARKET OPPORTUNITIES R&D Excellence and Support
Innovation Leader Germany by scientific groups like the Max Planck-Society; German patent figures pay testimony to the inno- whether by in-licensing or by building new ven- vation work done in German science and industry. tures. International companies find a tradition Germany ranks fourth globally in the application of collaborative research in Germany that allows of patents in all industrial fields. In 2015, the Euro- them to improve their own technology, become pean Patent Office received 1,183 patent applica- integrated in national value chains, and enjoy tions in the field of biotechnology and pharma- international visibility and global access. ceuticals from Germany – only US companies had a higher application rate. The life science industry Pharma R&D benefits from the output of patents developed The success of the German pharma industry stems from a highly innovative environment that places considerable value on technology and research Pharmaceutical Industry R&D Expenditure in Selected resources. In 2014, German pharmaceutical compa- European Countries 2014 nies spent a record EUR 6 billion in R&D. As such, in EUR billion investment in R&D is equivalent to 13 percent of revenue – more than any other industry sector in Germany. Nearly eight percent of all employees in
Germn 58 the pharmaceutical industry work in research and development. Internationally renowned R&D insti- tutions are embedded in a well-appointed research Sw tzerlnd 5 3 environment with extremely high standards.
U 4 9 Pharma and Biotech Clusters Non-university research institutes, universities Frnce 4 6 and companies all work together in numerous clusters throughout the country to improve or
Source: EFPIA 2016 invent new products and processes. Germany’s “BioRegions,” regional initiatives for the advance- ment of modern life sciences, play a key role in maintaining the stable and innovation-friendly European Patent Applications 2015: environment. Over the past three decades, these Biotechnology & Pharmaceuticals biotechnology clusters have developed into some of Europe’s leading R&D hubs. Each region special- izes in specific areas and facilitates collaboration
Germn 1,183 between universities, R&D institutes and private sector companies. Around 30 BioRegions are active members of AK BioRegio (“The Council of German Frnce 888 BioRegions”), which aims to advance the German life science sector by coordinating and promot- Netherlnds 773 ing local activities. AK BioRegio also coordinates regional initiatives and advises political decision Swtzerlnd 762 makers. The BioRegions also include technology parks (commonly known as “BioParks”) that offer an ideal infrastructure – including lab and suitable U 364 storage space as well as a range of administrative and technical services – for both start-ups and Source: EPO 2016 established companies.
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Investing in Innovation Clinical Trials Innovation does not exist in splendid isolation Germany offers excellent conditions for clinical for German companies. Non-university research trials. According to clinicaltrials.gov and the institutes, universities and companies all work Association of Research-Based Pharmaceutical together in numerous clusters throughout the Companies (VfA), Germany’s 655 studies make it country to improve or invent new products, the world’s number two in terms of number of services, and processes. To this end, the German clinical trials conducted. Geographically located Federal Government has been providing targeted at the heart of the EU and in close proximity to financial support for over 20 years. Universities other European countries, Germany allows easy and non-university research institutions also serve integration and management of study centers in as innovative partners to industry. the surrounding country markets. Germany enjoys a reputation as a credible and serious clinical According to the German Federal Statistical Office, study location for realizing high-quality data. universities invested approximately EUR 14.3 billion in R&D in 2014. Germany's four globally Contract Research Organizations (CROs) renowned non-university research foundations – Many biotechnology companies in Germany have the Max Planck Society, Fraunhofer Gesellschaft, been serving the pharmaceutical industry from the Helmholtz Association and Leibniz Association – outset. Rather than developing their own products, provided an increased overall research budget these companies provide contract research services of EUR 9.5 billion for the same year. With almost along the entire value chain for the creation of new 75,000 full-time equivalent research person- therapeutic entities. However, finding the right nel working at more than 250 institutes, these partner with the right skills can be a challenging organizations are involved in a broad spectrum task – especially for foreign companies seeking to of research projects; covering everything from have some of the development work carried out fundamental to applied science. in Germany. The GTAI initiative “Health – Made in Germany” provides an overview of possible Public R&D Support partners. There are a number of different public fund- ing programs at different levels for life-science www.health-made-in-germany.com/ → research and development projects. Looking guide-to-cro beyond the European Horizon 2020 program, a number of the German Federal Government’s “High-Tech Strategy” programs also include Institutional Funding in Germany healthcare as a major focal point. A number of federal programs, including the Central Innova- tion Programme (Zentrales Innovationsprogramm Industrial Companies/ Mittelstand – ZIM), promote cooperation between Research Associa- Industrial research institutions and the private sector. tions (AIF) Research Networks and ZIM is a funding program for small and medium- Länder- Fraunhofer- Clusters Institutions Gesellschaft
sized enterprises (SMEs) with business operations Applied research Helmholtz in Germany that seek to develop new or signifi- Universities Association cantly improve existing products, processes or Federal Institutions Leibniz technical services. Public and private non-profit Association research and technology organizations acting as Max-Planck- Gesellschaft SME cooperation partners are also eligible for ZIM Academics
funding. ZIM has been providing a reliable source Basic research Research of support for innovation efforts since 2008. In Infrastructures addition to the aforementioned federal initiative, the federal states also provide several funding Public funding Private funding programs to support German life science compa- nies, generally targeted at SMEs. Source: DAAD, Research in Germany
7 MARKET SPOTLIGHT Over-the-Counter (OTC) Market
Over-the-counter (OTC) medicines are used to Non-Prescription Drug (OTC) Sales Channels prevent and treat relatively minor ailments. As in EUR million populations increase and age there is a growing push to be able to license OTC medicines for treat-
ing chronic conditions. The OTC market is divided Ph rm c 5,669 into four categories: pharmacy only, non-prescrip- tion drugs, OTC drugs, and the group of health products that includes nutritional supplements Ml Order 744 and dietary food for special medical purposes. In Germany an aging population, alongside a grow- ing awareness of health and fitness, continues to Drustores 130 drive sales in the consumer health sector. Around seven percent of total health expenditure was Consumer spent out-of-pocket in 2015. The German OTC 68 Mrets pharmaceuticals market generated total revenues of EUR 6 billion in 2015. Source: BAH 2017
In 2020, the German OTC pharmaceuticals mar- Special indications – including analgesics, colds, ket is forecast to have a value of EUR 6.1 billion, influenza and gastrointestinal viruses – drive an increase of 2.4 percent on 2015 levels. The value growth, but products intended to boost compound annual growth rate of the market the immune system have also led to growth in during the period 2015–2020 is expected to be relevant categories (e.g. vitamins and natural 0.5 percent according to Marketline. Growth is products). being driven by a growing willingness to invest in self-medication and measures to improve In 2015, analgesics registered the highest sales health, well-being and fitness. Innovation and value in the OTC pharmaceuticals market, with 21 new product launches also supported this positive percent of market share. Sales of cough and cold performance, exceeding the average growth preparations reached 16.7 percent of market share. seen in recent years. Consumer health in Germany is largely in domestic hands. Bayer AG is the leading player in the Ger- man OTC pharmaceuticals market, accounting for German Pharmacy Revenue Development more than 10 percent share of total market value. in EUR billion German companies, including MCM Klosterfrau Vertriebsgesellschaft and Boehringer Ingelheim Pharma, also ranked among the top five consumer Non-Prescription Drug Sales health companies in 2015. Prescription Drug Sales According to a Marketline report, drug stores and pharmacies form the leading distribution channel 43 8 in the OTC pharmaceuticals market, accounting for 41 8 39 5 an 82.6 percent share of the total market value in 37 6 2015. Hypermarkets and supermarkets account for a further 9.7 percent of the market.
6 4 5 6 6 0 6 0
2012 2013 2014 2015
Source: BAH 2016
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Biopharmaceuticals
Big pharmaceutical and smaller biotechnology This means an increase of six percent compared companies alike are focusing on drug discovery to the previous year. Divided into pharmacological and development of medicines produced by bio- classes, 60 vaccines account for the majority of all technological processes. Small molecules are products (25 percent), followed by the 43 mono- moving to the background in medicine develop- clonal antibodies. ment as the result of a major paradigm shift to biopharmaceuticals. This trend is based, among other things, on the increasing development New Drug Approvals of personalized therapies and medicines. For patients, medical science, industry and govern- Biopharmaceuticals ment alike, the notion of a “customized pill” Other Drugs promises a new world of health and prosperity. Finding and providing the best cure on an indi- vidual patient basis not only helps restore patients to health more quickly and effectively, but also represents a substantial cost saving 14 15 14 for health care systems. Biopharmaceuticals play a major role in personalized medicine. This is reflected by the increasing sales of bio- pharmaceutical products worldwide. 5
35 35 According to a report by Boston Consulting Group 33 and the Association of Research-Based Pharma- 23 ceutical Companies (VfA), sales of biopharmaceu- ticals in Germany increased to EUR 8.2 billion in 2015 (growth of nearly 10 percent compared to 2014). The share of biopharmaceuticals in the total 2012 2013 2014 2015 pharmaceutical market (i.e. pharmacy and hospital Source: Federal Statistical Office 2015 market) increased from 22 percent to almost 23 percent over the same period. Growth was seen in nearly all fields of application, particularly in drugs treating immunological (e.g. rheumatic) diseases and cancer. Biopharmaceuticals Value Growth Rate in percent The clinical development pipeline has shown continuous growth over the past years, demon- strating accelerated progress in both the disco- Biopharmaceuticals very as well as the development of drug candi- Other Drugs dates. The number of biopharmaceuticals in clinical development increased by four percent from 604 to 627 in 2015, reflecting continued 22 9 high investment in the biopharmaceutical pipe- 22 line. With 50 new drugs approved, the approval 2015 78 rate was the highest in more than 10 years and 2014 +9.7 7 7 1 also included a record 15 biopharmaceuticals (30 percent of total). By the end of 2015, a total of 240 biopharmaceutical drugs were approved for the German market – more than ever before. Nearly 80 percent of these drugs are drugs and vaccines produced by biotechnological procedures. Source: IMS Health, Boston Consulting Group 2016
9 INVESTMENT CLIMATE Business Location Germany
Sound and Secure Legal Framework According to the World Economic Forum (WEF), Germany is one of the world’s best locations in Number of companies: terms of planning and operating security. Ger- 3.6 million – 99.3% SMEs many is also one of the world’s leading nations in terms of intellectual property protection and pro- tection from organized crime. German regulatory authorities are highly professional in their opera- Population: tions. The German legal system also counts as one 81.8 million people of the world’s most efficient and independent. Social, economic, and political stability provides a solid base for corporate investment projects. Total revenue of all companies Contractual agreements are secure and intellectual (2013): EUR 6.1 trillion – property is strictly protected in Germany. 31% SME revenue Business-friendly Tax Conditions Germany offers one of the most competitive tax Area: 357,340 sq. km systems of the big industrialized countries. The average overall tax burden for corporations is just below 30 percent. Significantly lower rates are available in certain German municipalities – up to eight percentage points less – with the overall corporate tax burden as low as 22.3 percent in some cases. Moreover, Germany provides an Free and Open Markets extensive network of double taxation agreements Germany has a welcoming attitude towards for- (DTAs) ensuring that double taxation is ruled out, eign direct investment (FDI). The German market e.g. when dividends are transferred from a Ger- is open for investment in practically all industry man subsidiary company to the foreign parent sectors, and business activities are free from regu- company. lations restricting day-to-day business. German law makes no distinction between Germans and Competitive Labor Costs foreign nationals regarding investments or the High productivity rates and steady wage levels establishment of companies. The legal framework make Germany an attractive investment location. for FDI in Germany favors the principle of free- Since 2004, wages have risen in most European dom of foreign trade and payment. There are no countries (EU-28), with the growth rate averaging restrictions or barriers to capital transactions or three percent. While some countries – particularly currency transfers, real estate purchases, repatria- those in eastern Europe – experienced an increase tion of profits, or access to foreign exchanges. of close to or more than five percent, Germany recorded the lowest labor cost growth within the Stable Economy EU at just two percent. Germany is widely considered to be the economic stabilizing force in Europe – particularly within Highly Skilled Workforce the Eurozone. Between 2010 and 2015, EU-28 real Germany’s excellent workforce is decisive to the GDP grew at around one percent. During the same country’s high productivity rates. It comprises over period, the German economy grew at a rate of 43 million people – making it the largest pool of around two percent, with Germany's real GDP ready labor in the EU. Germany’s world-class edu- growth rate higher than that of France and Italy. cation system ensures that the highest standards The German government expects an upswing of are always met. More than 80 percent of the 1.7 percent in 2016. German workforce has received formal vocational training or is in possession of an academic degree.
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Dual Education System Workforce in Germany by Level of Professional Education 2014 Germany provides direct access to a highly quali- percent of total workforce fied and flexible labor pool. The country’s dual education system – unique in combining the benefits of classroom-based and on-the-job train- ing over a period of two to three years – is spe- Unskilled 17 cifically geared to meet industry needs. In close cooperation with industry and the government, Skilled craftsmen the German Chambers of Industry and Commerce Vocational college graduates 10 (dual education (IHKs) and the German Confederation of Skilled apprentices) 54 Crafts (ZDH) ensure that exacting standards are adhered to, guaranteeing the quality of training provided across Germany. University graduates 19
Motivated and Dependable Employees German labor flexibility is reflected in higher than Source: Federal Statistical Office 2016 average employee motivation levels – exceed- ing those of most leading industrialized nations. According to the IMD World Competitiveness Yearbook 2016, German employee motivation lev- Europe’s Global Logistics Hub els are greater than those of their counterparts in With state-of-the-art transportation networks the USA, China, Russia, Poland, France, and the UK. (road, rail, sea, and inland waterways) as well as This can be related to the fact that Germans work a dense network of national and international air- more than their international peers (41.2 hours per ports, Germany provides easy access to domestic week) and lose less days per annum to strike and international markets. As a truly global logis- action than other European nations (significantly tics hub, more goods pass through Germany than below the EU-28 average according to Eurofound). any other country in Europe. Its approximately one quarter share of the European logistics market (EU-28, Norway and Switzerland) reflects Ger- many’s role as the major player in the continent’s Quality of Infrastructure 2016 economy.
Rank Country World Class Transport Infrastructure Germany’s infrastructure excellence is confirmed 1 Germany by a number of recent studies including the Swiss IMD’s World Competitiveness Yearbook and vari- 2 Luxembourg ous investor surveys conducted by institutions 3 Sweden including the World Economic Forum (WEF) and Ernst & Young. The 2016 Logistics Performance 4 Netherlands Index of the World Bank ranked Germany first worldwide for its logistic proficiency; singling out 5 Singapore Germany’s quality of trade and transport infra- 6 Belgium structure. Accumulated in this score for Germany are high marks for the quality of roads and air 7 Austria transport, excellent railroads and port infrastruc- 8 UK ture, as well as its information infrastructure.
9 Hong Kong
10 USA
Source: World Bank Logistics Performance Index 2016
11 INVESTMENT CLIMATE Financing & Incentives in Germany
Incentives programs in Germany are available Investment Project Financing by Bank Loans through different public funding instruments and Debt financing is a central financing resource for different funding purposes. The individual and the classic supplement to equity financing funding requirements may, for example, result from in Germany. It is available to companies with a investment projects, research and development continuous cash flow. Loans can be provided to activities, personnel recruitment, working capital finance long-term investments, working capital needs or other specific purposes. The different and operational costs (R&D, personnel) and for incentives instruments including grants, loans and bridging temporary financial gaps. Besides offers guarantees are generally available for all funding from commercial banks, investors can access pub- purposes and can ordinarily be combined; thus licly subsidized loan programs in Germany. These matching the different business activity needs at programs usually offer loans at attractive interest different development stages of the company. rates in combination with repayment-free start- up years, particularly for small and medium-sized Please visit Investment Project Financing by Private Equity companies. These loans are provided by the KfW our website for Technologically innovative start-ups in particular federal development bank and also by regional more incentives have to rely solely on financing through equity development banks. information: such as venture capital (VC). In Germany, appro- www.gtai.com/ priate VC partners can be found through the Investment and R&D Incentives incentives Bundesverband Deutscher Kapitalbeteiligungs- When it comes to setting up production and ser- gesellschaften e.V. (BVK – German Private Equity vice facilities, investors can count on a number of and Venture Capital Association). Special confer- different public funding programs. These programs ences and events like the Deutsches Eigenkapital- complement investment project financing. Most forum (German Equity Forum) provide another important are cash incentives provided in the form opportunity for young enterprises to come into of non-repayable grants applicable to co-finance direct contact with potential VC partners. Public investment-related expenditures such as new institutions such as development banks (publicly buildings, equipment and machinery. R&D project owned and organized banks which exist at the funding is made available through a number of national and state level) and public VC companies different incentives programs targeted at reducing may also offer partnership programs at this de- the operating costs of R&D projects. Programs velopment stage. operate at the regional, national, and European level and are wholly independent from investment Incentives in Germany incentives. At the national level, all R&D project funding has been concentrated in the High-Tech Strategy to push the development of cutting-edge Funding purposes technologies. Substantial annual funding budgets are available for diverse R&D projects.
Working Research & Specific Investments Personnel Labor-related Incentives Capital Development Purposes After the location-based investment has been initiated or realized, companies can receive fur- ther subsidies for building up a workforce or the Financing supported by any of the following public funding instruments implementation of R&D projects. Labor-related (combinations of instruments usually possible) incentives play a significant role in reducing the operational costs incurred by new businesses. Public funding instruments The range of programs offered can be classified into three main groups: programs focusing on recruitment support, training support, and wage Equity Mezzanine Grants Loans Guarantees Capital Capital subsidies respectively.
12 Industry Overview 2017/18 | gtai.com OUR PARTNERS Industry Associations
Germany Trade & Invest works closely to- owned businesses and small and medium-sized gether with the respective German industry enterprises that represent more than 11 percent associations to provide support to interna- of the pharmaceutical industry workforce in tional pharmaceutical companies seeking Europe. As an association representing the whole to settle in Germany. section of the pharmaceutical industry BPI’s goal is to ensure that patients receive the care and medicines they need. BPI is a political partner for decision-makers which contributes to the ongoing dialogue about the sustainability of healthcare systems. www.bpi.de BAH – German Medicines Manufacturers’ Association The Bundesverband der Arzneimittel-Hersteller e.V. (BAH) represents the interests of the phar- maceutical industry in Germany comprising international companies as well as local small and medium-sized enterprises (SMEs). BAH cov- ers the entire range of the industrial landscape from self-medication medicines (OTC) through to VfA – Association of Research based prescription drugs (Rx) and medical devices. BAH Pharmaceutical Companies advocates for secure and responsible self-medi- The vfa, the Association of Research based Phar- cation through professional medical and pharma- maceutical Companies, is the trade organization ceutical advice. Therefore, BAH strongly supports of research based pharmaceutical companies in the statutory protection of the owner-operated Germany. Forty-three leading research-based pharmacy as primary institution for distribution. pharmaceutical companies are organized in the BAH actively takes part in public health policy dis- vfa. Together with their more than 100 subsidiar- cussion. BAH represents its members on European ies and affiliated companies, they employ nearly level through the Brussels-based AESGP, the asso- 76,000 people in Germany. The vfa member com- ciation of the European Self-Medication Industry. panies are among the leading research-based Furthermore BAH is associated with WSMI, the pharmaceutical companies worldwide. They World Self-Medication Industry, a federation of guarantee therapeutic progress in pharmaceuticals over 50 member associations in all continents. and ensure high-quality pharmaceutical therapy. www.bah-bonn.de In Germany more than 16,000 of their employees work in the field of research and development of pharmaceuticals. Here, the research-based pharmaceutical companies invest EUR 4 billion per year in pharmaceutical research. The Associa- tion of Research-based Pharmaceutical Companies represents a German high-tech industry that is competitive in the international markets. BPI – German Pharmaceutical Industry www.vfa.de Association Founded in 1951 and thus with 65 years of experi- ence in drug research, development, authorisation, manufacturing and marketing, BPI is the only national trade association which represents the pharmaceutical industry with all its variety. Our membership consists of 240 companies that cover classic pharmaceutical companies, businesses from biotechnology, phytopharmacy and homeopathy as well as companies with a small generic port- folio. The majority of our membership is family
13 OUR SERVICES Germany Trade & Invest Helps You
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14 Industry Overview 2017/18 | gtai.com CONTACT Investor Consulting Imprint
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Editor Dr. Sandra M. Bütow is the senior manager William MacDougall, Germany responsible for the biotechnology and pharmaceu- Trade & Invest, Berlin tical industry in Germany Trade & Invest’s Investor Consulting division. Dr. Bütow’s considerable Layout experience in academic, cluster management and Germany Trade & Invest investment consultancy environments provide a significant advantage to international companies Print seeking to set up their business operations in inpuncto:asmuth druck + medien gmbh, Köln Germany. Picture Credits For questions on how to establish your business in Cover: gettyImages/PhotoAlto/Sigrid Olsson Germany, please contact Dr. Sandra M. Bütow at Page 15: Germany Trade & Invest [email protected] Notes For more information about the pharmaceuticals All rights reserved ©Germany Trade & Invest, industry in Germany, please visit our website: March 2017 www.gtai.com/pharma Reproduction, in whole or in part, only permissible Contact us at our headquarters in Berlin: with express prior authorization. All market data Germany Trade & Invest provided is based on the most current market Friedrichstraße 60 information available at the time of publication. 10117 Berlin Germany Trade & Invest accepts no liability for Germany the actuality, accuracy, or completeness of the T +49 (0)30 200 099-555 information provided. F +49 (0)30 200 099-999 Order Number 20858
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