From Hengrui To Moderna: Why More Biotech Companies Are Creating Swiss Hubs
Executive Summary
An increasing number of biotech companies originating from the US and Asia are building EU headquarters in Switzerland. Scrip spoke with four key opinion leaders on the motivations behind these decisions and the role the domestic ecosystem has to play, from school systems to neutral politics and beyond.
“Switzerland has four main sources of new biotech activity,” Swiss Biotech Association CEO Michael Altorfer told Scrip. “The first source is spin-offs from academic centres in the country, the second is spin-offs from big pharma and other large conglomerates, the third is the direct creation of companies through venture builders and the fourth is companies that are founded elsewhere but have expanded or moved to set up bases in Switzerland.”
It is this fourth and final source of activity that has gained traction in recent years. “Of all the international companies that opened up a location in Switzerland last year, around 23% were from the life sciences sector,” Sirpa Tsimal, director of investment promotion at Switzerland Global Enterprise, a non-profit organization for Swiss export and investment promotion, told Scrip at the Swiss Biotech Day meeting in April.
“This figure is even more impressive when you look at things in a global context,” Gabriela Güntherodt, leader of EY Switzerland’s biotech sector division, told Scrip at the same meeting. “In the US, a lot of biotech firms were struggling and had to lay off people whereas in Switzerland, there remained a positive trend.”
Indeed, the influx of foreign biotech companies to the nation has continued despite macroeconomic challenges, with notable moves from the US and Asia. For instance, in 2021, Chinese biotech firm Jiangsu Hengrui Pharmaceuticals formed a subsidiary in Zurich – Hengrui Europe Biosciences.
The spin-off is working on a research center focused on a differentiated technology platform to support the discovery of novel antibodies for oncological and immunological conditions. Prior to this, Hengrui had set up a separate Swiss subsidiary in Basel in 2020 to serve as its EU headquarters.
Elsewhere, mRNA specialist Moderna, Inc. established its European headquarters in Basel in 2021 where manufacturing partner Lonza Group AG helped produce its COVID-19 vaccine Spikevax. Last year, Pfizer Inc. completed a $6.7bn acquisition of US biotech Arena Pharmaceuticals, Inc., which credited its Swiss base as a major factor in its success, according to an article published in the Swiss Biotech Report 2023.
In the article, former Arena CEO Amit Munshi said: “Over the years, I have set up Swiss hubs for three of my companies. The decision to do so was driven…by a desire for operational excellence.” This excellence spans the entirety of the biotech ecosystem, from academic capabilities and a vibrant start-up community through to technological and manufacturing solutions.
Education, Politics And Less Red Tape
“In Switzerland, we have no export other than knowledge,” said Patrick Amstutz, president of the SBA’s board of directors. Amstutz is also CEO of the Swiss firm Molecular Partners AG, which is focused on developing DARPin therapeutics – a class of genetically engineered antibody mimetic proteins.
“Our school system is great and this quality carries through to the universities and technical schools, which are known for producing Nobel prize laureates,” Amstutz explained. “There is also a deep understanding that one has to invest in basic research and applied research, which helps attract people with academic talent from both home and abroad, many of whom have an entrepreneurial spirit.”
Switzerland’s success in attracting international talent is reflected by fact that roughly 27% of its population has moved there from abroad. “This percentage is even higher within the biotech ecosystem,” Altorfer highlighted. On the domestic side, the nation’s skilled labor force extends far deeper than academics, Tsimal said.
Under Switzerland’s dual-track apprenticeship system, young school leavers can embark on a two-to-four year scheme combining high quality on-the-job training with lessons in vocational school, giving them a variety of technical skills. Therefore, “it’s not just the high-quality PhDs and executives that we have, but also the skilled production and lab technicians,” Tsimal explained.
Furthermore, establishing a new business or subsidiary of an existing business is easier than in other markets thanks to the country’s efficient processes and limited bureaucracy. Switzerland has few price regulations, liberal labor laws, high purchasing power and a generally strong currency. Meanwhile, the country’s political neutrality is a stabilizing factor that enables scientists to focus on science and international collaboration all around the world, Altorfer noted.
When combined with its highly skilled workforce and strong focus on R&D, these unique factors “encourage innovation and investment in the biotech sector, making it highly productive without the need for government subsidies,” the report noted.
Historical Stronghold In Manufacturing
Last but not least, many multinational contract development and manufacturing organizations are Swiss in origin and retain a presence in the country. In fact, the largest by revenue – Lonza – is based in Basel and has Swiss roots dating back to the late 19th century. Besides Moderna, Lonza has also worked with big pharma firms such as Bristol Myers Squibb Company, Sanofi and Alexion Pharmaceuticals Inc. (now owned by AstraZeneca PLC).
Earlier this month, the manufacturer announced it would acquire the Dutch antibody-drug conjugate (ADC) focused biotech Synaffix B.V. for €100m in cash and up to €60m in further performance-based milestones. The deal will strengthen Lonza’s ADC offering through the integration of Synaffix’s proprietary technology platform and R&D technologies, including payload and site-specific linker technology.
Elsewhere, Zofingen-based Siegfried AG is known for small molecule API manufacturing, with seven cGMP facilities across the US, Europe and China. In March, the company acquired a majority stake in Swiss manufacturer DiNAMIQS – which focuses on viral vectors for cell and gene therapies – in a bid to expand into the biologics space.