The Boston Consulting Group (BCG) has evaluated the effectiveness of biotech innovation centers in Europe and the USA. Thorsten Schüller asked Bianca Adolphs, Principal at BCG, to explain what is lacking in Germany in particular.

CHEManager: Ms. Adolphs, what are the characteristics of a strong biotech cluster?

Bianca Adolphs: Biotech hubs, as we call regional clusters, are epicenters of scientific and tech-nological development, which facilitate the exchange of resources like knowledge, data, talent, and funding among firms, universities, and institutions within a geographic area. The resulting ecosystems create a positive feedback loop and foster innovation. The Biotech Innovation Hub Index (BIHI) can provide a tangible representation of this concept.

How is the BIHI determined?

B, Adolphs: We assess regions along four dimensions: Public infrastructure, Business environment & Entrepreneurship, Biotech Research & Development and Biotech venturing. Each of these dimensions can be broken down into four to six measurable characteristics, e.g., number of graduates and hospitals for public infrastructure, number of start-ups for the business environ-ment, or how often scientific publications were cited as a proxy for biotech R&D. We find that bio-tech clusters thrive in areas with seamless collaboration between universities and the industry, when universities are fostering an entrepreneurial culture, and in areas with a strong venture capital and start-up ecosystem.

“Biotech clusters thrive in areas with seamless collaboration between universities and the industry, when universities are fostering an entrepreneurial culture.”

Why can’t biotech hubs in Germany match the innovative power and strength of other Euro-pean or even US locations?

B. Adolphs: As we observe the metrics throughout the innovation process, we see that European countries score relatively similar to the US in the early stages. However, in terms of sheer scien-tific output volume and especially for private biotech venture funding, there is an increasing gap between Germany and broader Europe, including the UK compared to the US. Germany’s biotech innovation landscape is highly decentralized and fragmented, with multiple biotech hubs and uni-versity clusters lacking scale and efficient expertise sharing, thus limiting their potential com-pared to the more cohesive ecosystems in the US, France, and the UK.

In your study you point out that Germany’s sub-par performance could also stem from the traditional reluctance among scientists and physicians to engage with the business side of their discoveries. Why is that?

B. Adolphs: Within the German university system, structured incentives and encouragement to translate scientific outcomes into business ideas is often lacking, with a cultural emphasis on research for research’s sake and no clear pathway to commercialization. In contrast, US biotech hubs intrinsically incorporate business acumen into scientific education and build up infrastruc-ture to support scientists along the journey. This includes mentorship programs and access to venture accelerators/incubators that allow scientists to spend time working on translating re-search into marketable innovation. Technology transfer at universities is often less bureaucratic and more supportive for scientists, leveraging strong industry connections to succeed. This results in numerous successful ventures within university departments and positive role models, which German scientists often lack.

Biotech investors in the US are known to be much more willing to take risks and invest larger sums of money than investors in Europe. What needs to happen to close this gap?

B. Adolphs: Higher venture capital investments and a risk-taking culture are not unique to bio-tech but apply broadly. To strengthen biotech hubs in Germany, aspects of innovation funding could be tackled: redirecting government funding to later stages of the innovation process, sup-porting science-to-business translation programs in initial grants, or considering incentives for private investors to co-fund innovation. Moreover, cross-hub collaboration in Germany’s decen-tralized innovation system could standardize processes and benefit from joint expertise and ex-perience with commercialization. Creating innovation nuclei can be a starting point.