Invest in Partnering - a Key to Success

Medicon Valley's market for innovation is being challenged by a classic catch-22 situation caused by an uncontrollable level of success and unfortunate timing. Many of the region's innovative companies have successfully matured towards an exit, while the general economic situation has jammed the exit market, resulting in the companies requesting additional capital to stay in market. Thus, investors are expecting late stage development results, while innovators wait for additional capital to continue development.

According to estimates from "Vækstfonden" (the Danish government-backed investment fund), the Danish venture market lacks the capital to support the region's innovation companies to exit. Moreover, according to "Svenska Riskkapitalföreningen" (the Swedish Venture Capital Association), Swedish private equity companies are also rather pessimistic about future exit market conditions. At the same time, the international credit crisis as well as the stock market slowdown, in addition to the predicted recession, have caused a shift in investors' risk profiles. As a consequence, an increased need for differentiation and marketing is needed for innovation companies to win the attention of international investors and exit markets.

Forbes: Medicon Valley - a Region with Hot Start-Ups

Medicon Valley is, however, considered a high performance research environment. Forbes Magazine has recently highlighted Medicon Valley as a "hot start-up" region with a comparable high level of life science-dedicated venture investment activities. In an article dated June 18^th, the magazine highlights the governmental investment commitment as well as the fact that Denmark and Sweden take first and second places respectively in terms of percent venture capital investments of GDP. The triple helix structure is the backbone of many Medicon Valley companies and even though the concentration of biotech companies has reached a record high, new companies continue to emerge every year.

In spite of the rather unfortunate prospects it is evident that Medicon Valley has an excellent basis to overcome and perhaps even take advantage of the current situation. The high concentration of life science companies represents Medicon Valley in all phases of development and in a broad range of therapeutic and technological areas, offering a balanced innovative environment in terms of risk, synergy and continuity. This is evident from the very successful track record of the region's biotech companies: according to Vækstfonden, 55 percent of Medicon Valley biotech companies founded around the turn of the millennium are still operating.

On this positive note Medicon Valley's biotech companies may get unexpected help from the international pharmaceutical industry, which is currently on the lookout for new potential candidates to cover the disappointing research of recent years. Swiss-based Roche recently put in a record high bid for the New York-listed biotech company Genentech - a deal potentially worth 43.7 billion USD. According to Ian Oliver, senior manager of the life sciences team at Ernst & Young, this may only be the beginning: "Given the current economic environment, the valuation of a number of public biotech businesses is particularly attractive, so you may see a bubble of biotech M&A". Roche has also visited Medicon Valley and recently announced a strategic alliance with Lund-based BioInvent. Several of the region's other biotech companies - such as Symphogen and Zymenex - have concluded similar deals and partnerships this summer.

MVA: Getting Medicon Valley Across the Regional Border

In order to overcome the current challenges, additional effort needs to be placed in the marketing of the region's unique innovation environment and investment opportunities. The future success of Medicon Valley will strongly depend on the ability of the region's companies to engage in appropriate partnerships - in order to take advantage of regional synergies and to find international financial backing. Medicon Valley Alliance seeks to promote the region internationally and intends to improve and facilitate the making of new partnerships within Medicon Valley as well as internationally.

MVA recently published the Medicon Valley Alliance Directory 2008, which was launched and promoted at Bio International Convention 2008 in San Diego, US. The Directory is intended to serve as a point of entry for regional and international stakeholders who wish to know more about life science companies and organisations in Medicon Valley. To view the Directory, please download it here.

Meeting Medicon Valley 2008 - Future Partnering Strategies (24 September)

Why not take the opportunity to strengthen your network and future partnerships at this year's key partnering event? Meeting Medicon Valley 2008 is a one-day conference aimed at facilitating future partnerships and alliances between regional and international biotech companies, pharmaceutical companies, investors, service providers, suppliers and other companies operating within the life science arena. The conference features international speakers and industry experts and will provide an update on the Medicon Valley life science industry as well as future investment opportunities, industry collaborations and business partnerships. For more information and registration, please visit www.mva.org/MMV2008.

Meeting Medicon Valley 2008 will take place on 24 September during the three-day partnering event "Biotech Forum Partnering Event 2008", which will be held from 23-25 September in Bella Center, Copenhagen. For more information, please visit www.biotechforum.org.

Kind regards,

Peter Aksel Villadsen Senior Business Analyst pv@mva.org