Norwegian government steps in to rescue biotech, as the UK sector lobbies for support

The Norwegian government has responded to lobbying from its biotech sector, unveiling a package of measures to help the industry through the economic crisis. Meanwhile, its UK counterpart met government ministers to ask for similar support.

Representations to the Norwegian government were led by the Oslo Cancer Cluster, an industry and research group. The group felt very positive about the crisis package put forward by the Norwegian Cabinet.

“This is the most active political move in Europe so far regarding support to the biotech industry. At this point, these seem to be the necessary measures to bring the Norwegian biotech companies through the financial crisis,” said Bjarte Reve, the CEO of Oslo Cancer Cluster.

Members of the Oslo Cancer Cluster called on the government in December to take urgent measures to help the Norwegian life science sector through the financial crisis. Over 50 per cent of the 25 companies that are members of the Oslo Cancer Cluster are in danger of running out of cash in the next 12 to 18 months. Together the companies have more than 50 oncology products in the pipeline.

“Oslo Cancer Cluster has been heeded by the Norwegian Government on the most important measures we proposed – providing additional funds for Innovation Loans granted by Innovation Norway and R&D tax breaks. These loans may be used as working capital for biotech companies,” said Reve.

The key measures in crisis package are:

• Innovation Loans governed by Innovation Norway: funding increased from £32 million to £95 million. These loans may be used as working capital for the biotech companies. Innovation Norway is the country's main industrial development agency. Normal commercial criteria will apply to the loans.
• £7 million for R&D contracts. The aim is to stimulate increased cooperation within industry on research and development. These are to be focused on industry development in the health sector and internationalisation.
• Tax breaks for individual small and medium-size enterprises: companies may deduct now deduct up to £0.58 million in tax breaks, an increase from the current £0.42 million.
• Argentum – the government-owned investment company, and the only investor in Norway solely dedicated to investing in private equity funds – will get increased equity capital of £200 million, allowing it to increase its investments in private VC funds focusing in life sciences in Norway and abroad.

Meanwhile, leaders from UK biotech were calling on the government to rescue the sector. The BioIndustry Association (BIA) met the Prime Minister Gordon Brown, Peter Mandelson (Secretary of State for Business, Enterprise & Regulatory Reform), Angela Eagle (Exchequer Secretary to the Treasury), Alan Johnson (Secretary of State for Health) and Paul Drayson (Minister of State for Science and Innovation) at a Life Sciences Summit.

BIA Chairman Clive Dix, Chief Executive Aisling Burnand, and board members Glyn Edwards and John Brown joined representatives from pharmaceutical companies and the Association of the British Pharmaceutical Industry, in a bid to get commitment to action to ensure the future of the bioscience sector.

The current situation is grave, with approximately a third of publicly quoted UK bioscience companies having less than six months cash remaining.

At the summit the BIA asked the Prime Minister to:

• Extend R&D tax credits.
• Provide incentives for established pharmaceutical companies to jointly invest alongside government and VCs in a fund specifically for start-ups and early stage companies.
• Encourage established pharmaceutical companies to invest in British bioscience companies by either off-setting losses against tax or through a tax relief on investment made.
• Encourage spin-outs from established pharma to take place in the UK by providing tax incentives, brokerage facilities and rewarding academic collaboration.
• Launch an intellectual property protection scheme to encourage the retention and exploitation of life science IP in the UK.

Clive Dix said, “The UK Government has invested billions in the UK science base. We now have a real opportunity to translate our excellence in bioscience into innovative medicines and therapies as well as creating high value-added jobs and making a return to the UK economy. We can only do this with immediate government action.”