Medtech and biotech resisting Switzerland’s strong currency The life sciences sector continues to grow – and draw in investment and funding – despite the strength of the Swiss franc.
Switzerland’s economy took a harsh blow when the Swiss National Bank decided to unpeg its currency from the euro in early 2015. The aftershocks are gradually dying down, but a number of industries are struggling to scrape themselves back up. So in this bleak landscape, how are the country’s biotech and medtech companies holding up?
The first positive sign is that Switzerland continues to attract foreign firms. The U.S. medical equipment manufacturer Becton Dickinson has recently opened its European headquarters in Eysins, near Nyon, and plans to build a factory there. And the Japanese ophthalmic pharmaceutical company Santen opened an office in Geneva in 2015.
Meanwhile, other groups are boosting their presence in Health Valley. “Ferring, located in Saint-Prex, will expand from 600 to 1,000 employees, and Celgene, in the Canton of Neuchâtel, will increase its staff from 800 to 1,000 people,” says Claude Joris, the Secretary General of BioAlps, the life sciences cluster in French-speaking Switzerland. “Even Merck Serono continues to hire more people in Switzerland.”
“Swiss biotech companies generated 5.1 billion Swiss francs in revenue last year. That’s 200 million Swiss francs more than in 2014,” says Jürg Zürcher, a biotech and medtech expert at Ernst & Young. And 759 more people have been given jobs over the past two years. “This performance is driven by large companies – such as Actelion,
Santhera, Evolva and Basilea – which have posted strong sales and recently received approval for several drugs,” the analyst says.
The region remains a top destination for funding. In 2015, Swiss biotech companies secured a record 907 million Swiss francs. Several firms have attracted investment from major foreign groups. GlaxoSmithKline acquired the Zurich-based GlycoVaxyn; Pfizer bought a stake in another company from Zurich, Redvax, while Servier invested in GeNeuro, a biopharmaceutical firm based in Geneva. Crispr Therapeutics, which
operates out of Basel, has forged a $335 million partnership with Bayer.
Why is this industry thriving? “Most biotech companies don’t spend much Switzerland,” Zürcher says. “They manufacture their drugs abroad and outsource clinical trials to contractors located outside the country.” These external firms are often located within Europe, meaning their Swiss clients can take advantage of the weak euro.
Biotech companies generate revenue from the sale of drugs worldwide. “It is important to remember that the Swiss franc has risen significantly against the euro, but not so much against the dollar or Asian currencies, which account for most of their revenue,” Mr Joris says.
But there’s an exception. “Medical device suppliers, especially the many implant and prosthetics manufacturers operating in the Jura region, have suffered more from the strong Swiss franc, as most of their production takes place in Switzerland,” the head of BioAlps says. Some businesses have watched their margins erode by 10% and been forced to raise their prices accordingly. “That has weakened their position against European and Asian competitors.”
With its location in the heart of Europe, supportive tax schemes, flexible labour laws, business incubators – such as the Campus Biotech in Geneva and the Wyss Center in Zurich – and dominance in life science research, Switzerland remains a favourite destination for biotech firms. “Most of the groups that choose to come here stay,” Mr Zürcher says. “They’re in it for the long term.” ⁄