Whether in terms of sales, employee numbers or investments in research and development, the signs in the German biotech industry were once again pointing to growth in 2021. After years of shadowy existence, the biotechnology industry moved into the public eye with the onset of the pandemic. Not only the economic key figures, but also the perception and above all the appreciation of the industry have increased significantly.

This positive development is largely due to the Mainz-based company BioNTech. If the key figures of the Mainz company are disregarded, the growth curve flattens out considerably, but still points unmistakably upwards. This is shown by the results of the Biotech Company Survey 2022 of BIOCOM AG, which collected the key figures of the year in spring 2021. BIOCOM has been following the development of the biotechnology industry in Europe for more than 35 years. As early as 2005, the most important key figures of German biotechnology companies have been collected annually and analyzed according to the criteria of the Organization for Economic Cooperation and Development (OECD). Only in 2020 the data collection was suspended due to COVID-19. The figures and graphs given below refer to those companies defined by the OECD as "dedicated" biotech companies (for more information on the methodology, see tab 10)

It is true that the pandemic has put companies from the field of medical biotechnology in the spotlight - BioNTech was able to bring its mRNA vaccine to preliminary approval incredibly quickly, thus taking away the biggest scare of the pandemic. With similar speed, necessary production capacities were built up and diagnostic tests developed.

But fields of activity outside the healthcare sector also demonstrate the enormous potential of biotechnological innovations. For example, the development of alternative proteins as a key supplement to the food supply for a steadily growing world population. Start-ups are developing alternatives for fish and other marine animals from plant and cultivated proteins or are working on meat products from cellular agriculture (CellAg) - according to current forecasts, plant-based alternatives will replace around a third of meat products by 2030. In the field of sustainable packaging and materials, biotechnological applications offer innovative and climate-friendly solutions, just as they do in the field of sustainable textiles or in waste-to-value approaches in a circular economy.

Compared to 2020, the sales of the 753 dedicated biotech companies have virtually exploded in 2021, reaching the incredible sum of €26.5 billion - admittedly, the enormous growth rate of almost 400% is primarily attributable to BioNTech's vaccine sales. But even if the sales of the Mainz-based company are excluded, the result is a remarkable sum of €7.5 billion. This represents growth of more than 20% compared to 2020 (€6.2 billion excluding BioNTech sales) - an increase unmatched in the years before the pandemic. This shows that many German biotech companies have now reached a high level of maturity, which has been reflected accordingly.

As in 2020, the immense growth is attributable in particular to sales generated with vaccines as well as diagnostics. The healthcare sector alone was able to generate sales of €24.2 billion. Excluding BioNTech sales, this still amounted to €5.2 billion (+18%; 2020: €4.4 billion excluding BioNTech). However, non-specific biotech services (€1.85 billion; +32%) and companies focusing on industrial biotechnology (€399 million, 11%) also recorded a significant increase in sales.

By the end of 2021, a total of 753 German biotech companies were counted (2020: 736). Half (52%) focus their activities on the healthcare sector, either developing new therapeutics, diagnostics or vaccines or working on technology platforms relevant for this. About a third (30%) of the companies provide biotechnological services and just over 10% are involved in industrial biotechnology. Only a small proportion (2%) of German biotech companies are active in agricultural biotechnology and 5% focus on bioinformatics.

The majority of biotech companies (390 companies; 52%) deal with medical topics and thus belong to the "red" biotechnology. They focus on the development of drugs, vaccines or new diagnostics. In the past two years, these companies have shown that they are capable of delivering efficient solutions to combat a global pandemic. Vaccines and diagnostics have been delivered at a speed not seen before in the biotechnology sector. Therapeutics developers need staying power

Drug development requires perseverance

Drug development is a lengthy and expensive process, making it difficult for small to medium-sized biotech companies to manage. In times of a pandemic, however, the pace of drug development was much faster than usual. The first newly developed drugs received approval after less than two years - this was possible, among other things, because companies prioritized the development of COVID-19 drugs, both investors and the public sector invested in research, and the countries processed the study approval procedures quickly.

Pipeline

Drug candidates against COVID-19 are also in the pipelines of some German drug developers. In addition, there are numerous other indications in which new therapeutics are being developed. A total of 68 biotechnology companies had one or more candidates in clinical development in 2021. In total, 119 biologically active substances were in one of the clinical phases. Meanwhile, the number of approved vaccines and therapeutics remained unchanged at 18 following four approvals in 2020.

Companies with a focus on technology platforms

The vast majority of healthcare companies (214) either have drug candidates that are still in the preclinical phase of drug development or are developing technology platforms that can be used in various applications within medical biotechnology.

Importance of diagnostics

The past two years have shown that speed is also an essential factor in successfully combating diseases in diagnostics. Only when specific reagents and methods are developed quickly, for example for established PCR-based methods, is it possible to develop and approve new in vitro diagnostics. The pandemic brought this area of diagnostics decisively forward.

It also demonstrated that it is not enough to focus on therapeutic strategies. Experts predict that stratified and individualized medicine will push this segment further into the foreground in the future. For many diseases, it will not only be important to find a targeted therapy, but also to provide a rapid and non-invasive means of diagnosis. In combinations with digital solutions, new forms of precision medicine can thus be applied. In addition, predictions about the effect of a drug ("companion diagnostics") can significantly reduce side effects and avoid incorrect treatments.

In 2021, the 108 diagnostics companies could once again significantly increase their sales - albeit not quite as significantly as in 2020 - by 21% from €2.8 billion in 2020 to €3.4 billion. Research and development spending also increased, by 15% to €334 million (2020: €291 million).

With 227 companies, companies focusing on non-specific services build the second largest pillar of the German biotech sector. This segment includes all companies that provide equipment and reagents, or services based primarily on biotechnological principles. This also includes contract manufacturers and biomanufacturing experts. 

In 2021, these companies were able to continue the strong sales growth of 2020. Nearly two billion euros in sales (€1.85 billion) were generated in this segment, a 32% increase over 2020 (€1.41 billion). R&D spending (€184.1 million) also increased by nearly a quarter (22%) compared to 2020, and nearly a third (32.6%) of all biotech employees worked in this segment. The number of employees increased by almost 17% once again, rising to 9,890 employees in 2021 (2020: 8,480 employees). This segment shows continuous growth within the German biotech industry and proved to be one of the supporting pillars for the rapid start of vaccine production and thus for efficiently combating the pandemic.

Potential of industrial biotechnology

Seventy-seven companies develop industrial applications for various industries (2020: 74 companies) in Germany. The number of these companies is growing slowly, but the importance of industrial biotechnology is still much higher than the number of companies suggests. 

Developments in industrial biotechnology in Germany go hand in hand with the steadily growing demand for alternative solutions in the food sector, for example, through fermentation of alternative proteins, or in the field of sustainable materials for industry or in the textile sector. Although the number of companies increased only slightly, they recorded a significant increase in sales (€399 million, +11%). The number of employees also increased by almost 14% to 2,150 (2020: 1,890 employees). Newcomers in this field are mainly companies active in so-called cellular agriculture. They grow animal products directly from cells or with the help of microorganisms and also rely heavily on the possibilities of precision fermentation. In the future, fish, meat and dairy products can be produced in the laboratory instead of raising and slaughtering farm animals.

Agrobiotechnology stable at low level

The application of biotechnology in the plant breeding and agricultural sectors has declined over the years due to strict regulations and general skepticism, especially towards green genetic engineering. Since 2015, it has stabilized at a low level.

Although the number of companies is decreasing slowly but steadily - 17 companies were still active in this segment in 2021 (2020: 19 companies). The number of employees, on the other hand, varies only slightly, falling by just under 5% to 400 employees in 2021 (2020: 420 employees). Sales and R&D spending, on the other hand, remained stable (sales: €39.1 million, +1.8%; R&D: €16.3 million, -0.6%).

Bioinformatics gains in importance

A steadily growing number of companies (2021: 42 companies) are primarily involved in bioinformatics. Modern high-throughput procedures require the systematic acquisition and analysis of ever larger volumes of medically relevant data. Information sciences provide the leverage to exploit the potential of these data for prognostic, diagnostic and therapeutic applications. But also in other areas, such as phenotyping or precision breeding, the latest methods require an increasingly comprehensive analysis of data - in the past five years, the number of companies specializing in bioinformatics applications has increased by more than a quarter (27%) (2016: 33 companies).

Also in 2021, successes in developing new vaccines and diagnostics to combat the COVID 19 pandemic had a major impact on research and development (R&D) spending. After surpassing the two billion mark for the first time in 2020, research spending in 2021 was already reaching for the three billion mark - €2.83 billion was invested in R&D, an increase of 32.4% compared to 2020.

BioNTech invested just under one billion in R&D in 2021. But even here, if you exclude the research expenditures of the Mainz-based company, there is still a very significant increase of 26% compared to 2020. 1.88 billion would then be compared with €1.49 billion.

The R&D expenditures of the "red" biotech companies accounted for almost 90% of the total research expenditures of the sector; within the sector, they increased by almost 35% from €1.9 billion in 2020 to €2.5 billion - the increase would still be 28% if BioNTech were not taken into account (2021: €1.59 billion; 2020: €1.24 billion in 2020, both excluding BioNTech). This shows the high importance of vaccine, drug and diagnostics development not only for COVID-19-related indications. Therapeutics developers invested €2 billion in R&D (€1.1 billion excluding BioNTech). Diagnostics developers spent a total of €334 million in 2020, up 14% from 2020 (€291 million).

However, biotechnology service providers and bioinformatics companies also increased their R&D spending substantially (22% and 16%, respectively). In the industrial biotechnology sector, research spending rose only slightly to €71.6 million, with growth of 4.2% (2020: €68.7 million), while it stagnated at the agrobiotech companies.

In the second year of the pandemic, startup momentum in the industry appeared to slow a bit but remained unbroken. At the end of the first quarter of 2022, 21 start-ups were reported for the year 2021. At the same time last year, 25 start-ups were already reported. Since experience has shown that many start-ups become known retroactively for the previous year during the course of the year, it can be assumed that the actual number of start-ups will be higher. It therefore remains to be seen whether the high figures of previous years will be achieved again.

As in previous years, start-ups in the medical field again dominated (16), three companies are involved in industrial biotechnology, one in bioinformatics and one in non-specific biotechnological services.

The high propensity to invest continued unabated even in the second year of the pandemic. The success of BioNTech has given the biotechnology industry the attention it had long been denied. As a result, the exceptionally high financing volume of the previous year was matched again in 2021. The money no longer flowed primarily into vaccine development and there were fewer triple-digit million rounds to report, but significantly more companies were able to benefit from the windfall. The funds of the VC companies were well filled and there was also a willingness to invest on the stock market.

In total, German biotech companies were able to raise €2.16bn - only about €50m (2%) less than in the previous year. A total of €1.34bn went to publicly listed companies. Private companies raised €825m from investors.

Top financing via the stock exchange

A capital increase by CureVac in February 2021 brought in €431.5m, and the secondary listing of Hamburg-based Evotec on the U.S. Nasdaq technology exchange in November 2021 added another €376m to the total volume of listed companies. Affimed, based in Heidelberg, Germany, raised €95m via the stock exchange in 2021. The company develops innovative therapeutic antibodies in immuno-oncology. By reactivating the body's own defense mechanisms, it aims to fight cancer cells. Two drug candidates are being tested in a series of studies targeting different types of cancer. With a capital increase of €85m, MorphoSys completed the acquisition of US-based Constellation Pharmaceuticals in July 2021. Signatory of the capital increase was the US financial company Royalty Pharma.

Top private biotech company financings

In the summer of 2021, U.S. investor Blackstone Life Sciences expressed interest in investing in Dresden-based GEMoab, which which is developing a universal switchable platform to improve CAR T-cell therapies. Blackstone, however, wanted to expand research into allogeneic therapies and brought gene shearing specialist Intellia on board. Intellia's CRISPR-Cas technology will be used in the future to modify donor cells to make them suitable for as many recipients as possible. Blackstone invested €210m in the founding of the new company AvenCell, which is based in Cambridge, Massachusetts, with research continuing in Dresden.

Last year, Berlin-based T-knife - which is also active in the field of T-cell therapies - already caused a stir with a Series A financing of €66m. Almost exactly one year later, in August 2021, another €93m was added.

Emergence Therapeutics, which was only founded in 2019, raised €87m at the end of the year, the second-highest Series A round in the German biotech sector. The Duisburg-based company is developing novel antibody-drug conjugates (ADCs) against cancers that currently have little or no treatment.

The dedicated biotech companies had a total of 30,280 employees (2020: 27,200) under their payroll, representing an increase of 11.3%. 

The highest increase, almost 17% (9,890 employees), was among companies in the non-specific services sector. Industrial biotechnology companies saw an increase of almost 14%. Their number of employees rose from 1,890 in 2020 to 2,150. The bioinformatics sector added 10% more staff (540), followed by nearly 9% in the healthcare sector (17,300). Only the agrobiotech sector employed fewer people than in 2020, with the number of employees falling by just under 5% to 400.

The data and facts used here are taken from the biotechnology company survey carried out annually by BIOCOM AG. It is based on the guidelines of the Organization for Economic Cooperation and Development (OCED). In December 2004 the OECD harmonized the large number of existing definitions for biotechnology. Since then, all OECD countries have been called upon to base their biotechnology surveys on the so-called “Framework for Biotechnology Statistics” (www.oecd.org). The OECD differentiates between two different categories of companies within the biotech sector: “Dedicated biotechnology companies” on the one hand and “other biotechnologically active companies” on the other. According to the OECD definition, the former are biotechnologically active companies whose main corporate objectives are the use of biotechnological processes for the manufacturing of products or the provision of services or the implementation of biotechnological research and development.

In contrast to this type of dedicated biotech company, the main corporate objective of an “other biotechnologically active company” is not exclusively the application of biotechnological processes. The OECD describes those companies as the ones using biotechnology only as part of their business and field of activity, such as pharmaceutical and chemical companies or seed manufacturers.

For the purposes of biotech statistics, BIOCOM has drawn up a questionnaire based on the OECD definitions explained above. A total of 815 companies were contacted between January and March 2022. The selection of the companies contacted for the survey took into account the OECD definition in comparison with the company database of BIOCOM AG. 562 of the companies surveyed answered either by questionnaire or after a telephone call. The response rate or verification rate is 69%.

In accordance with the OECD guidelines, when selecting companies, care was taken to include all companies that deal with biotechnology in Germany and are based in Germany. For this reason, companies that are majority owned by a non-German parent company but have R&D activities in Germany were also taken into account. When recording jobs, business figures and business areas, the survey was only carried out for the German locations of a company. If a company has more than one location in Germany, it is counted once with the corresponding cumulative values.

In contrast to this type of dedicated biotech company, the main corporate objective of an “other biotechnologically active company” is not exclusively the application of biotechnological processes. The OECD describes those companies as the ones using biotechnology only as part of their business and field of activity, such as pharmaceutical and chemical companies or seed manufacturers.

For the purposes of biotech statistics, BIOCOM has drawn up a questionnaire based on the OECD definitions explained above. A total of 816 companies were contacted between January and March 2020. The selection of the companies contacted for the survey took into account the OECD definition in comparison with the company database of BIOCOM AG. 512 of the companies surveyed answered either by questionnaire or after a telephone call. The response rate or verification rate is 62%.

In accordance with the OECD guidelines, when selecting companies, care was taken to include all companies that deal with biotechnology in Germany and are based in Germany. For this reason, companies that are majority owned by a non-German parent company but have R&D activities in Germany were also taken into account. When recording jobs, business figures and business areas, the survey was only carried out for the German locations of a company. If a company has more than one location in Germany, it is was counted once with the corresponding cumulative values.

You’ll find all information regarding the biotech statistics publication of BIOCOM AG here:  https://biocom.de/deutsche-biotech-branche-waechst-rasant/?lang=en