1. Biotechnology in Germany
Multinational Business Management
Lucie Avenel – Marie-Claire Burgat – Shiho Kamei - Wilson
Kao
Celia Lao – Alain Truche – Adrian Tsai – Jeff Shusterich

2. Macroeconomic environment of
Germany

3. Political structure
 Parliamentary democratic federal republic:
Federal Republic of Germany.
 Federal President of Germany: Joachim
Gauck.
 Chancellor: Angela Merkel.
 Major political Parties: Coalition of the
Christian Democratic Union (CDU), the
Christian Social Union (CSU); and the Free
Democratic Party (FDP).
 Political Attacks on Foreign Companies and
Industries. Ex: Boeing and Airbus.

4. Legal System
 Constitution: Basic Law for 16 states.
 Five codes at the core system, civil, civil
procedure, commercial, criminal, and
criminal procedure.
 As a part of the European Union, Germany
must obey all the laws set in place by that
organization.

5. Political and legal structure
The politic and legal
environment basically is
riskless.
The low grades for Labor
Flexibility is due to the
employment and labor
laws are strongly
employee based, and
commonly referred to as
“employee protection
law”

6. Germany’s economic and
financial variables
 The GDP of 2012 is 0,6%, but Germany remains the richest
country of Europe and the 4th richest of the world in terms of
GDP (PPP)
 The most dynamic country as far as finance in concerned: the
European Central Bank is in Frankfurt
 Prices level
Sources:
www.tradingeconomics.com , The
Economics magazine

7. Germany’s economic and
financial variables
 During the last 10 years the ratio between wages in Germany
and China countries went from 10–1 to 4-1, 2 reasons:
 Chinese workers wages are growing
 German government decided to decrease the minimum wage allowed
because of the increase of unemployment rate
 And transportation costs are low if you want to enter the
European market because Germany is geographically in the
center of European Union
Global Times

8. • Situation: Cross-boarder with 9 countries
• Distribution: Hambourg, Berlin, Munich, cities along the Ruhr
Social and cultural situation

9. Population
 81 millions inhabitants
- 14th most populous country in the globe
 The fertility rate of 1.4 children per mother
⇒ estimated decline of population by about 4 million
Growing aging population
⇒ shortage of skilled workers
 91% German
- Majority of immigrants are from Turkey
- Italians, Greeks and the Serbs
 Middle class society

10. People characteristics
 One of the highest level of education
- Number of youths entering universities has more than tripled since 1950
- Trade and technical schools are among the world's best
 Attitudes
- Hard workers
- Planning
- Formality in works
- Work and personal lives are rigidly divided
 Culture Dimensions
- Low Context Communication
- High Power Distance
- Individualism
- High Uncertainty Avoidance
- Achievement
 Open to new technologies and product

11. Technology
 HIGH INVESTMENT RESEARCH AND DEVELOPMENT:
• Increase its investment in research and development: In
2010, public and private sectors spent a record 70 billion
euros, amounting to 2.82 percent of GDP
• Employ 506 000 persons in R&D and 299 000 scientists &
scholars
• Various forms of research locations: universities, companies and
institutions run by federal or state authorities.
• Several research areas: Environment and Energy / Health and
Safety / Interdisciplinary Technologies / Communication and
Mobility / Future and Society
• Technology centers: Potsdam, Berlin, Franckfurt, Dusseldorf

12. Technology (cont.)
DENSE, MODERN AND POLYCENTRIC TRANSPORT
NETWORK
 Due to its central position in Europe
 Largest German airports are Frankfurt Airport and Munich
Airport.
“MADE IN GERMANY”
 “Germany is the most inventive country in terms of patents
after the United States and Japan” based on the OECD’s
2009 Science, Technology and Industry Scoreboard
 German innovations have shaped today’s world and
promoted progress: exemples…
GREEN TECHNOLOGIES
 Leadership position in the field of sustainable production
technologies.
 "Green Production Technologies" campaign

13. Porter’s Diamond Model:
Biotechnology in Germany

14. What is Biotechnology ?
Biotechnology
“The application of science and technology to living organisms, as well as parts,
products and models thereof, to alter living or non-living materials for the
production of knowledge, goods and services.”
Green Biotechnology: Agriculture
• Plant and food
Red Biotechnology: Medicine
• Medical and pharmaceutical for humans and animals
White Biotechnology: Industry
• Industrial manufacture with biotechnical procedures, environmental
protection productive processes

15. Industry Structure, Rivalry and
Firm Strategy
 Market Size
◦ Germany biotech market had total
revenue of 4,465 million in 2010, a
compound annual growth of 1% between
2006 and 2010
◦ Medical/healthcare sales provided most
lucrative, totaling 3,138 million, equaling
70% of total biotech market in 2010
◦ Anticipates CAGR 7% for five year period,
and drive market to 6,260 million by end
of 2015
Source:
http://www.marketresearch.com/Market
Line-v3883/Biotechnology-Germany-
6555038/

16. Industry Structure, Rivalry and
Firm Strategy
46.50%
4.50%
10.40%
34.70%
3.90%
Main areas of activity in dedicated
biotechnology companies
health/medicine
agricultural
biotechnology
industrial
biotechnology
non-specific services
bioinformatics
Market Segmentation

17. Industry Structure, Rivalry and
Firm Strategy
495 496 501
531 538
56
91 92
114 125
0
100
200
300
400
500
600
2006 2007 2008 2009 2010
Number of
dedicated
biotechnology
companies
Number of other
biotechnology-
active companies
source: biotechnologie.de
Number of Biotech companies

18. Industry Structure, Rivalry and
Firm Strategy
Research
Developm
ent
Validation Sales Total
Other
countries
with research institutes 712 315 180 6 1112 228
with biotech companies 214 193 21 141 551 178
with industrial partners 199 204 25 340 732 343
with other organizations 22 21 34 26 103 20
0
200
400
600
800
1000
1200
Cooperations of dedicated biotechnology
companies along the value chain
source: biotechnologie.de

19. Related and supporting
industries
 Integrated Clusters
◦ As many as 25 industry relevant clusters of
various sizes; largest are around
Munich, Berlin, the Rhine Neckar triangle
, Frankfurt and Cologne.
◦ Bioregions provide access to an outstanding
scientific environment, excellent
infrastructure, ready access to
capital, experienced management, and highly
trained personnel.
 Examples
◦ BioM (Bavaria) manages the biggest cluster in
Germany
◦ Health-Capital (Berlin): cooperation between
industry, politics, and research

20. Related and supporting
industries (cont.)
 Research and Education
◦ 63 Universities, 26 Technical Colleges, 104
non-academic research institutes, 9 sites for
state departmental research
◦ R&D expenditure in 2010:
 Ranked 3rd out of 25 for total expenditures (OECD)
 Ranked 1st for expenditures by the public sector
(OECD)
 Supporting industries
◦ Pharmaceutical: 63% of revenues from
exports
◦ Medical devices: 62.5% of revenues from
exports

21. Related and supporting
industries (cont.)
 Financing and Capital: most of funding sources
come from venture capital and grants

22. Multinational Business Activity
 Boehringer-Ingelheim
(Pharmaceutical)
◦ Net Sales: 32% in Europe, 46% in
Americas, and 22% in Asia, Australia and
Africa.
 MediGene
◦ operates in Europe and U.S.
◦ First biotech company in Germany to
have revenues from marketed products
 Morphosys
◦ 97% of Revenue comes from outside of
Germany Source: company annual reports

23. Government - Programs
 BioRegio competition of the Federal Ministry of
Education and Research (BMBF) (1995)
◦ Provide impetus
 BioIndustry 2021
◦ Initiative that supports strategic partnerships between
science and industry
 Health and Research Framework Program of the
Federal Government (investment of about 5.5 billion
Euros)
 KMU-innovativ initiative
◦ Aims to provide technology transfer
 Go-Bio measure
◦ Aimed at validation and start-ups
 BioPharma competition

24. Government – Intellectual
Property
 SIGNO: Protection of ideas for commercial use
◦ Helps universities, small and medium-sized
enterprises, people intending to set up in business and
inventors to secure and commercialize their innovative
ideas
◦ It supports 24 patent and commercialization agencies
 Sample Agreements for Research and Development
Cooperation
◦ Help with the drafting of joint projects involving companies
and universities or research institutions
◦ Contribute towards reducing legal and administrative
expense associated with cooperation projects
 Law on Improved Enforcement of Intellectual Property
Rights
◦ Facilitates the battle against product piracy and
strengthens intellectual property rights.

25. Government
Policy Environment

26. Government
Policy Environment

27. Demand Conditions
 Red biotechnology / medical
◦ Large and aging population: GDP health
spending, Germany is 4th (11.6%)
◦ Internal market of highly sophisticated
wealthy consumers
◦ Life expectancy: from 81,5 years in 2000 to
82,7 years in 2009
◦ Increase of chronic illness that needs
medications
◦ Favorable healthcare system
◦ Central position of Germany in Europe

28. Demand Conditions
 Green Biotechnology / Agriculture
◦ Important consumption of biotech animal
feed
◦ Development of Genetically Modified
Food in companies
 White Biotechnology
- Concern towards environment
- Development of green energy
- Advance in green technology in Germany

29. Factor endowment
 Communication
infrastructure
 Long established/start-up companies.
Industry Government and Research
are pulling in one direction
 Medical biotech company
revenueincreased by nearly 20 percent
for the period 2007 through 2010.
 25 Industry Clusters: Lab to Market
Place: Environmental stimulation –
support and competition among
clusters on regional, governmental and
industrial expertise.
 Swiss IMD's second best Infrastructure
Bio-regions

30. Factor endowment
 Skilled labor & technology know-how
 Establishment of broad research
platforms:
Universities/Organizations with
strong international connected
growth searching for investors.
 1.02B in research expenditure
 343 Universities and 330 Research
Institutes cooperating with
companies for new products
 Public R&D: 5.5B – Health
Research Framework: Ex. 1000
Biotech Applications
 50 National Universities: Life
Science/Bio Med Engineers
 48,000 Natural Science and
Mathematics; 21,000 Medicine
Students – with 9,000 obtaining
biology degrees; 5,300 in
Chemistry, 2,300 in Pharmacy
 Germany has proportionally more
natural sciences graduates than
the US or Japan.
 World Class Education System with
84% higher education over OECD

31. Labor Cost

32. Technology know-how
 Best Patent Record in Europe - 2nd to US globally; European leader in
patents: 100 over UK and France; 4th Leading Nation in Triadic Patents
 Molecular Diagnostics: Largest IVD Market in Europe; Regenerative
Therapies; 1B in Heart Research Sector
 Comparatively not the best technological know-how in the industry (bottom
7)