Basel - The Silicon Valley of Biotech?

Three points made in favour of Basel's biotech hub - the speed of the biotech engine and how policymakers and corporations produce convincing success stories together.

Basel is the centre of an attractive life sciences region with access to a rich pool of talent. The City on the Rhine is also a place where industries, the government and scientific companies collaborate closely across all fields. This has helped in creating a hub, where innovation thrives and new ideas are turned into reality.

Biotechnology – a brief introduction

As defined by the Organisation for Economic Cooperation and Development (OECD), biotechnology is the application of technology to living organisms and their products for the purpose of altering living or non-living matter to advance knowledge, produce goods and provide services.

A generic technology for many industries

Biotechnology is a cross-sectional technology, widely used today to develop new drugs, breed new plant varieties or produce everyday products such as detergents and cosmetics more efficiently. A colour code has been developed in order to distinguish different areas of application: A distinction is made between red, green and white biotechnology, which covers medicine (red), agriculture (green) and industry (white).

Approximately 700 companies involved in Life Sciences employ about 32’000 people in Basel and the surrounding area. An impressive illustration of many possibilities in red biotechnology. No other area in Switzerland has more employees in the Life Sciences sector than Basel.

Society as a whole is becoming increasingly aware of the materials used in daily life. One particular material is changing life on earth like no other - plastic. It is estimated that up to 12.7 million tons of plastic end up in the oceans each year. Depending on the type of plastic, the natural decomposition process takes between several hundred and several thousand years.

New technologies are being developed to help reduce our dependence on plastic. One such strategy is the refinement of bioplastics. We are seeing an increase in natural materials that are biodegradable, even safe to eat in some cases, instead of traditional plastic. Statistics suggest that the use of bioplastics may increase by 20% each year.

What are the key criteria for a biotech company coming to Basel?

The growing number of companies based in the region is a strong indication of the increasing importance of Basel as a biotech hub. What attracts these companies? Why settle in this city on the Rhine? With its high concentration of top pharmaceutical and ICT companies, as well as teaching hospitals and universities, Basel is able to offer companies a large customer base, but also access to a highly qualified talent pool, which is crucial for any high-tech company.

Tax advantages for research and development in Switzerland

Two important tax planning instruments for biotech and other innovative companies are the Patent Box and the increased deductions for research and development. But what is the Swiss Patent Box? At the request of a taxable person or company, the net profit from patents or patent income is taken into account by calculating the taxable net profit in relation to the qualified research and development expenses to the total research and development expenses per patent.

In this context, it is possible to reduce income by up to a maximum of 90 percent, which leads to respective tax advantages for a company with high investments in research. In addition, R&D expenses incurred by a taxable person or company in Switzerland, directly or indirectly through third parties, are allowed as tax deduction up to 150% of the effective and business-related R&D expenses. The respective cantons in Switzerland are responsible for granting approvals upon application. And who benefits from the Patent Box? Large companies benefit from this regulation, but also countless small and medium-sized enterprises in Switzerland (SMEs) active in the field of research, development and innovation.

Can innovation be quantified?

Looking at the past and present of the Swiss Stock Exchange SXI Bio+Medtech Index, it shows that it has outperformed its benchmarks and the NASDAQ Biotech Index by 46 percent over the past five years to January 2020, according to an article published by the Biotech Association in Switzerland.

Basel is constantly growing as a hub for Life Sciences - with more and more biotech companies relocating here. More than ten companies have over 32 products in their pipeline which are undergoing clinical phases. Basel receives additional support on a political level. The government of Baselland, for instance, supports "Switzerland Innovation Park Basel Area" across all political parties. With an absolute majority and without a dissenting vote, the cantonal parliament approved the budget for 2019 - and all the way to 2025. This high-tech innovation park is thus receiving a total of 5.6 million Swiss francs from the canton of Baselland as operating contributions. Also, the region has pooled 5.7 million Swiss francs dedicated to the expansion of BaseLink, a Life Sciences research campus in Allschwil.

Janvier 21, 2021


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