A formidable innovation engine operates at the heart of every life science cluster; consider Stanford, MIT/Harvard and Cambridge and their seminal intellectual and research contributions to the development of pharma, biotech and med tech industries in the patents and Nobel prizes generated, first-rate scientists trained and world-leading companies spun-out into the respective clusters of Palo Alto, US, Kendall Square, US, and Cambridge, UK.

Having spent two years in these clusters engaged with the principal actors — venture capitalist (VC) partners, biotech management, big pharma executives, academics and tech transfer officers — it is clear that competition for deal flow, cash, molecules, grants and talent is fierce, unyielding, and in some respects, global. However, an ambitious tier of European life science innovators, led by the Flanders Institute of Biotechnology (VIB) in Belgium, is challenging the hegemony of the Anglophone triumvirate.

Formed in 1996 as a not-for-profit research institution with EUR25m annual funding from the Flemish government, VIB pooled the expertise among 1,170 people in life sciences research from the four leading universities in Ghent, Leuven, Antwerp, and Brussels, and took a strategic, evidence-based view in assessing which research to fund. Professor Rudy Dekeyser, managing director of VIB explains in more detail: "Our target is to be in the top 10 per cent in the world educationally, and in terms of patents, and publications. We know our targets from day one — to produce 25 patents and 150 publications with an impact factor greater than 5 each year."

The VIB leadership recognises that innovative research takes time, and is financially structured to support programmes for the medium term of three to five years. Dr Dekeyser adds "We try to encourage scientists to think long-term to do front-line research — our focus is on excellence, excellence, excellence." His conviction carries weight when he adds that 10 per cent of principal investigators leave each year; an approach which must make VIB the research equivalent of McKinsey & Co., the management consultants with the up-or-out policy.

Tangible results
This strategic and Darwinistic approach has yielded tangible results: since 1996, VIB has amassed an estate of 165 patent families, yielding EUR17.2m royalties in 2008 alone. In 2009, VIB will disburse EUR100m, with EUR38m coming from the Flemish government and the remainder from industry, grants, and those royalties. Along with the science, job creation, and knowledge-based economic growth, the Government is getting between 50-60 VIB-trained PhDs each year — nascent talent for local demand by industry or academia.

But how are new companies spun-out from VIB? How is technology transfer managed by VIB. "Typically we do a licence deal, but the key criterion to decide to build a new company is whether or not the technology has a very wide application," says Dr Dekeyser. The figures speak for themselves: a total of ten VIB spin-outs have raised EUR353m — five of which are VC-backed, and 60 per cent of all VC in Belgium goes to VIB spin-outs. Talking with management at a successful spin-out such as Ablynx [Euronext: ABLX] based in Ghent, it is unsurprising that Wyeth and Merck KGaA have each entered significant alliance deals worth $212.5m and EUR335m respectively with the firm. Ablynx uses llama-derived, antibody-based drugs which appear to have the best attributes of small molecules with the specificity of antibodies.

European standing
VIB is undoubtedly playing a major role in creating value in the Flanders region, but how does the competitiveness of Belgian biotech compare to the rest of Europe? Ernst & Young's Global Biotechnology Report 2009, published in May, suggests that there is room for improvement: Belgian biotech companies raised less than EUR25m in 2008, ranking it 10th in Europe, marginally ahead of Austria.

Encouragingly, 2008 was a bumper year in terms of alliances for Belgian biotech deals with pharma — ranking 4th behind Switzerland, the UK, and Germany, with ~EUR800m of combined up-front and potential milestone payments, reflecting a maturity in pipeline development. That pipeline needs strengthening since Belgium ranks 13th in Europe for quantity of compounds across all three clinical phases, just behind Norway, Ireland, and most grating, behind its northerly neighbour, the Netherlands. For comparison, the UK dominates the table with almost 250 compounds in clinical development, with Denmark and Germany occupying second and third place.