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Producing expert services to the pharmaceutical and biotech industries has become an important line of business that creates high expertise jobs in Finland.
A two-year internationalisation project supported by the Finnish Funding Agency for Technology and Innovation Tekes produced five models for the internationalisation of service companies which the companies can utilise at different development stages.
Drug development services have been heavily outsourced, as small drug development companies mainly focus on discovering new prodrugs and larger pharmaceutical companies concentrate more and more on their core competence. Internationalisation is also crucial for the service companies in the industry. They operate from the very beginning in a globally competitive environment, and the home market alone cannot guarantee enough customers.
A two-year internationalisation project supported by the Finnish Funding Agency for Technology and Innovation Tekes produced five models for the internationalisation of service companies which the companies can utilise at different development stages. The models can be utilised in the internationalisation of service companies in other lines of business, too. Eight pharmaceutical industry service companies located in different parts of Finland participated in the project; their services cover a large part of the drug development process and they can be formed into large service entities. Generating growth for the companies, the project was co-ordinated by Turku Science Park Ltd, and until last autumn by its subsidiary Turku Bio Valley Ltd.
Companies benefited already during the project
The internationalisation of many companies involved in the project accelerated during the project. For example, Novamass Ltd in Oulu entered a new phase in internationalisation, and at the same time its turnover increased by 280%, of which more than half came from exports.
The business operations of Biovian Ltd in Turku developed very strongly. Turnover, export share and number of jobs all increased by over 50% during the project (2005–2007). For 4Pharma Ltd, also from Turku, the number of international customers and turnover from them grew considerably. The company provides services for managing, storing and analysing data, as well as medical services and technology solutions especially for pharmaceutical companies.
On the basis of the final report, companies estimate that the project also had a direct positive effect on their internationalisation. Remedium had advanced far in internationalisation when the project started. As a result of a merger in 2006, the company became part of the Nasdaq-listed Encorium Group Inc. and was renamed Encorium Oy in Finland. Encorium Group provides expert services in clinical drug trials for biotechnology and pharmaceutical companies, and employs around 280 experts. The President and CEO of Encorium Group is Kai E. Lindevall, former Managing Director of Remedium.
A model for growing and competitive service branches
The service sector generates the majority of the GDP in industrial countries, and the international trade in services accounts for over 25% of the total world trade. The internationalisation concepts created as a result of this project can also be utilised outside the pharmaceutical and biotech industries in other service branches. Many service sector operations are being transferred to low-cost countries, especially Asia, but according to the final report, cross-border networking and collaboration of Western operators with new competitors may in some cases be a much better solution than hard competition.
There is a plan to invest in the development of knowledge-intensive health biotechnology in the future, too. New opportunities are being thought up in the HealthBIO biotech competence cluster that combines all five biotech centres in Finland. Part of the national Centre of Expertise Programme (OSKE), the cluster is co-ordinated by Turku Science Park Ltd.
Further information: Jussi Holopainen, Chairman of the Executive Group of the project, tel. +358 40 5400 222
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