The BioRegion of Catalonia is home to a total of 734 companies, 49% of which carry out R&D activities. The largest group is made up of biotechnology companies (221), which focus their activities on new therapies and diagnostics, providing R&D and biotechnology services applied to various fields including agriculture, food, cosmetics and industrial processes, to name just a few.

The BioRegion has 94 companies that do R&D in medical technology and 46 pharmaceutical corporations. The large group of suppliers and engineering firms (208 companies) includes many firms with links to two subsectors, medtech and pharma, but that don’t do their own product development. This group is basically made up of distributors, technology suppliers and digital health companies.¹³

Professional services and consulting companies make up 19% of those in the BioRegion and there is a small but stable group of investors (4%).

This large number of companies (734) has grown significantly from the make-up of the sector at the end of 2013, when the previous Biocat Report was published. At that time the count was 512. This increase is due, firstly, to the steady creation of new companies; and, secondly, to many service companies joining the sector from other arenas; finally, Biocat’s efforts to identify all active stakeholders in the different subsectors, and in particular those working in medical technology and digital health, has also had an impact.

Graph 5 shows the growth seen in each segment since the previous report was published, with a total increase of 222 companies. 33.5% were set up over that period.

Between 2013 and 2015, 75 new companies were created in the BioRegion. Most of these were biotechnology firms (27), among which those providing R&D services were predominant (14). There was also a sidagnificant group of new professional services and consulting firms (17) and medical technology companies (14). Although in lesser numbers, there are new companies in every subsector, as can be seen in graph 6.

Given their short history, we have relatively little data on these new companies, most of which are micro-enterprises (fewer than 10 workers) and 25% of which are spin-offs of universities, research centers or hospitals. Among the most recently created companies in the BioRegion, just a handful are subsidiaries of international companies (3), which have opened offices in Barcelona to focus on sales or managing R&D agreements. However a significant number (16 companies, 22%) are the result of, or have benefited from, initiatives to encourage entrepreneurship, like BioEmprenedor XXI and Design Health Barcelona. In this regard, it is worth highlighting that since it was created in 2007, the BioEmprenedorXXI award —a training and mentoring program for entrepreneurs that includes a business plan competition— has led to the creation of 62 new companies, 48 of which are still active in the BioRegion.

Of the companies created over the past two years, three are crowdfunding platforms. This formula is gaining ground as a source of resources for early-stage companies.

In addition to the 75 companies created between 2013 and 2015, the Biocat Directory has added 147 companies active in the BioRegion for which no data was available at the time the previous report was published. As seen in Graph 5, the bulk of these companies work in medical technology —a segment that has 40 new companies, 14 of which were created over past two years and 26 newly identified— or belong to the group of suppliers and engineering firms. This group nearly doubled, from 105 to 208 companies, only 11 of which were created between 2013 and 2015. Nearly half of the companies that make up this segment (56) are active in medtech (distributing medical devices, manufacturing instruments and lab equipment, etc.) and 21 are developing digital health technology. When, further on in the report, we analyze the subsectors of activity for the companies in the BioRegion, we will see that the weight of health and medical technology companies is growing significantly.

If we look at the rate at which new companies were set up over the past two years and compare that to organic growth in the sector between 2005 and 2015 (graph 7), we see a decrease that, however, requires clarification: this figure is only through 30 September 2015 and the detection of new business projects outside of core areas often slows over time.¹⁴

In total, 337 new business projects have been set up in the BioRegion over the past ten years, 30 of which —shown in the lighter color on graph 7— have shut down over this period (with an average lifespan of 5 to 6 years). By subsectors (graph 8), the majority of the new projects were biotechnology companies (133, 39% of the total), and most of the aborted projects were also biotech firms (19 out of the 30). These companies closed for a variety of reasons, although two do stand out: on one hand, a lack of conclusive scientific results for their technology or product to make the company attractive to investors; and, on the other, a weak initial business project or one of its key aspects, like identifying a clear market niche or having a good management team.

It is worth noting the great resilience of Catalan companies in the life sciences sector compared to other innovative sectors. So, we see that only 9% of business projects started up in the BioRegion between 2005 and 2015 came to an end, while several sources show the general mortality rate for innovative companies in Spain and Catalonia is close to 50%. According to a recent study by the Economic and Social Council on R&D in Spain, the number of innovative technology companies dropped from 30,000 in 2009 to just 16,000 in 2013.¹⁵ In Catalonia, according to data from Idescat, in 2009 there were 7,045 companies working in technological innovation, down to just 3,396 by 2013.¹⁶

The size of companies in the BioRegion

88% of companies in the BioRegion are SMEs and, of these, nearly half are micro-enterprises with fewer than 10 employees and annual operating income under €2 millions. Although in relative terms the proportion of SMEs is higher than it was in 2013 (88% compared to 85%), a more exhaustive analysis shows that the proportion of micro-enterprises and small companies has dropped (from 43% in 2013 to 40% now and from 29% to 26%, respectively), bolstering that of medium-sized firms (with between 50 and 250 employees and yearly turnover of between €10 millions and €50 millions) that now make up 22% of the BioRegion compared to 13% in 2013.

Although it is true that the increase in the pool used for calculations¹⁷ means there are more companies in all segments, the increase in medium-sized companies –which doubled— and the relative drop in micro-enterprises and small firms shows that business projects are also growing, which as we mentioned in the previous report is absolutely essential to the consolidation of the sector.

If we turn to look at the subsectors (graph 10), we see that medium-sized companies now make up 20% of all biotechnology firms, when two years ago this segment was only 14% of that total, while the proportion of small firms dropped from 26% to 22%. Among biotechnology firms, there is still a high percentage of micro-enterprises (48%), however we cannot forget, in this regard, that most entrepreneurial projects in biotechnology kick off with a barebones team and see no revenue for the first four years, seeking the support they need to develop their products or technology in venture capital or other public or private investors.

The medical technology subsector also shows a much higher relative weight of medium-sized companies (21% of the total compared to 10% in 2013), while small firms have dropped from 42% to 30% of the total and micro-enterprises, from 42% to 38%. In this case, adding a significant number of companies with years of history and consolidated projects to the pool analyzed has undoubtedly had an impact, unlike the biotechnology subsector (whose growth was purely organic, with 27 new companies created between 2013 and 2015).

The drive towards internationalization, the growing number of licensing agreements between biotechnology and pharmaceutical companies and the interest of investors —which has led to significant operations over the past two years— are good indicators that this upward trend will continue over the coming years.

Turnover of companies in the BioRegion

Companies in the BioRegion of Catalonia posted joint turnover of €14.36 billions in 2014, which accounts for 7% of the GDP of Catalonia. 48% of this income is from pharmaceutical companies, with €6.85 billions,¹⁸ while 20% (€2.91 billions) corresponds to biotechnology companies. The medical technology subsector, as a whole, makes up 22% of all revenue generated by the sector, which is broken down as shown in graph 11, between medtech R&D companies (€1.24 billions or 9%) and the group of medtech distributors, specialized providers and manufacturers of instruments and lab equipment (€1.852 billions or 13% of the total).

If we compare these figures to those in the 2013 Biocat Report (graph 12), we see that the segment with the highest growth is medical technology, which with total income of €3.09 billions doubled the results seen in 2011. We must remember, however, that the number of companies analyzed is also twice as big as that in 2013: then the medtech segment had 106 companies and in this report the group studied is made up of 200 companies.¹⁹

The most significant growth, in terms of sector consolidation, is that of turnover in biotechnology firms. This has increased 20% from 2011 with practically no impact from the increase in number of companies.²⁰ This data confirms the upward trend we’ve already noted in analyzing the size of companies, and is also in line with the increase in personnel shown in graph 13.

As we’ve mentioned previously, in the BioRegion there is a growing group of digital health companies, which cut across several subsectors: software and digital-platform developers grouped under the heading Suppliers and engineering firms, specialized consulting firms and biotechnology companies offering bioinformatics services. In total there are 40 companies, nearly all of which are micro-enterprises, which generate annual revenue of approximately €16 millions and employ roughly 200 people. In another chapter of this report we will delve deeper into our analysis of the latest developments in digital technology for health.

As a whole, the companies in the life sciences sector employ 42,133 workers, which is 8,444 more than in the previous report (up 25%). Biotechnology companies, with a total of 9,989 workers, saw the lowest growth —up 18% compared to growth of 42% in people employed by medtech companies (11,244 employees) and 30% in the number of people working at consulting firms and specialized services, suppliers and engineers (6,622 employees grouped under the heading Other). Once again, it must be noted that the growth in biotechnology firms was organic and not the result of expanding the analysis pool, as happened in other groups. This is therefore a positive indicator of the progressive consolidation of Catalan biotech firms.

We don’t have any data on the number of R&D workers in any of the subsectors, but according to the Spanish National Institute of Statistics (INE) survey on the use of biotechnology in 2013, Catalan biotechnology companies have nearly 2,200 people working in R&D, 56% of which are researchers and the rest, technicians. This figure is surely lower than the real situation, however, as the random methodology used for the INE survey yields a smaller number of biotech companies than those really operating in Catalonia.

According to data from the INE, the Spanish pharmaceutical industry employs 4,449 R&D workers (full-time equivalent, FTE). Based on the weight of Catalonia in the total number of pharmaceutical employees, R&D personnel at Catalan pharma companies is approximately 1,700 FTE positions.

Barcelona, epicenter of the BioRegion

Barcelona is home to 95% of the business fabric in the life sciences sector in Catalonia. As shown in graph 14, the province of Barcelona (94%) and especially the Catalan capital (51%) make up the bulk of the sector.

Outside of the city of Barcelona, the two main concentrations are found, on one hand, in the towns to the south of the capital —where there are more than 70 companies, one third of which are in L’Hospitalet (24)— and in Vallès Occidental, particularly in the areas around UAB-Cerdanyola (31), Sant Cugat – Rubí (33) and Terrassa (20).

Within the capital, the greatest concentration of companies is found in the neighborhoods of Les Corts and Sarrià – Sant Gervasi —which have a total of 169 companies, 45% of all those in the city of Barcelona, with a noteworthy hub at the Barcelona Science Park— and Eixample (28%). The third area of concentration is the neighborhood of Sant Martí (22@), where 13% of all companies in the city of Barcelona are located.

Graph 15 shows the type of companies located in the city of Barcelona, which is home to the majority of investors (81%) and consulting and professional services firms, approximately half of all biotechnology and pharmaceutical companies, but only 39% of suppliers and engineering firms and 36% of medical technology companies.

Technology platforms and scientific services provided by universities and research centers, connections —in terms of logistics but also professional networking— access to highly trained personnel, and proximity to sources of funding and the government are just some of the factors that encourage companies to group together in the city of Barcelona and its metropolitan region. Nor should we forget, in this regard, that 85 of the companies active in the BioRegion are spin-offs of universities, hospitals and research centers, and the majority of public research bodies are also located in the metropolitan area.

Internationalization of companies in the BioRegion

Europe is the destination for most foreign sales of companies in the BioRegion that have products or services on the market. In fact, the main destination of sales for Catalan life sciences companies continues to be Spain, but Germany, Italy, France and the United States are the top international destinations for exports (or where services are marketed). If we broaden our focus to look at which countries are involved in R&D collaborations or that companies expect to enter in the near future (graph 16), the US is by far the top priority for internationalization in the sector, and Great Britain joins the three European countries mentioned previously as a preferred market, although in terms of sales destination it is surpassed by Mexico.

These data come from the survey on internationalization Biocat conducted between March and June 2015, with responses from approximately 100 companies, mostly biotechnology firms (48%). 80% of companies that responded to the survey have products or services on the market and 58% conduct sales activity in international markets. The number of markets where these companies say they are present varies widely (from 1 to more than 100 countries), and although the average is 26 countries per company, only 25% of companies have products in more than 20 markets.

Graph 16 cross responses on the top five markets by volume of sales, the top five countries where organizations have scientific or technological development agreements, and the top five countries companies would like to move into or start collaborations in over the next two years.

Some of the most relevant countries in terms of sales —like Portugal, which 9% of companies list among their top markets, or Switzerland, which is a priority sales destination for 6% of companies— didn’t make it onto the graph because their presence in terms of scientific/technological collaborations or potential future markets is low or non-existent.

Despite the weight of global markets in the sales strategy of these companies, only 40% currently have a department or team specializing in internationalization. 62% of companies with international sales activity have subsidiaries or local branches —in 7 countries on average— but most use local or Spanish distributors to expand their commercial reach.

26% of companies with international sales activity indicate that the income from sales in foreign markets makes up between 80% and 100% of their total turnover, while for 38% of companies foreign sales account for 40% to 79% of their income.

International presence in manufacturing is scarce. Only seven companies out of the hundred that responded to the survey say they have production plants abroad. Of the 10 production centers identified, half are located in Europe, three in Latin America and two in Asia (India and China). Some companies say only part of production takes place there, specifically for the local market.

41% of the companies surveyed say they have scientific/technological development agreements with organizations in 29 different countries, with an average of two international agreements per company. Additionally, 21% of companies have licensed out their products and 20% have acquired licenses on products from other organizations. The partners in these licensing agreements are mainly other companies (89%), research centers (45%), universities (34%) and hospitals (19%).

This data on internationalization must be put into context in terms of the wide variety of business models found in the life sciences sector. Only some types of companies —pharmaceutical, medical device manufacturers, CMOs, etc.— have industrial production activities and seek out foreign markets to export products. Most biotechnology firms, whether they focus on research into new therapies and diagnostics, providing R&D services or working in fields such as food, the environment or cosmetics, work mainly in the pre-production stages and their business models focus on providing services or licensing their products —often a patent for innovative technology— to larger companies, which then produce and market the final product.

Funding companies in the BioRegion

Companies in the BioRegion attracted more than €100 millions in investment over the 2013-2015 period, more than half (€55.16 millions) over the past year (see graph 17 and table 1). In 2015, companies attracted 66% more funds than in 2013, when €33.12 millions were raised and the previous record since recording began in 2003. In 2014, however, there were “only” 16 investment operations for a total of €11 millions –one third of that seen in 2013. Although the figures for that year also include the capital increase by InKemia IUCT Group on the Spanish Alternative Stock Market (MAB) for €3.4 millions.

Despite this drop in direct investment in companies in the BioRegion, 2014 was an extremely positive year given the importance of the operations in the sector. Specifically, Oryzon Genomics signed the largest deal ever reached by a Catalan or Spanish biotechnology firm, selling the rights to exploit its experimental drug ORY-1001 for acute myeloid leukemia —with orphan drug status— to pharmaceutical corporation Roche for a total of $500 millions, including an initial payment of $21 millions and an additional $50 millions in research milestones, $4 millions of which has already been paid out for successful completion of the first stage of phase I clinical trials.²¹ The agreement between Oryzon and Roche covered only two of the 16 patents held by this Catalan biotechnology firm, which was founded in 2000 by Carlos Buesa and Tamara Maes as a spin-off of the University of Barcelona and began its international expansion by opening a subsidiary in Boston (USA) in October 2014, now focusing on research into diseases with a high social impact, like Alzheimer.

Beyond its financial impact, the importance of the Oryzon-Roche agreement lies in the fact that it confirms the great potential of research being conducted in Catalonia and has drawn the attention of international investors to companies in the BioRegion, which has helped attract funds for other important operations.

Oryzon was also one of the companies that fuelled the high capitalization in the sector in 2015, with a round for €16.5 millions that it used to fund its IPO on the Madrid Continuous Market in December 2015.

The other large operation in 2015 in the BioRegion was carried out by Minoryx Therapeutics, a company doing research into rare neurodegenerative diseases that closed a €19.4-millions round to fund clinical validation of MIN-102. This drug is a candidate to treat X-linked adrenoleukodystrophy (X-ALD), a rare disease that causes motor dysfunction and can lead to death for which there is currently no treatment available. This round, led by Ysios Capital,²² was in addition to two operations closed by Minoryx in early 2015: €1.6 millions invested mainly by Caixa Capital Risc and €750,000 from the HealthEquity fund (promoted by the Barcelona Medical Association and the Riva y García financial group). These funds are in addition to the €700,000 in grants and loans from public entities from 2013 to 2015.

In addition to the aforementioned operations, 2015 saw seven more over the million-euro mark (see Table 1). Noteworthy among these, as it is a new area of interest on an upward trend, are the four funding agreements signed by digital-health start-ups: two of which are online platforms to give patients direct access to medical services (TopDoctors and Clinic Point), one to create personalized health plans (Medtep) and one medical imaging software company (Galgo Medical). One of these companies, Medtep, saw investment from a Mexican fund —Stella Maris Partners— and decided to move its headquarters to the United States to facilitate access to the North-American market, although its marketing and product-development teams remain in Barcelona. There are other similar cases of companies in the sector (Avizorex, Neos Surgery, Palobiofarma) that, although their registered business headquarters are not in Catalonia, carry out most of their activity here. As such, we have included them in our investment statistics.

Additionally, a Catalan investment manager, Ysios Capital, led the most important round even seen in a Spanish biotechnology company. Specifically, it involved Sanifit, a company based in Mallorca, which obtained €36.6 millions to fund development of SNF472, a drug to treat cardiovascular disease linked to calcification in kidney dialysis patients.²³

The importance of operations like those of Minoryx and Sanifit is clear when seen in the context of the European venture capital market. According to data from the EVCA, the European Venture Capital Association, this type of investment —seed, early-stage and later-stage venture— totaled €3.6 billions in Europe in 2014, funding projects in 3,209 companies. Countries in southern Europe —Portugal, Spain, Italy and Greece— and those in central and eastern Europe saw the lowest levels of investment: the EVCA estimates €200 millions in VC investment in southern countries compared to the €900 millions of venture capital invested in the three large hubs (Great Britain/Ireland, France/ Benelux and Germany/Austria/Switzerland). Operations in the life sciences sector made up only 13.1% of all venture capital and private equity investment in Europe in 2014, going to 15.8% of all companies that received investment.²⁴

In Spain, the Spanish Association of Venture Capital Firms (ASCRI) puts venture capital investment higher, at €280 millions in 2014, with 10% going to the life sciences sector. Catalonia is home to 38% of the companies, in any sector, that received investment, and more importantly, received 60% of all capital invested.²⁵ In the biosciences, the €10 millions attracted by Catalan companies in 2014, according to ASCRI, makes up 36% of all VC investment in Spain that year.

Over the 2013-2015 period, we also saw new funding options emerge for small innovative companies, which are also new ways to broaden the social base of R&D investment and give access to small investors. We mean crowdequity, a formula based on the idea of crowdfunding —a way of channeling donations to social and cultural projects through the Internet—that goes a bit further. Instead of just making a donation, with crowdequity investors get a share in the company’s equity and can see return on their investment if the project turns a profit.

So, while bodies like FECYT promoted the creation of crowdfunding platforms, like Precipita (October 2014), geared towards raising funds for research and scientific dissemination projects, other private crowdequity initiatives were also launched. In Catalonia, specifically, there are three active initiatives: Capital Cell, founded in 2013, has carried out operations with several companies in the biotech sector, including Iproteos, ZeClinics and SM Genomics; Crowdcube, created in Great Britain in 2011, opened a subsidiary in Barcelona in mid-2014 and closed the largest crowdequity operation ever seen in the Spanish biotech sector in October 2015, raising €234,000 for Mind the Byte; and Funds4Science, the latest of this type of initiative launched in early 2015.

The financial panorama in the sector over the past two years also includes Catalan biopharmaceutical company Reig Jofre going public in June 2014, through a merger with Natraceutical, a company specializing in nutritional supplements. With a joint turnover of €150 millions, this made Reig Jofre the fifth pharmaceutical company to be traded on the Spanish Continuous Market (Madrid Stock Exchange) after Grifols, Almirall, Rovi and Faes Farma. Since then, the company has closed several significant deals, including one to move into the Japanese market with Kern Pharma and other distribution contracts with Catalan biotechnology firms, and closed 2015 with a turnover of €157 milion, 2.9% higher than previous year.

Furthermore, in July 2014, pharmaceutical company Almirall closed an agreement with British-based AstraZeneca to transfer its respiratory line in an operation valued at €1.56 billions, €910 millions of which are in research milestones. This led to the opening of a new AstraZeneca R&D center in Barcelona in June 2015 and the company announcing it will invest €540 millions in research in Spain over the coming three years. In late 2015, Almirall acquired 100% of the Poli Group —a holding company made up of Taurus Pharma GbmH, Polichem, SA, and Polichem S.r.l.— for €365 millions to complement its shift towards dermatology.

2015 saw another significant licensing agreement: biotechnology firm Palobiofarma —which continues to do the bulk of its work in Catalonia despite having moved its registered headquarters to Navarra in 2013 after receiving an injection of capital from Sodena, the financial instrument of the government of Navarra— licensed the rights to its drug PBF-509 to treat lung cancer to Novartis for €13 millions, a figure that will increase if research milestones are met.

The investment activity of Catalan multinational corporation Grifols deserves special mention, increasing its portfolio of stakes in companies and strengthening its position as a key stakeholder in the global biotechnology and biomedical sector. In addition to its stake in Nanotherapix (51%), Araclon (51%), VCN Biosciences (40%), Progenika (60%) and Aradigm (35%) —which we covered in the 2013 Biocat Report— the company acquired 21.3% of TiGenix in November 2013. This Belgian company conducts research in Madrid after acquiring Cellerix, whose founders included former minister of Science and Innovation Cristina Garmendia. Grifols expects to take on up to 40% of TiGenix by 2018.

Just a few weeks later, Grifols announced its purchase of the Novartis hematology diagnostic division, based in California (USA). The operation was valued at $1.67 billions and strengthened Grifols’ presence in the United States, where the company has 120 plasma collection plants, among other assets. In 2014 and 2015, the company expanded its investment portfolio with two additional operations: in September 2014 Grifols paid €21 millions for a 50% stake in Kiro Robotics, a spin-off of the Mondragón Corporation that specializes in producing technology to automatize hospital processes; in March 2015 it acquired 45% of the shares of Alkahest, with an investment of $37.5 millions and an additional $12.5 millions for marketing rights. Alkahest is a spin-off of Stanford University and its researchers have shown that some factors in the blood of young animals can help older animals recover cognitive and mental faculties.

In addition to these investments in companies with innovative projects, Grifols, which closed 2015 with global income of €3.93 billions, devoted more than
6% of its turnover to R&D. Specifically, in 2015 the company invested €236 millions in R&D —5.9% of turnover— up 30% from 2014.

The Biocat Directory shows 26 investment bodies active in Catalonia, including seven associations of business angels, four corporate investors, one institutional investor (Catalan Institute of Finance, ICF) and eight venture capital firms, as well as the crowdfunding and crowdequity initiatives discussed above. All of these organizations invest or have invested in the life sciences sector, but only four specialize in this area and invest a significant volume: Caixa Capital Risc, Ysios Capital, Inveready and HealthEquity.

Caixa Capital Risc led or co-led 26 of the operations in table 1, for a value of nearly €24 millions. It has several investment vehicles, two of which focus exclusively on the biosciences sector: Caixa Capital Biomed (€17 millions) and Caixa Invierte Biomed (€35 millions). It also has a fund for new technology —Caixa Capital TIC, with €20 millions— which could be of interest to digital health companies.

Ysios set up its first fund in 2008, with €69 millions, from which it has invested in 11 biotechnology companies, four of which were Catalan. In 2014, it set up a new fund with €100 millions, also geared towards the bio sector. Of the investment registered in Catalonia, Ysios has led or co-led four operations for a total value of €28.4 millions.

Inveready manages more than €50 millions. Specifically, the Inveready Biotech II fund created in 2012 is endowed with €15 millions. In the BioRegion, this firm has led or co-led 10 investment agreements for a total of €9 millions.

HealthEquity is the newest specialized fund here in the BioRegion. It was promoted by the Barcelona Medical Association and is managed by Riva y García. The fund is endowed with €7 millions, which may be expanded to €15 millions, and so far has participated in two of the rounds closed in 2015 by Minoryx Therapeutics.