The secret behind Denmark’s success
The magic of the Danish biotech scene is enterprise foundations
BY CHRISTIAN ELLING, MANAGING PARTNER, SVP LUNDBECKFONDEN BIOCAPITAL
COPENHAGEN, MAY 2023: Something is cooking in Denmark. And it's not just the bacon, beer, butter and pastry that Denmark is so famous for. It's also the vibrant life science and biotech scene with its many leading healthcare companies that have put Denmark on the map as a hot spot for international life science investors and collaborators.
As Head of Lundbeckfonden BioCapital, I have seen first-hand how Denmark’s enterprise foundation model – in some European countries also known as the ‘steward ownership’ model – has built new companies and driven public-private innovation and advances in biomedicine and med-tech in the country.
The Enterprise foundation model is a model with three defining elements; It is a self-sustaining institution led by an independent board. It is a business owner and investor operating with a long-term perspective. And it is a generous philanthropic partner to society.
The long-term ownership perspective is important because it secures the companies' survival, growth and development through volatile markets and other sequential business challenges. The long-term perspective leaves room for scientific discoveries, innovation and development in R&D intensive industries. The model has been instrumental for the success of Denmark’s largest life science companies; Novo Nordisk, Leo Pharma, ALK, and Lundbeck and a seed forest of young biotech companies, which are making progress despite difficult markets. All this has made life science products one of the leading export industries in Denmark. The companies have shown investors that the Danish biotech scene is not just a fairy tale but a real and growing market for investors and collaborators.
The success of Danish biotech is not only due to the enterprise foundation model but also driven by the country’s scientific strengths, which enables new discoveries and paves the way for new products and treatments. Denmark’s big Enterprise Foundations are important financial supporters of Denmark’s eight universities through a wide range of philanthropic grants. The Danish government also offers a range of programs and initiatives which support and benefit innovation and entrepreneurship in the life science sector.
So, what can we learn from the Danish biotech and life science scene? The Danish model shows that a long-term ownership perspective is important for success and business growth in the life science sector and for the new discovery processes and innovation. It also shows what we already knew; That successful development of new biomedical products and treatments requires finances, time and a lot of staying power. It’s not about making an exit – the companies are not for sale unless their owners and the board of directors support this decision. And this is what the enterprise foundation model delivers in Denmark.
Enterprise Foundations Set the Scene
As I was saying: What sets Denmark's biotech scene apart from other countries is the enterprise foundation model, which has been a driving force behind the success of the industry in the country. The enterprise foundations, which include the likes of the Lundbeck Foundation, the Novo Nordisk Foundation and the Leo Foundation, hold the majority shares in the country's largest and most successful pharmaceutical companies bringing medicines to the world of CNS disorders, diabetes, obesity and skin disease. In other industries we see the same picture: Carlsberg Foundation is behind a world-leading brewery building on a strong foundation of scientific advances in refining yeast for centuries of the finest beer-brewing. The A. P. Moller Foundation is behind the world’s largest shipping company Maersk.
The unique feature of the enterprise foundation model is that it ensures that these companies have a long-term perspective when it comes to research and development, which is crucial in all innovation-intensive industries and very much so in the biotech industry. These companies can invest heavily in R&D, even during periods of economic down-turn, knowing that they have the financial backing of the foundations.
Moreover, enterprise foundations have been instrumental in funding and supporting startups and emerging companies in the biotech scene. They provide seed funding, support innovation, and facilitate collaborations between academia and industry.
Hence, Denmark's biotech scene is a fairy tale come true with the country's success in the life sciences industry being driven by a business ownership model, which secure a long-term business perspective and therefore innovation. As international investors and collaborators, we can learn a lot from Denmark's approach to biotech and stand to gain a great deal from investing in this vibrant and innovative hub.
As the famous Danish author Hans Christian Andersen once wrote, "To move, to breathe, to fly, to float, to gain all while you give, to roam the roads of lands remote, to travel is to live." It's a fitting sentiment for Denmark's biotech industry, where the country's biotech companies are traveling far and wide, innovating and giving back to society while also gaining in return.
So, there's definitely something cooking in Denmark – and I urge the world of venture capital and biotech investors to take notice. There is a good chance the Danish model could inspire how to develop the sector in your geographies.
Christian Elling is managing partner, SVP at Lundbeckfonden BioCapital, an enterprise foundation in Denmark that is a long-term owner of several international healthcare companies and an active investor in biotechs based on Danish research. It provides philanthropic grants to scientists and programs at Danish universities.
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As managing partner of Lundbeckfonden BioCapital, I have been fortunate enough to witness first-hand the success of several biotech companies and have become the engaged investor in many exciting companies over the years. Our portfolio now has investments in 20 biotech companies, which include IO Biotech and NMD Pharma to name a few:
IO Biotech is a clinical-stage biotech company that is developing a novel cancer immunotherapy platform. It was IPO’ed and entered NASDAQ in 2021. Their technology has already shown great promise in pre-clinical and clinical trials and has the potential to improve cancer patients' survival rates significantly.
NMD Pharma is another exciting Danish biotech startup that we have invested in. They are developing a treatment for rare neuromuscular diseases such as ALS, spinal muscular atrophy, and myasthenia gravis. Their innovative approach targets a specific mechanism in the nerve cells that could potentially be used to treat a wide range of diseases.
The Lundbeck Foundation is one of Denmark’s largest enterprise foundation encompassing a comprehensive range of commercial and philanthropic activities – all united by its strong purpose; Bringing Discoveries to Lives. The foundation is the long-term and engaged owner of several international healthcare companies – Lundbeck, Falck, ALK and Ferrosan Medical Devices – and an active investor in business, science and people through its commercial investments in the financial markets; in biotech companies based on Danish research and through philanthropic grants to science talents and programmes in Danish universities. The foundation’s philanthropic grants amount to more than DKK 500m annually primarily focusing on the brain – including the world’s largest personal prize for neuroscience, The Brain Prize.
