Economics Today, Vol.44, No.1, April 2023

Structure and Ingenuity of Ecosystem
Formation in Life Science- System Formation in Belgium andChallenges in Japan -Tatsufumi AOYAMA
Research Institute of Capital Formation
Development Bank of Japan

This paper is a research created in the Research Institute of Capital Formation,
however, views expressed in this paper are those of the author and do not reflect theviews of the Research Institute of Capital Formation or Development Bank of Japan.

Table of contents
Introduction ----------------------------------------------------------------------------------------------- 1
Chapter1 Life science processes and ecosystems in Japan --------------------------------- 3
1.1Development process in life science --------------------------------------------------------- 3
1.2 Research and development trends at universities and research institutes ---- 4
1.3 Translational research ------------------------------------------------------------------------- 6
1.4 Functions performed by venture capital -------------------------------------------------- 7
1.4.1 Investment trends by venture capital ------------------------------------------------ 7
1.4.2 Activity patterns of venture capital --------------------------------------------------- 8
1.5 Formation of the exit ---------------------------------------------------------------------------- 9
1.5.1 Approach to listing market -------------------------------------------------------------- 9
1.5.2 Exit response by large companies ----------------------------------------------------- 9
1.5.3 Actual product launch --------------------------------------------------------------------10
Chapter2 Review of existing research on ecosystems and life science business -----11
2.1 Theory on the ecosystem ----------------------------------------------------------------------11
2.1.1 Ecosystem Theory by Ron Adner ------------------------------------------------------11
2.1.2 Ecosystem Theory by MG Jacobides -------------------------------------------------12
2.2 Life science as a business ---------------------------------------------------------------------12
2.2.1 How did life science innovation spread? -------------------------------------------12
2.2.2 Characteristics of science business ---------------------------------------------------13
2.2.3 Development process and its probability theory ---------------------------------13
2.2.4 The difficulty of finance from the perspective of Lo's theory -----------------15
2.2.5 Static complementary relationship ---------------------------------------------------15
Chapter3 Transition of Players in the Ecosystem ---------------------------------------------17
3.1 Trends in figures related to individual players -------------------------------------------17
3.1.1 Trends in figures related to university research ---------------------------------17
3.1.2 Changes in investment amount of venture capital ------------------------------24
3.1.3 Changes on the company side ----------------------------------------------------------26
3.2 Ecosystem transitions -------------------------------------------------------------------------30
3.2.1 1980s-1990s: Dawn ------------------------------------------------------------------------30
3.2.2 2000s: Beginning of a clear division of roles ---------------------------------------31
3.2.3 2010s: Dynamic ecosystem --------------------------------------------------------------32
3.2.4 Summary -------------------------------------------------------------------------------------33
Chapter 4 History of Belgian bio-ecosystem formation -------------------------------------35
4.1 Assumptions of Belgium's life science ecosystem --------------------------------------35

4.1.1 Geographical features of Belgium ----------------------------------------------------35
4.1.2 Universities ----------------------------------------------------------------------------------36
4.1.3 Major pharmaceutical companies -----------------------------------------------------37
4.1.4 Characteristics of the Belgian life science field -----------------------------------37
4.2 Formation of an ecosystem in biotechnology --------------------------------------------41
4.2.1 Movements up to the 1990s -------------------------------------------------------------41
4.2.2 Trends in the 1990s -----------------------------------------------------------------------42
4.2.3 Flow of the first decade of the 2000s -------------------------------------------------50
4.2.4 Situation in the 2010s --------------------------------------------------------------------52
4.2.5 Coming Up Next: Solvay Brussels School ------------------------------------------54
4.3 As a summary of the Belgium part --------------------------------------------------------55
Chapter5 Comparison of Belgium and Japan as Ecosystems- As a methodology for strengthening human capital -------------------------57
5.1 Formation of Belgium's bio-related ecosystem -----------------------------------------57
5.1.1 Changes in ecosystem formation ------------------------------------------------------57
5.1.2 What kind of complementarity was observed? -----------------------------------58
5.2 Current status of the ecosystem in Japan -----------------------------------------------60
5.2.1 Overview of large companies -----------------------------------------------------------60
5.2.2 Positioning of venture capital ----------------------------------------------------------61
5.2.3 Research and development environment in academia -------------------------61
5.2.4 Overview of Japan as an ecosystem --------------------------------------------------61
5.3 Necessity of mutually complementary functions: Formation of an ecosystemthat only progresses in a complex manner ----------------------------------------------62
5.3.1 Cooperation of multiple universities and research institutes andimprovement of organizational/academia environment ------------------------63
5.3.2 Education of professional human resources ---------------------------------------64
5.4 Summary of this chapter: How should we exercise ingenuity? -------------------64
Conclusion -------------------------------------------------------------------------------------------------66
References -------------------------------------------------------------------------------------------------67
Interviewees / Accompanying and cooperating with the interview ----------------------68

Structure and Ingenuity of Ecosystem Formation in Life Science- System Formation in Belgium and Challenges in Japan -Introduction
Recently, the term “ecosystem” has increasingly been used among business managers andresearchers. Originally, "ecosystem" meant ‘a biological community of interacting organisms andtheir physical environment’, but in some respects the term is now being used to indicate that
innovation is mutually complementary.
In this paper, the pharmaceutical and medical device fields are collectively referred to as ‘life
science’, but the life science field is one of the fields that takes a very long time from research toactual product development. Naturally, a single organization will not be responsible for all efforts
during this period. The concept of a "cluster" may apply when considering circulation within a certain
region, but in reality, the process from development to market launch often spans regions andcountries.
The term "ecosystem formation" presents difficulty in that it is formed in a manner that overlaps
globally in industry or research & development. Of course, depending on the area, there are areasthat are said to have "ecosystems", but there are also aspects that are formed as subsystems of akind of overall system.
This paper examines how ecosystems in the life sciences have functioned in a mutuallycomplementary manner, how they have changed, and what the challenges are in Japan, through areview of previous research and a case study.
In Chapter 1, I describe the functions of each player in the current life science ecosystem, basicallyin Japan, and qualitatively examine what is emphasized by each business operator.
In Chapter 2, I touch on previous research on the theory of ecosystems and confirm theirdefinitions. After that, through various research on innovation in life science, I confirm the difficulties
unique to life science and how to deal with them.
In Chapter 3, I overview the movements of the players who actually form the system over the past
30 years. In addition, I focus on the formation of an ecosystem in the "development process" andlook at the movements of each player from that perspective.
In Chapter 4, based on the discussion so far, I trace the Belgian bio-industry as a case study for theformation of a life science ecosystem. Unlike the pattern in North America, I verify its characteristics
while confirming from an oral history that an ecosystem unique to Belgium is being formed.
In Chapter 5, I compare the situations in Belgium and Japan based on the framework consideredin Chapter 2 and, from that, reconsider the issues in Japan.
Based on these chapters, the goal of this paper is to examine the following points.
"Mutual complementation" is important in ecosystem theory, and each player exists as an actor
with complementarity. Also, life sciences as a business are characterized by long development
periods and uncertainties. Specifically, as global majors (mainly in North America) expand theirscale, venture capital investment increases, and as this framework solidifies, investment inacademia will increase steadily and the development process will continue to grow.

1This system is globally established, and in terms of connection to the global framework, various
developments have been achieved depending on the country. Belgium is developing based oninvestment in science and human resources. It is one country that has achieved results, and thefoundation of this was the strengthening of science. This is supported by activities such as
Vlaams Instituut voor Biotechnologie (VIB), which is a cross-sectoral organization in universities
and carries out organizational management centered on the career development of scientists.
Belgium is also currently focusing on strengthening human resources. Underlying these
movements is investment in human resources.



In Japan, the development of major pharmaceutical companies shows a certain level of growthamid globalization, but the growth and maturity of finance and academia have not kept up withthis growth. In view of access to a global structure, it is necessary to 1) improve funding methods
for academia in line with the career paths of scientists and 2) flexibly implement human resource
development methods for VCs and entrepreneurs. I believe that there will still be room fordevelopment toward the realization of a mutually complementary ecosystem by removing
bottleneck, such as ‘lack of seed’. To that end, it is necessary to grasp the overall compositionand discuss changes that transcend the historical background of each player.

This paper is created through revisions based on many interviews and opinions on the first draft. I
would like to express my strong gratitude to those who cooperated.

2

Chapter 1Life science processes and ecosystems in Japan

In the current life science development process, roles are divided from academia tocompanies in a manner similar to passing the baton in a relay, with a view to bringing
products to market.
Japan is also adapting to this movement, mainly in large companies. But from theperspective of academia and venture capital, it can be said that there is still room forrevitalization.

1.1 Development process in life science
First, I would like to show the movement of each player in the ecosystem underfoot. It is necessary
to go through various processes in order to create pharmaceuticals and medical devices. Each
product basically has processes for obtaining approvals. (There are products and services that do not
require approvals, but they are excluded from the theme of this paper.)
Until the 1970s, this process was generally carried out within a single company. However, since thebirth of bio-ventures in the late 1970s, venture companies and venture capital have gradually beencreated in the life science industry, and although there are many processes that continue to becompleted within a single company, explicit division of roles increased.
Figure 1 shows the actual division of roles as of the 2020s. In this figure, the upper row is for
medical devices and the lower row is for pharmaceuticals (mainly Biotech), and the timings related
to the development process differ for each. Also, in pharmaceuticals, the timing of involvement ofcompanies, universities, and research institutes differs between the development of small moleculedrugs and the development of biopharmaceuticals. I would like to discuss this point withoutcompletely dividing it into cases.
Fig1 Ecosystem overview in life sciences
Idea /
Prototype

Animal test etc

PhaseⅠ

PhaseⅡ

PhaseⅢ

Approval
・
Reimbursement

Manufacturing* Sales

Incubator
Middle & Large Companies
Medical
Device（Acquisition）

Entrepreneur／
EngineerStart-up [Medical device]

IPO

CommonUniversity

Hospital

Key Opinion Leader etc [ Advisor]
Venture Capital Incl. CVC（Early／Middle／Late）

Research
Institute

Further

Pipeline-type Start-up [Biotech]
BiotechScientist
Platform-type

CrossoverFundStart-up［Biotech]

growthIPO
Middle & Large Companies（Acquisition）
Basic
research

Pre-clinical

PhaseⅠ

PhaseⅡ

Created by the author

3

PhaseⅢ

Approval・
Reimbursement

Manufacturing*SalesBreaking down the flow of Figure 1, there are roughly the following processes.
1. Discovery of seeds from universities and research institutes
2. Existence of venture companies and venture capital that will shape seeds, or R&D within thelarge company
3. Intermediation from the development stage to the commercialization stage, Support for approval
processes such as clinical trials, and Commercialization development by acquiring a venturecompany (this is a process called business development).
4. Domestic or overseas distribution after the market launch
In the current industry of pharmaceuticals and medical devices, the flow of 1 to 4 is seamlessly
established globally and, as a result, new products are born from this circulation. Of course, even now
the number of companies with global sales channels is very limited. In that sense, it is not importantthat each region generally has global distribution channels.
From this point on, I would like to take a look at this situation, first focusing on the current situationin Japan.
1.2 Research and development trends at universities and research institutes
The first is the process of discovering seeds. Of course, the word "excavation" itself is an expression
from an industrial point of view, and research in the field of science is not carried out in order to be"excavated". However, without research and development in such places, the evolution of life
sciences cannot begin.
Here, I focus on universities and look at the changes in numbers of researchers in the field of
natural sciences Health (medicine, pharmacy, dentistry) and their research expenditures in Figures 2& 3.
Fig2 Trends in the number of Natural Sciences–Health researchers by organization and academic field(e.g., universities) in Japan
Number of people

140,000

120,000

100,000

80,00060,00040,00020,000

0
2001

2003

2005

2007

2009

2011

2013

2015

2017

2019

2021

Source: Ministry of Internal Affairs and Communications 'Science and Technology Research Survey'

4

Fig3

Natural Sciences–Health research expenses for internal use (e.g., universities) in Japan
Million Yen

1,400,000

1,200,000

1,000,000

800,000

600,000

400,000

200,000

02001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021

Source: Ministry of Internal Affairs and Communications 'Science and Technology Research Survey'
In terms of the number of researchers, there were 91,115 in 2000, but this will increase to 120,025
in 2021, an increase of about 1.3 times. On the other hand, the trend of research expenses is JPY
823.2 billion as of 2000, but it will be JPY 1.2364 trillion as of 2021, about 1.5 times.
This research is not being conducted in a form directly linked to pharmaceuticals and medical
devices; however, it does include basic research and clinical practice for those fields, and newtreatment concepts are being developed.
Next, I look at trends in the number of academic papers. Figure 4 shows trends in the number of
papers worldwide. Papers in the combined fields of “clinical medicine/psychiatry/psychology” and“basic life sciences” account for 45.1% of all papers as of 2020. Over the last 40 years, these papers
have increased by about 4.0 times, compared to about 4.7 times for academic papers overall,indicating that these two research fields continue to be active.
Fig4

Changes in the number of academic papers worldwide (integer count): 1981-2020
2,000,000
1,800,000
1,600,000
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,00001981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 2020
Total number of paper

Number of papers on clinical medicine and basic life sciences

Processed and created by the author based on “Science and Technology Indicators 2022”, National
Institute of Science and Technology Policy, Ministry of Education, Culture, Sports, Science and5Technology. (Data source: Web of Science XML from Clarivate)
On the other hand, Figure 5 shows the number of papers from Japan. There has been no significant
change in the ratio of "clinical medicine/psychiatry/psychology" and "basic life sciences", but it canbe seen that the number of papers itself has not changed significantly since around 2000. However,whereas in 2000 it accounted for 8.7% (worldwide) of the total number of papers in both fields, as of2020, it was around 4.4%.
Fig5 Changes in the number of papers worldwide (integer count) in Japan: 1981-2020
80,00070,00060,00050,00040,00030,00020,00010,00001981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 2020
Total number of papers

Number of clinical medicine and basic biomedical papers

Processed and created by the author based on “Science and Technology Indicators 2022”, National
Institute of Science and Technology Policy, Ministry of Education, Culture, Sports, Science andTechnology. (Data source: Web of Science XML from Clarivate)
The change in the number of cited papers will be dealt with in a later chapter.
1.3 Translational research
The next topic is translational research, which is development and research conducted with theaim of practical application of themes discovered by researchers in academia. Progress in this field
has also become an issue in individual countries, and various efforts have been made by universities,
research institutes, and governments.
In Japan, the secretariat materials for the "4th Industrial Structure Council Economic and Industrial
Policy Innovative Subcommittee" held by the Ministry of Economy, Trade and Industry on February
16, 2020, also stated that "technological seeds in academia have not led to commercialization yet",and "Japan tends to have fewer start-ups compared to the number of patent applications".
While discussions on such issues have been going on for some time, the number of universitylaunched ventures has been gradually increasing in the life science field—that is, in a broader senseof the healthcare field (Figure 6).
intentionally blank

6

Fig6

Changes in the number of university-launched ventures in Japan
2,905

3,000
2,566
2,500

2,278
2,093

2,000

1,773

1,846

1,500

1,000

500
540

659

702

769

2016

2017

2018

2019

All industry

Biotech/Healthcare/Medical devices

573

907

0
2015

2020

Source: Created by the author based on the website of the Ministry of Economy, Trade and Industry,“University Venture Database”
Although it is a small movement compared to trends in the number of research papers, it is clearthat certain results have been achieved in terms of the technology transfer function and the
involvement of researchers.
I will take the perspective of making this process more active and increasing the number of
products born from that development. Specifically, it is investment activity on the venture capital sidethat hooks up the seeds of academia.
1.4

Functions performed by venture capital

1.4.1 Investment trends by venture capital
Japan has already experienced a bio-venture boom in the past. In 1999-2004, there was a period
when biotechnology start-ups were established all at once, but this movement had calmed down in
the latter half of the 2000s. On the other hand, from a global perspective in the life science field,
venture capital was continuing to become a huge part of industrialization (details are described in
Chapter 3), and whereas Japan had been lagging behind, its pace picked up again in the late 2010s(Figure 7).
Fig7 Number of venture capital investments (bio/medical/healthcare total) in Japan
350
300
250
200
150
100
50
0

Bio, Pharma, Medical devices, Healthcare services
Bio, Pharma
Medical devices, Healthcare services

Source: Venture Enterprise Center7

It is true that this movement is linked to an increase in the number of university-launched ventures,
but the important point is the probability that such development and investment will take shape.
I would like to see how venture capital has changed in recent years.
1.4.2 Activity patterns of venture capital
At what stage does venture capital become involved in development? The way it is involved
changes depending both on the stage of investment—early, middle, and late—and with the times.
Many articles of 10-20 years ago said that the difference between Europe/the United States andJapan was whether or not they had "hands-on" competencies. That means the VC adds various
means of external support to the completed company.
However, the current role of venture capital is dependent on how far the VC can step into thecompany launch—that is, "company creation". Unlike the leadership of a single, strong-willed
entrepreneur, the presence of VCs (or one of the actual founders) who get involved from the creationof the concept is important.
There is a wide range of items necessary for such activities, but the overall process is as follows.
1. Narrowing down of the target disease areas in comparison with current competitors
2. Teaming up of human resources necessary for the development process
3. Building of relationships with key opinion leaders who can serve as advisors
4. Based on the first three items, consultation with experts on building a clinical trial system andsecuring intellectual property
5. Suggestion of appropriate capital policy
Active involvement of venture capital in this process is strictly different from simple investment.
Of course, the funds collected from investors should be invested in promising projects in the future.
The upshot is that venture capital in the life sciences needs to create new value in the medical field
while aiming to maximize returns to investors.
It should be noted that in life sciences, more and more start-up companies are choosing the"stealth" format these days. When you move to raise funds, you have to show "differentiation/
strength", but if you clear the point of "what area to attack’ and have the technology to do it, there
is no need to disclose that information; so, this format trend may be inevitable.
Another aspect consists of key opinion leaders. KOLs exist not only within universities and research
institutes, but also close to the site of treatment. Therefore, it is not easy for a venture company itself
to handle this part alone. The function of venture capital is also important in such situations. VCs
invite these KOLs into their teams as advisors for their own funds. Then the venture capital generally
flows through the network for each project toward reference destinations where there is potential
for new drugs and medical devices.
As its original function, a VC will evaluate the value of the venture company at the appropriate
time and make follow-on investments. From the venture company side, there is also the aspect thatthey want to strongly assert their own value, but if the corporate value increases too early, it will bedifficult to raise funds in the next round. In the worst case, the venture company will misjudge thetiming of the exit. One of the roles of venture capital is to identify an appropriate investment
structure.

8

1. 5 Formation of the exit
Up to this point, I have gone through the establishment of a venture company from projects
developed in academia. Next, I approach the right side of Figure 1. In life science industry, IPO is justone process, and product launch and sales constitute a major goal.
1.5.1 Approach to listing market
Figure 8 shows the timing at which companies currently listed on the Japanese pharmaceutical andbiotechnology market were listed on the current market. This figure also includes large companies
and service companies. Right side lines indicate only the biotechnology, pharmaceuticals, andmedical equipment sectors.
Fig8 Changes in the timing of listing of healthcare companies on the current market
12
10
8
6
4
2
0
2000

2002

2004

2006

2008

Overall healthcare

2010

2012

2014

2016

2018

2020

2022

Only bio,pharmaceuticals,and medical devices

Created by the author
As you can see from this figure, the number of years in which there are five or more listings islimited, even for service-based healthcare providers, and it is difficult to say that the market isrevitalized in Japan.
1.5.2 Exit response by large companies
In life science industry, large pharmaceutical and medical device manufacturers who market andsell their products play a major role. They acquire venture companies to add new products to theirsales line-up. Another common practice is to obtain a license for rights, and this movement is activein Japan as well. These activities are collectively referred to as "business development".
There are various aspects to business development. In terms of medical equipment, acquisition
targets are those that have reached the product/sales stage. In contrast, pharmaceuticals are often
acquired even at the development stage. Medical devices constitute a process of adding new
products to the sales channel, but pharmaceuticals are strongly influenced by the size and contentsof the pipeline itself; so, the company will take over the development of products and launch themon the market.
In addition, manufacturers have a strong incentive to effectively utilize their own sales channels(for specific clinical departments), and business development personnel are watching the trend of
newly developed products that match them, including overseas. Venture companies’ exit strategies
include approaching major companies that have channels to clinical departments where theirproducts should be deployed.
9Especially in the pharmaceutical field, such processes have become a matter of course. Commentsthat "Japanese companies are weak in business development" may have been heard 5 to 10 years
ago, but that notion is a thing of the past. That being said, the manufacturers capable of suchdevelopment are limited to companies with sales that rank among the top 10 in Japan, and overseas
venture companies are the main targets (see Chapter 5).
As a result, acquisitions remain an inactive exit for Japanese venture companies.
1.5.3 Actual product launch
Table 1 shows the approval status of pharmaceuticals. More than 30 drugs containing new active
ingredients are approved each year, but the majority of approvals are from large and medium-sized
drug manufacturers, including foreign companies, and many of them originate from European andAmerican ventures. Approval of Japanese venture origins is rare.
Table1 Approval Status of Drugs Containing New Active Ingredients (Japan)
Year
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021

Numbers of Drugs Containing New Active
Ingredients (Japan)
Biopharmaceuticals

Ratio（％）

2
7
3
2
2
4
6
10
8
8
8
12
10
10
16
9
14
8
14
10
9
24

5
28
13
13
13
19
26
29
24
32
24
32
22
31
27
24
27
33
38
26
24
46

39
25
24
16
16
21
23
35
34
25
33
38
45
32
60
38
52
24
37
39
38
52

(Note) Excludes in-vitro diagnostics, insecticides, and OTC drugs.
Source: “Pharmaceutical Affairs Bulletin”, Pharmaceuticals and Medical Devices Agency “List of
Approved New Drugs”
From Japan Pharmaceutical Manufacturers Association DATA BOOK 2022
Many drugs are developed in-house through collaboration with Japanese universities and research
institutes. However, the formation of ecosystems that include relatively clear divisions of roles has
been limited—that is, in some cases some parts have been activated but a comprehensive system
has not been completed.

10Chapter 2 Review of existing research on ecosystems and life science business

In ecosystem theory, “mutual complementation” is important, and each player exists as
an actor with complementarity.
Life sciences as a business are characterized by long development periods anduncertainties. It is not easy to compensate for risks related to these uncertainties, but as
the commitments of companies, academia, and VCs have evolved, compensation has
been strengthened step by step, and the development of the industry has been inherited.

I have written about industry trends mainly in Japan, but in this chapter I review existing research,focusing on the "ecosystem" and "science and business" perspectives.
2.1 Theory on the ecosystem
The term "ecosystem" is used in a wide variety of ways. From the side of large companies, there
are many cases where it is perceived as "the amount of collaboration within the corporate strategy".
It is also used when talking about the overall picture of stakeholders in the context of businessdevelopment.
On the other hand, from the perspective of regional development, the relationship itself withvarious players in the region is called an ecosystem, and there are discussions that are close to the‘cluster’ theory.
In that sense, it is difficult to grasp the term "ecosystem" in a unified way, but it is important inbusiness administration that ecosystems exist as an alternative way among strategy theory andinnovation theory. Among those discussions, there are by no means many examples that deal withlife science itself, but the following summarizes ecosystem theory from a management perspective.
2.1.1. Ecosystem Theory by Ron Adner
Ron Adner perceives the ecosystem as a theory of corporate strategy and considers the risks
inherent in the ecosystem.
He considers how to utilize responses to those risks in business development. Roughly speaking,in his paper ’Match Your Innovation Strategy to Your Innovation Ecosystem (2006)’, he envisions three
types of risks:
1. initiative risk,
2. interdependence risk, and
3. integration risk.
Initiative risk involves risks inherent in the project itself. It can be said that it is the risk itself related
to the development of pharmaceuticals and medical devices.
Interdependence risk is the risk related to coordinating with complementary innovators. When
moving forward in the direction of development—that is, to each new step—it is essential that thecomplementary innovators experience success before the project itself reaches success.
From the perspective of development, ‘Research by academia’ and ‘Companies bringing theirdevelopment to market’ are interdependent but very time-consuming. One example of the process
is the interdependence between academia and venture capital. As mentioned in the previous chapter,the role of venture capital itself is to play the role of company creation. The VCs themselves need to
be innovators because having a certain amount of success and experience in development is an
important factor leading to successful development.

11

The third type of risk according to Adner is integration risk—that is, risk throughout the entire
value chain of the introduction process of newly developed products and related to the need forconsistency in the process until the product is delivered to the end user.
For pharmaceuticals, the process of "Acquisition of development rights and/or sales rights" also
plays a very important role. The relationships that large and medium-sized companies foster with VCs
and start-ups are critical.
In addition, Adner considers innovation ecosystems in corporate innovation strategies. He stresses
the importance of aligning strategies with the system in particular in his book “Winning the rightgame” (2021). He states that responses to these risks will change over time: “Build as little aspossible”, “Expand incrementally”, and “Inherit”. When doing so, it is necessary to transform theecosystem for success. In other words, rather than just coordinating responses to each risk, theventure needs to take the time to make adjustments.
2.1.2 Ecosystem Theory by MG Jacobides
In his paper 'Towards a theory of ecosystems' (2018), MG Jacobides focuses on the way of "mutual
complementation", which is an important element in ecosystems. In the system, modularity andcooperation are positioned as important elements. Modularity can be thought of as an element thatis replaceable as a kind of part. Leveraging several categories of complementarity, the theory is not
limited to the discussion of individual products, but also applies to the entire industrial structure.
In addition, an important point is that the ecosystem should not be “in the form of someone
controlling the ecosystem”. Rather, the basis of ecosystem theory is that “each player exists as anactor with complementarity”.
There are aspects that are more static than Adner's arguments. On the other hand, works are being
made to grasp how the products and industries are in a mutually complementary relationship as amatrix. I will also examine the matrix of the complementary relationship in life science innovation
later.
An important point common to the theories of Adner and Jacobides is that while defining theexistence of an ecosystem as a methodology for realizing innovation, it is also important to consider
the interrelationship of the entire system.
Rather than focusing on a single business entity, they do the analysis focus on the mutual
complementation of the entire system. This point will be an important guideline in the next section
and later.
2.2 Life science as a business
Based on ecosystem theory as management, it is necessary to look at the life science business asa whole. However, before that, I would like to review research on the business characteristics of life
sciences, especially innovation.
2.2.1 How did life science innovation spread?
Regarding ‘How did the industrial base expand from the origin of development?’, there are several
examples of quantitative research in the field of biotechnology.
First, in ‘Intellectual Human Capital and the Birth of U.S. Biotechnology Enterprises’ (1998), Zucker
et al. analyzed that the highest explanatory variable for the number of ventures born in each region(at the time of writing the paper) is the total number of star scientists that were active between 1976
12

and 1980. Then, in the follow-up 'Commercializing Knowledge' (2002), the variable "whether or notthere are co-authored papers with star scientists" has a significant effect on start-ups’ performance(number of patents).
Thinking about the ecosystem, these papers show that translations from academia are greatly
significant to biotech industry.
On the other hand, S. Casper’s 'How Do Technology Clusters Emerge and Become Sustainable?:
Social Network Formulation and Inter-firm Mobility within the San Diego Biotechnology Cluster’(2007) is emphasized as a theoretical background for cluster formation. Based on insight into the
behavior of senior managers in biotech companies, Eli Lilly’s failed acquisition of Hybritch produced
the mobility of senior managers and other talent among biotech companies in the San Diego region.
As above, in terms of network expansion, the importance of "star scientists in universities" and"influence of core companies" are key points. Biotechnology was both a new technology and a new
industry in the 1970s; thus, the existence of the main scientists and the spread of human resources
who have gained experience had large impacts on performance (= number of patents, etc.). Thisessence has important implications for the development of new modalities, which will be describedlater.
2.2.2 Characteristics of science business
From the perspective of taking life sciences as a business, Gary Pisano's paper "Can science becomea business?: Lessons learned from biotechnology" (2006) and his book "Science Business" are stillreference points.
As for characteristics of life sciences, the time from the start of research and development to actual
deployment in the market is long. Pisano points out that the way the industry manages risk isinconsistent with the long R&D timetables required to create new drugs. As of 2006, he was criticalof the performance of VCs.
At the same time, he said that in the biotechnology era, pharmaceutical research and development
is characterized by ‘Uncertainty’, ‘Complexity and interdisciplinary,’ and ‘Speed and accumulation’and will become more foreground.
In order to deal with these issues, he assumed the need for "vertical integration", against the
backdrop of declining corporate profitability, and for long-term collaboration. Then he proposed
strengthening funding for translational research.
If the times had progressed in the way Pisano wrote, the market for biopharmaceuticals would
have contracted at some point and the scale of venture capital would have become more moderate.
Instead, the pharmaceutical market expanded, mainly in the North American market.
In the fifteen years since then, various methods have been created to compensate for the longdevelopment period, such as the existence of crossover funds and "long-term collaboration".
However, it can be said that he had explained most of the industrial structure itself in 2006.
2.2.3 Development process and its probability theory
Next, I would like to think about the real development process and its probability theory.
First, at universities and research institutes, development is being carried out as basic research.
Recent years have seen the flow of the "omics revolution"—that is, comprehensive research on
molecules in the living body, including genomics, transcriptomics, proteomics, metabolomics and soon.
Also, from the perspective of modalities involved in actual drug discovery, in addition to existing13

low-molecular medicine, there is wide use of biomedicine, recombinant protein and peptide
medicine, nucleic acid medicine, gene therapy and regenerative medicine. Various papers have been
produced while intertwining these and other treatment methods for individual diseases.
The process of moving from basic research to actual drug discovery includes (1) treatment
hypotheses for each disease and specific designation of modalities, (2) identification of drug
discovery targets, (3) identification and optimization of compounds, etc.
Regarding the "uncertainty" in this process, when you take a look at the probability theory fromthe JPMA data for low-molecular-weight compounds, Table 2 shows a ‘1 in 22,000 chance’ of approval
on a compound basis.
Table2 Number of compounds by development stage and stage transition probability (cumulative
over 5 years)
Number of compounds by development stage (cumulative over 5
years)
Fiscal year

2000-2004

Start of
Synthetic compound Preclinicalstudy
463,961
215

Start of
Domesticclinical trial
127

Stage transition probability (5-year
cumulative)～Start ofApproved (inPreclinicalhouse)
study
36
1:2,158～Start ofDomesticclinical trial
1:3,653～Approved(in-house)
1:12,888

2001-2005

499,915

197

97

32

1:2,538

1:5,154

1:15,622

2002-2006

535,049

203

73

27

1:2,636

1:7,329

1:19,817

2003-2007

563,589

202

83

26

1:2,790

1:6,790

1:21,677

2004-2008

611,576

199

81

24

1:3,073

1:7,550

1:25,482

2005-2009

652,336

203

75

21

1:3,213

1:8,698

1:31,064

2006-2010

673,002

216

83

22

1:3,116

1:8,108

1:30,591

2007-2011

704,333

219

85

26

1:3,216

1:8,286

1:27,090

2008-2012

742,465

198

71

25

1:3,750

1:10,457

1:29,699

2009-2013

728,512

201

68

25

1:3,624

1:10,713

1:29,140

2010-2014

712,040

190

74

29

1:3,748

1:9,622

1:24,553

2011-2015

703,397

165

70

28

1:4,263

1:10,049

1:25,121

2012-2016

674,850

151

62

26

1:4,469

1:10885

1:25,956

2013-2017624,482

146

65

24

1:4,277

1:9,607

1:26,020

2014-2018582,573

150

62

26

1:3,884

1:9,396

1:22,407

2015-2019545,967

146

53

24

1:3,740

1:10,301

1:22,749

2016-2020

505,141

173

52

23

1:2,920

1:9,714

1:21,963

Notes:
1. The number of low-molecular-weight compounds excludes chemical libraries such as
combinatorial chemistry.
2. Excludes additional dosage forms and indications only for in-house products (excludes inlicensed products).
3. The step transition probability indicates the ratio of the number of compounds in each step toall compounds.
Source: Research by the Japan Pharmaceutical Manufacturers Association (total of domestic
companies among R&D committee members)
From Japan Pharmaceutical Manufacturers Association DATA BOOK 2002
However, this is the story of the entire small molecule process. As for project-based probability,
the numbers are different than those in the chart.
14

Example: MIT Laboratory for Financial Engineering ‘Project Alpha’ (as of 2022Q1), 68.8% (71.3%
excluding cancer) from Phase 1 to Phase 2, 50.4%; (60.1%) from Phase 2 to Phase 3; 43.5% (48.4%)
from Phase 3 to approval; total 10.3% (16.2%) from Phase 1 to approval
These figures are different from the roughly 1 in 22,000 figure referenced in Table 2.
Note that Project Alpha, the source of these numbers, is led by Andrew Lo, which is very importantfrom the standpoint of looking at this development from a financial perspective.
2.2.4 The difficulty of finance from the perspective of Lo's theory
Andrew Lo’s paper 'Can Financial Economics Cure Cancer?' says that the funding structure is notcommensurate with the risk from the perspective of financial engineering. Pharmaceuticaldevelopment is extremely costly and time consuming, and the historical probability of success isgenerally low. Through the omics revolution, the complexity and risks of drug development haveincreased, and the efficiency of the drug development process has decreased (so-called Eroom’s law).
The point that the “Valley of Death” is also manifesting is similar to the situation pointed out by
Pisano.
Under these circumstances, only investors who seek high returns are the ones who invest in “single
drug discovery”, which is a high-risk asset type. Lo’s theory is that in order to avoid such a situation,
it is possible to appropriately raise funds by creating a portfolio of investment assets and controlling
their correlation.
In the first place, early-stage biotech companies have high beta values, while pharmaceuticalcompanies have beta values almost below 1.0. Biotech companies stand out for their high cost ofcapital, as they face both scientific and financial risks, with financial risks driving high betas.
Lo argues that a de-correlated portfolio of investments in these companies should free up moremoney for drug development.
And the expected present value of such an investment depends on three terms: the profit
generated by the drug, the program's probability of success, and the cost of development. Of these,
PoS (success rate) analysis is very suitable for academia; so, Lo continues to disclose the details of the
project that calculates this, and this is the number of Project Alpha mentioned above.
On the other hand, based on this paper, the mystery of why development has been divided intoroles can be somewhat solved. Entities that can make high-risk investments are limited to companies
with a low beta value, such as large companies and giant venture companies with strong abilities toraise capital.
Therefore, it is said that it is usually difficult to invest. But on the flip side, it is possible for a groupof such companies to acquire ventures that have development assets in the early stages. Also, we cansee the situation that venture capital has appeared with an eye on the exit.
Of course, Lo talks about ways to overcome this situation. But it is also understandable that
previously the challenges related to uncertainty were gradually covered by corporate growth.
2.2.5 Static complementary relationshipI would like to return to the discussion in 2.1—that is, Jacobides' discussion about the kind ofcomplementary relationships being built with respect to risk in the current life science industry.
The first complementary item is that of "uncertainty" discussed by Pisano and Lo. Continuous
development of existing products, development of new products, and development in newmodalities all have different uncertainties. However, commercialization needs to involve laboratory,
preclinical, and clinical processes. As mentioned above, Lo recommends the use of financial
15

engineering to fill this uncertainty. However, so far, this uncertainty has been alleviated by (1) thehigh quality of science at the start, (2) ‘creation’ by venture capital, and (3) investors who support
this process.
Another point is time compensation. In the case of life sciences, time would be (1) the number ofexperiments in the laboratory stage, and (2) the time (and cost) in the process from preclinical tolarge-scale clinical trials. From the perspective of large companies, the point is how much time shouldbe spent on (1). Also, if you try to reduce the uncertainty risk mentioned earlier, you will have todecide whether to follow the process in (2) from scratch or to take a shortcut by introducing the
product from another company.
Figure 9 was created with these points in mind. By performing such risk supplementation, it
becomes possible to "present a new treatment method to the patient", which is the most important
aspect.
Fig9

Matrix of complementary relationship

Uncertainty
Imputation/
Large

New
omics,New
modalityStrengthening the commitment of academia,
company creation by VCs, and finallydelivering the fruits

Companyʼs early commitment, in addition to
everything listed in the column to the left

Uncertainty
Imputation/
Small

Existing
modality

VC investment with an eye on the exit and its
exit

In-house development or collaboration level
relationship

Late stage involvement

Involvement from Pre-clinical

Time interpolation/Small

Time interpolation/Large

Created by the author

16

Chapter 3 Transition of Players in the Ecosystem






The number of researchers has remained at a certain level, except in the United States,
but development costs in academia have been steadily increasing.
Venture investment has grown significantly over the past 20 years, mainly in the UnitedStates. Sales grew rapidly in Europe in the 2010s and showed growth in Japan in the latter
half of the 2010s.
Major global companies were the first to show significant growth in the ecosystem,
increasing the amount of development costs and intangible fixed assets.
Therefore, as major global companies expand their scale, venture capital investment will
increase. As this framework solidifies, investment in academia will increase steadily andthe development process will continue to grow.

Based on the discussion so far, this chapter focuses on the "life science ecosystem and its
transition". Although a very simple method, I look at the transition of how the development cost in
the life science field is invested, in absolute amount throughout the whole system.
First is investment in universities. Among them, there will be some that actually become
translational start-up companies, and some that will be used for new drug discovery and medical
device development at the corporate level after basic research.
From here, the story is divided into two routes, one of which is investment by venture capital. Of
course, not all of this money goes to research and development expenses—it goes to all activities ofthe venture company, including sales—and the probability of success as a company is limited.
However, much of its activity is invested in research and development itself.
The next step is research and development at the corporate level, and there is likely some overlap
with university research. Also, when a venture company exits, funds are a feature of the acquisitionand such payment is recorded in the form of intangible fixed assets and goodwill. After that, thecompany itself bears the subsequent development costs. When it comes to corporate-level figures,acquisition payments include venture capital and shareholder returns; so, figures differ from puredevelopment investment.
In this way, the transition of capital investment in the development life cycle becomes moredifficult to grasp—that is, the actual cost from the origin as it goes to the exit stage. However, bylooking at how funds have been invested in each process in some countries, it will be possible tounderstand the evolution of the ecosystem.
3.1 Trends in figures related to individual players
3.1.1 Trends in figures related to university research
The origin of the ecosystem is universities and research institutes. As in Chapter 1, I look at thetrends in the number of researchers in the life sciences.
(1) Changes in the number of researchers
OECD data shows the trends in the number of researchers in each country, but countries showing
disaggregated figures are limited. For example, the figures of the United States, the United Kingdom,and France do not appear in the OECD data.
Bearing in mind the above limitations, Figure 10 shows Medical and health sciences data of nine17European countries (Belgium, Denmark, Finland, Germany, Italy, the Netherlands, Poland, Portugal,
Spain)13 and Japan. The absolute number of researchers in Japan exceeds that of the nine European
countries, but the overall number in Japan is declining.
Fig10 Changes in the number of R&D personnel (Medical and health sciences)
R&D pesonnel_Medical and health sciences_Total internal personnel（Number of People）

120,000

100,000

80,00060,00040,00020,00001995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Denmark

1995

1996

1997

1998

1999

Belgium

FinlandGermany

Italy

Netherlands

PolandPortugal

Spain

Japan

Belgium

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

3,446

3,494

3,276

3,568

3,925

4,017

4,310

4,526

4,775

5,040

4,975

5,138

5,116

5,502

6,045

6,593

6,228

6,233

5,121

5,528

6,220

6,585

7,276

7,083

6,915

7,172

7,203

3,253

3,543

3,185

3,247

3,062

3,032

3,071

3,030

3,043
27,358Denmark

1,193

1,100

1,014

1,332

3,273

3,387

3,367

3,924

4,156

4,555

Finland

1,684

..

2,572

2,684

2,950

2,949

3,009

3,432

3,533

3,583

3,608

3,693

3,270

Germany

24,59424,90824,48023,92825,94525,40526,18626,30826,682

24,447

23,38024,03726,00026,49627,283

27,10927,75027,20927,53928,47927,71327,541

10,182

12,576

10,01910,13010,424

10,02910,19010,452

10,474

10,225

10,477

10,937

13,142

11,453

11,274

10,425

10,147

10,252

10,45910,36010,086

10,258
11,423

1,086

Italy

3,411

Netherlands

5,112

5,001

5,252

5,186

8,922

9,677

9,766

9,868

9,938

10,173

10,31910,441

10,831Poland

6,240

5,725

7,308

7,562

6,557

6,885

8,630

7,380

6,846

7,647

7,788

7,456

1,220

673

6,796

7,536

7,771

7,093

6,459

7,436

7,485

9,548

Portugal

700

746

792

811

825

859

893

896

899

895

891

1,121

1,351

3,532

3,414

3,135

3,076

3,291

3,565

3,385

3,588

3,885

3,950

Spain

4,859

5,781

5,165

6,282

6,020

6,691

7,245

7,090

9,518

10,853

11,438

11,048

11,591

12,39912,566

12,883

12,551

12,64012,156

12,20012,106

12,174

13,493

Japan

104,920 81,566

82,66882,466

81,386

79,90879,361

69,29970,35871,75473,55574,90375,65859,81760,74062,93564,827

65,83967,80069,07369,34370,95871,864Created by the author based on OECD 'Main Science and Technology Indicators'
Unlike Japan's decline, Belgium's growth is conspicuous. However, since the 2000s, the number of
researchers in this field has increased significantly in only four of the nine European countries:
Belgium, Denmark, Portugal, and Spain.
Fig11 Changes in the number of R&D personnel (Medical and health sciences) per 100,000 population
R&D pesonnel_Medical and health sciences_Total internal personnel per 100,000
population
140
120
100
80
60
40
20
0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Belgium

FinlandGermany

Italy

Netherlands

PolandPortugal

Spain

Japan

DenmarkCreated by the author based on OECD 'Main Science and Technology Indicators'
13

Countries with less than 3,000 R&D personnel or countries for which data can only be obtained
every other year are excluded.
18

On the other hand, in the United States, I look at trends in the number of newly acquired
doctorates in the healthcare field. Table 3 compares these figures for Japan and the US. Relative tothe population, the number of doctoral degree holders in Japan is large, but the United States has
produced about 1.7 times as many doctoral degree holders on an annual basis over the past 30 years.
There are no major changes in Japan. Considering population growth, the growth in the US figures isstill limited, but we can see that the absolute number of researchers, which is the base, has beensteadily raised.
Table3 Numbers of new doctoral degree holders in Japan and the US-US1991

1996

2001

2006

2011

2016

2021

Agricultural sciences and natural
resources

1,277

1,289

1,132

1,146

1,206

1,379

1,334

Biological and biomedical sciences

4,649

5,724

5,697

6,652

8,152

8,863

8,149

Health sciences

1,041

1,324

1,540

1,905

2,177

2,297

2,331

6,967

8,337

8,369

9,703

11,535

12,53911,814

1991

1996

2001

2006

2011

2016

2019

Agriculture

870

1,043

1,248

1,378

1,046

933

917

Health

6,356

6,800

6,962

6,981

6,229

6,206

6,372

7,226

7,843

8,210

8,359

7,275

7,139

7,289

Life sciences-Japan-Total

Sources
US: National Center for Science and Engineering Statistics, Survey of Earned Doctorates
Japan: “Science and Technology Indicators 2022”, National Institute of Science and Technology Policy,
Ministry of Education, Culture, Sports, Science and Technology.
(2) Trends in R&D expenses
Next is research and development expenses. The following is the change in figures in the medical
field under the category of higher education in the OECD.
As was the case for previous figures and tables, the number of countries for which data can beobtained continuously up to the recent past is limited; however, since comparisons can be made up
to the year 2000, including for the United States, the trends in R&D expenditures in the United States,
Japan, and Germany converted per capita are shown in Figure 12.
Regarding these figures, development costs in this field were not necessarily high in the UnitedStates until the late 1990s. However, as described later, I would like to consider the United States
National Institute of Health figures as reference values.

intentionally blank19

Fig12 Trends in R&D spending in the fields of medical and health sciences in higher education
Gross domestic expenditure on R&D by sectorof performance and field of R&D ：per capita

＄

60
50
40
30
20
10
0
1981

1983

1985

1987

1989

Japan

1991

Germany

1993

1995

1997

1999

2001

United States

Created by the author based on OECD 'Main Science and Technology Indicators'
I can’t find detailed OECD data for the United States for later years; so, for years after 1995, I lookat the figures below for the previously mentioned nine European countries plus the UK. The upper
part of Figure 13 shows changes in absolute numbers, and the lower part shows figures per numberof people. Looking at per capita, the Netherlands, Belgium, Denmark, and Finland have grownsignificantly, and Germany has also shown a certain level of growth. In Japan, after a temporary
decline in the latter half of the 1990s, the per capita numbers have been gradually recovering,whereas the absolute amount has returned fully to the base of the latter half of the 1990s.
Fig13

Trends in R&D spending in the fields of medical and health sciences in higher education

Million $Gross domestic expenditure on R&D by sector of performanceand field of R&D

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0

Belgium

FinlandGermany

Italy

Japan

Netherlands

PolandPortugal

Spain

United Kingdom

Denmark

20

1995

1996

1997

1998

Belgium
Denmark

152

133

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

415

408

414

421

436

469

496

495

527

607

670

689

704

689

732

704

758

799

793

820

855

122

130

142

378

390

403

432

486

564

656

702

818

865

981

1,007

929

976

948

Finland

118

226

234

263

260

278

318

317

334

332

348

343

350

355

382

348

341

313

315

319

323

329

350

358

Germany

3,176

3,337

3,310

3,161

3,447

3,589

3,772

3,850

3,957

3,655

3,580

3,841

3,924

4,360

4,373

4,574

4,787

4,833

4,566

4,851

4,767

4,860

4,922

5,238

5,229

1,158

1,229

1,294

1,183

1,157

1,115

1,105

1,102

1,121

1,084

1,047

1,025

1,219

1,205

1,197

Japan

6,597

4,511

4,557

4,875

4,712

4,826

5,099

5,143

5,195

5,251

5,414

5,506

5,781

5,549

5,919

5,879

6,326

6,678

6,671

6,907

6,542

6,504

6,626

6,576

6,526

Netherlands

804

816

834

856

1,071

1,251

1,259

1,342

1,378

1,390

1,452

1,453

1,543

1,780

1,735

1,686

1,623

1,653

1,703

1,705

1,654

1,657

1,826

1,719

Poland

98

102

119

133

148

169

168

155

143

157

122

151

36

15

236

231

274

485

300

317

386

456

588

679

1,008

Portugal

46

50

53

64

75

72

70

67

65

67

69

87

105

219

237

235

211

196

218

222

235

244

250

247

263

Spain

386

392

372

431

448

459

484

495

640

720

769

739

777

861

870

892

866

866

862

875

888

848

909

931

1,006

2,662

2,784

2,709

2,653

2,642

2,597

2,623

2,673

2,614

2,685

2,829

2,912

Italy

UnitedKingdom＄

Gross domestic expenditure on R&D by sector of performance and fieldof R&D：per population

200
180
160
140
120
100
80
60
40
20
0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Belgium

FinlandGermany

Italy

Japan

Netherlands

PolandPortugal

Spain

United Kingdom

DenmarkCreated by the author based on OECD 'Main Science and Technology Indicators'
I also look at US data for the same period, but it is based on R&D expenditure in US universities inthis field (see Figure 14).
Fig14

Trends in R&D spending in the life sciences field in higher education in the United States
Higher education R&D expenditures, by R&D field: FYs 2005–20＄

Thousand
60,000,000

50,000,000

40,000,000

30,000,000

20,000,000

10,000,000

0
2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Life sciences

Agricultural sciences

Biological sciences

Medical sciences

Natural resources and conservation

Life sciences nec

21

2018

2019

2020

Higher education R&D expenditures, by R&D field: FYs 2005–2020（Per population)

＄
160
140
120
100
80
60
40
20
0

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Sources: National Science Foundation/National Center for Science and Engineering Statistics, Higher
Education Research and Development Survey
Looking at the transition here, the movement of the numbers is different from the situation up toaround 2000 seen in Figure 12. Compared to Germany and Japan, which have grown about 1.2-1.4
times since 2005, the growth rate in the United States is 1.6 times, even per the population.
Supplementing this data, I show the budget growth at the National Institutes of Health in Figure
15 below.
Fig15

Changes in the NIH budget
Million45,000＄

NIH Budget

40,00035,00030,00025,00020,00015,00010,0005,000
01995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019

Source: NIH Data Book
(3) Changes in the number of papers
On the other hand, here I look at the transition in the number of papers as one of the achievementsof academia. Table4 shows trends in the number of papers published in basic life sciences and clinicalmedicine over the past 30 years, as well as the number of corrected Top 10% papers and the numberof corrected Top 1% papers. In Chapter 4, I would like to see more detailed trends in each European
country.
In terms of the number of Top 10%-cited and Top 1%-cited papers, Japan most recently has notbeen among the top 10 countries in either category (ranked 12th in both).
Note that the obviously large growth in China’s production of papers is not discussed in this article,
partly because the movement is rapid.
22

Table4

Changes in the number of papers published by country/region-Basic life scienceＦＹ1 99 7 - 1 9 9 9(ave rage ）Number of papers
Country
Papers
1 U.S.
77,327
2 Japan
19,888
3 U.K.
19,3494 Germany
17,4795 France
13,786
6 Canada
10,8927 Italy
8,335
8 Australia
6,780
9 Spain
6,543
10 Netherlands
5,768
Number of Top 10% cited papers
Country
Papers
1 U.S.
11,263
2 U.K.
2,659
3 Germany
1,860
4 France
1,360
5 Japan
1,353
6 Canada
1,302
7 Netherlands
759
8 Australia
715
9 Switzerland
651
10 Italy
638
Number of Top 1% cited papers
Country
Papers
1 U.S.
1,307
2 U.K.
287
3 Germany180
4 France
135
5 Canada
123
6 Japan117
7 Netherlands
82
8 Switzerland
76
9 Australia
67
10 Sweden
60

ＦＹ2 0 0 7 - 20 0 9 （ ave rage ）ＦＹ2 01 7 - 2 0 1 9（ ave rage ）Country
U.S.
U.K.
GermanyJapan
ChinaFranceCanadaItaly
BrazilSpain

Papers
94,506
22,737
22,103
21,692
18,505
15,514
14,693
13,23011,647
11,363

Country
U.S.
China
U.K.
GermanyJapan
BrazilItaly
FranceCanadaIndia

Papers
112,508
83,78030,021
29,262
21,76820,542
19,51319,05018,757
16,971Country
U.S.
U.K.
Germany
FranceCanada
Japan
China
Italy
Australia
Spain

Papers13,833
3,725
2,925
2,011
1,850
1,606
1,586
1,367
1,335
1,250

Country
U.S.
China
U.K.
Germany
Italy
FranceAustralia
CanadaSpain
Netherlands

Papers15,981
9,203
5,147
4,415
2,810
2,747
2,660
2,535
2,216
2,013

Country
U.S.
U.K.
Germany
FranceCanadaAustralia
Japan
Netherlands
Italy
China

Papers
1,608
444
323
219
207
162
162
142
132
123

Country
U.S.
China
U.K.
Germany
FranceAustralia
Canada
Italy
Netherlands
Spain

Papers
2,042
848
699
573
366
360
342
328
316
274

-Clinical medicineＦＹ1 99 7- 19 99 (ave rage）
Number of papers
Country
Papers
1 U.S.
55,236
2 U.K.
15,4603 Germany
13,4994 Japan
13,497
5 France
8,979
6 Italy
6,964
7 Canada
6,318
8 Netherlands
4,654
9 Australia
3,989
10 Sweden
3,742
Number of Top 10% cited papers
Country
Papers
1 U.S.
8,187
2 U.K.
1,917
3 Germany
1,151
4 Canada
944
5 Japan886
6 France820
7 Italy763
8 Netherlands
714
9 Sweden506
10 Australia
476
Number of Top 1% cited papers
Country
Papers
1 U.S.
969
2 U.K.
220
3 Canada132
4 Germany102
5 France102
6 Italy89
7 Netherlands
89
8 Japan54
9 Sweden54
10 Australia
53

ＦＹ20 0 7- 20 09 （ave rage ）ＦＹ2 0 17 -2 01 9（ average）

Country
U.S.
U.K.
GermanyJapan
Italy
FranceCanadaChina
Australia
Netherlands

Papers73,522
20,056
17,782
14,857
11,545
11,136
10,650
8,677
8,016
7,794

Country
U.S.
China
U.K.
GermanyJapan
Italy
CanadaAustralia
FranceNetherlands

Papers104,356
46,69829,061
23,03419,80818,03017,66016,326
14,466
12,777

Country
U.S.
U.K.
Germany
Canada
Italy
Netherlands
FranceAustralia
Japan
Switzerland

Papers
11,507
3,014
2,110
1,720
1,586
1,428
1,385
1,103
1,078
802

Country
U.S.
U.K.
China
Germany
Italy
CanadaFranceNetherlands
Australia
Spain

Papers
15,763
5,568
4,636
3,734
3,385
3,153
2,640
2,617
2,600
1,983

Country
U.S.
U.K.
Germany
CanadaItaly
FranceNetherlands
Australia
Switzerland
Spain

Papers
1,369
419
267
246
214
210
195
144
122
112

Country
U.S.
U.K.
Germany
CanadaFranceItaly
Australia
Netherlands
China
Spain

Papers
2,106
931
615
562
510
507
453
428
396
370

Processed and created by the author based on “Science and Technology Indicators 2022”, National
Institute of Science and Technology Policy, Ministry of Education, Culture, Sports, Science andTechnology (Data source: Web of Science XML from Clarivate)(4) Brief Summary
Here's a quick summary of what I can learn from these numbers.
-

In Japan, although the number of researchers themselves is on the decline, R&D expenditures
have returned to the mid-1990s level, and R&D expenditures per capita are increasing slightly.
However, the number of Top 10%-cited and Top 1%-cited papers dropped out of the top ranks.
23

-

-

In Europe, data is available only for a limited number of countries, but within the scope of ninecountries, Germany's movement is standard, and around that, Belgium, the Netherlands, andFinland are moving actively. Looking at Germany, the number of researchers has increased only
slightly since the mid-1990s, but the cost of investment in research and development hasreached 1.6 times, showing a steady increase. However, like in Japan, there are some countries
where R&D spending is sluggish.
In the United States, R&D expenditure levels have accelerated since around the year 2000, andnot only personnel but also development costs are at 1.8 times their 2005 levels.

The financial input to science at the university level differs from country to country, but with the
exception of the United States, there are not many Western countries where an extreme increase
can be seen, and there are some countries where, similar to Japan, it is somewhat flat.
3.1.2 Changes in investment amount of venture capital
Next, I would like to look at the status of capital investment in ventures. Since it is difficult to obtain
continuous and consistent numbers in this field as well, I look at the overall picture while checking itwith the data that can be obtained. Please forgive the lack of consistency in that sense, as there areconsiderable differences in the fields covered by the figures, such as those for biotechnology and life
sciences in general.
First of all, if I look at the start-up of "venture capital investment in the biotechnology industry"rather than in life science as a whole, the cumulative investment amount exceeded USD 5 billion from1978 to 1994. In 1998, cumulative investment exceeded USD 10 billion, and thereafter continued toincrease by USD 3 to 5 billion annually until 2004. The first half of the 2000s was a period of fullfledged takeoff in the biotechnology field.
On that premise, I would like to consider the following transitions as involving deals in the life
sciences as a whole.
[USA]
Data from NVCA (National Venture Capital Association) shows that investment in this field
progressed at a pace of about USD 4 billion annually in the 2000s overall. Since 2013, the figure has
exceeded USD 10 billion annually, and this figure is increasing at a rapid pace.
In addition, the scale of fundraising became extremely large in the latter half of the 2010s.
Since the life science field has also included digital aspects, the increase factor is not necessarily
directed to pure drug discovery and development of therapeutic medical devices, but compared to
the latter half of the 1990s, the situation in the United States is that the amount of annual investment
has grown tenfold in just 20 years.
[Europe]On the other hand, regarding the trend of figures in Europe, the investment amount of the entire
venture capital remained at the level of EUR 2 to 3 billion from 2007 to 2016, but since 2017 it has
grown very strongly.

24

Table5 Venture capital Investments in the EU

Capital Invested（EUR billion)

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

3.6

3.8

2.4

2.5

2.7

2.2

2.7

2.7

3.3

3.8

4.7

6

7.5

8.2

15.2

Source: Invest Europe, 2022
Note: (1) Data are measured following the market statistics approach, an aggregation of the figuresaccording to the country in which the investee company is based, regardless of the location of the PE
fund. At the European level, this relates to investments in European companies regardless of thelocation of the PE firm.
From Science, Research and Innovation Performance of the EU 2022
And in terms of life sciences, as of 2021 the figure for biotech and healthcare is 15% of the total,
or about EUR 2.5 billion. Looking at biotech and healthcare as a whole, in the first half of the 2010s
it was around EUR 1 billion, and in the latter half of the 2010s it held steady at the level of EUR 3 to
4 billion. Due to the growth in recent years, the situation is approaching the level of the United Statesin the 2000s.
Fig16

Venture capital investment by sector in the EU
Venture capital investments(1) in EU per sector, 2021
0

1,000

2,000

3,000

4,000

5,000

ICT

6,000

7,000

Million

8,000

Euro

9,000

7,653

Biotech and healthcare

2,554

Consumer goods and services

1,584

Financial and insurance

1,555

Transportation

557

Business products and services

536

Energy and environment

506

Agriculture

86

Real estate

61

Chemicals and materials

49

Construction

24

Other

24

Source: Invest Europe, 2022
Note (1): Data are measured following the market statistics approach, an aggregation of the figuresaccording to the country in which the investee company is based, regardless of the location of the private
equity fund. At the EU level, this relates to investments in EU companies regardless of the location of theprivate equity firm.
From Science, Research and Innovation Performance of the EU 2022

Intentionally blank25

[Japan]
In Japan, the amount of investment in this field is showing a certain increase.
Fig17

Changes in the number of venture investments
300
250
200
150
100
50
0
2009FY 2010FY 2011FY 2012FY 2013FY 2014FY 2015FY 2016FY 2017FY 2018FY 2019FY 2020FY 2021FY
Biotech/Medical/Healthcare

Biotech.Pharmaceuticals

Medical devices/Healthcare services

Source: Venture Enterprise Center
It is reasonable to think that the level exceeded JPY 50 billion in FY2021, and that it has been
trending at about one-tenth of the total in Europe.
In terms of population, in 2010 the EU had 441.02 million and Japan had 128.04 million, and in2020 the EU had 448.31 million and Japan had 125.71 million. The fact that Japan’s venture capital
investment in healthcare is about one-tenth of EU is a major feature.
The point is at what pace this level increased. A steady increase occurred in the United States inthe early 2000s. After the Lehman Brothers collapse, from the 2010s onwards, companies shifted
gears again, and the annual investment amount has increased by about 10 times in about 25 years.
There was some movement in Europe as well, but full-scale growth started in the latter half of the2010s. As mentioned above, at this point Europe for the first time reached the size of investment
seen in the United States in the first half of the 2000s. In Japan, the number of investments and theamount of investment increased at the same time as in Europe, but the scale was smaller. Consideringthat there is no big difference in R&D spending per capita at universities, one characteristic is that
there is a limit to translational movements in Japan.
3.1.3 Changes on the company side
Section 3.1.2 showed the weakness of Japanese venture capital, but when it comes to corporatebased deployment, this trend changes slightly. A conclusion is that Japanese companies are moving
closer to global standards, while simultaneously it is becoming meaningless to "determine thenationality of a company based on the location of its headquarters."
Based on that, I look at changes in corporate activities in relation to the ecosystem. In this section,rather than capturing the total value of the industry, I add up the figures for major companies. Table
6 shows the sales, R&D expenses, and intangible fixed assets of top global companies. Table 7, on theother hand, looks at the movements of Japanese companies.

26

Table6

Changes in financial statements of major pharmaceutical companies*1 (average value)

2000

2005

2010

2015

（Million ＄）2020

Average of 9 Average of 10 Average of 11 Average of 11 Average of 11

Amount of sales
R&D expense
Total assets
Current assets
Property, plant and equipment
Intangible assets and goodwill

20,827
2,591
27,37014,1306,903
3,361

32,775
4,577
56,95022,108
9,945
18,882

43,461
6,867
86,40628,991
12,731
36,58740,7196,852
92,867
27,797
12,43040,556

46,2789,287
113,075
31,924
13,312
54,940*1 Johnson & Johnson, Pfizer Inc, Roche Holding AG, Novartis AG, Bayer AG, Merck & Co.
Inc, GSK PLC, Bristol-Myers Squibb Co, Sanofi SA, AstraZeneca PLC, Eli Lilly and Co.
Note: Figures for fiscal 2000 are for nine companies, excluding Merck and AstraZeneca, and figures
for fiscal 2005 are for 10 companies, excluding AstraZeneca.
Created by the author based on each company's financial statements
Table7 Changes in financial statements of major Japanese pharmaceutical companies*1 (averagevalue)（JYP Million）

Amount of sales
R&D expense
Total assets
Current assets
Property, plant and equipment
Intangible assets and goodwill

2000

2005

2010

2015

2020

Average of 11

Average of 9

Average of 10

Average of 10

Average of 10

Average of 9
（Excluding
Takeda）

383,968
45,381
635,169
370,985
211,233
10,190543,353
82,427
1,015,121
536,634
132,960
23,370679,019
127,085
1,097,909
602,069
167,764
180,561

789,630
141,407
1,442,241
687,425
198,520
371,577

970,634
169,4292,607,966
891,704
325,493
1,107,726

723,169
137,607
1,463,041
689,349
200,112348,248

2000

2005

2010

2015

2020

Average of 11

Average of 9

Average of 10

Average of 10

Average of 10

Average of 9
（Excluding
Takeda）

3,811
450
6,303
3,682
2,096
101

4,930
748
9,210
4,869
1,206
212

7,735
1,448
12,508
6,859
1,911
2,057

6,523
1,168
11,915
5,679
1,640
3,070

9,090
1,587
24,4258,351
3,048
10,374

6,773
1,289
13,702
6,456
1,874
3,262

（USD Million）

Amount of sales
R&D expense
Total assets
Current assets
Property, plant and equipment
Intangible assets and goodwill*1 Takeda Pharmaceutical, Otsuka Holdings, Astellas Pharma (in FY2000 Yamanouchi and Fujisawa
separately), Daiichi Sankyo (in FY2000 Daiichi and Sankyo separately), Chugai Pharmaceutical, Eisai,
Sumitomo Pharma, Ono Pharmaceutical, Kyowa Kirin, Shionogi Pharmaceutical
Note: Figures for fiscal 2000 and 2005 are 11 and 9 companies, respectively, excluding Otsuka
Holdings.
Created by the author based on each company's financial statements
Looking at the figures taken up here, what stands out is the increase in intangible fixed assets andresearch and development expenses. I would like to touch upon this point a little further below.
27[Trends in intangible fixed assets]
The level of intangible fixed assets has increased significantly since 2005 for major global
companies, and since around 2010 for Japanese companies. Initially, this movement was conspicuousin the process of integration and acquisition between large companies, but with the introduction ofInternational Financial Reporting Standards, the depreciation policy changed, and with thematuration of the ecosystem, there were large-scale acquisitions of venture companies. In 2020, theratio of intangible fixed assets to total assets was expected to be 47% for major global companies and
43% for Japanese companies.
Unlike R&D expenses, which are paid out as a flow every fiscal year, intangible fixed assets are notsomething that accumulates at a fixed percentage every fiscal year, because they are recorded in theform of goodwill when acquiring a company. However, over the long term, the trends in the numbers
clearly show when company activity stepped up a gear.
[Trends in research and development expenses within companies]
Even as complementarity proceeds, companies are still required to invest in research anddevelopment on their own. There continues to be company-specific development, as well as postintegration development such as acquisitions and licensing, and the pace of R&D is not slowing.
Looking only at trends since 2000, I can see an average tripling of development costs for global
companies, whereas the overall figure for Japanese companies has been a bit more moderate,
roughly doubling (Table 8).
Table8

R&D spending in the pharmaceutical industry (Japan)
Fiscal Year

1980
1985
1990
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020

R&D expenses
Year-on-year change(expenditure
amount)(JPY billion) (JPY billion) Growth rate(%)

1,898
3,419
5,161
6,328
6,422
6,671
6,433
6,811
6,894
7,462
8,109
9,657
8,837
9,067
10,477
11,735
12,537
12,956
11,937
12,76012,29913,061
14,371
14,953
14,577
13,516
14,653
14,047
13,392
13,216

129
466
601
36
94
249
-238
378
83
568
647
1,548
-820
230
1,410
1,258
802
419
-1,019
823
-461
762
1,310
582
-376
-1,061
1,137
-606
-655
-176

7.3
15.8
13.2
0.6
1.5
3.9
-3.6
5.9
1.2
8.2
8.7
19.1
-8.5
2.6
15.5
12
6.8
3.3
-7.9
0.9
-3.6
6.2
10.0
4.1
-2.5
-7.3
8.4
-4.1
-4.7
-1.3

% of sales
（％）

5.45
7.04
8.02
7.79
8.03
8.11
8.06
8.07
8.07
8.60
8.52
8.91
8.43
8.64
10.01
10.95
12.11
11.74
11.66
12.02
11.96
11.81
11.70
12.21
11.93
10.04
11.10
11.05
10.08
9.68

(Note) The research and development expenses described here are internal research expenses
defined in the Ministry of Internal Affairs and Communications' "Science and Technology Research
Survey". External research expenses (those outside the company), such as commissioned researchand joint research, are not included.
28

(Source) Ministry of Internal Affairs and Communications, “Science and Technology Research Survey”
From Japan Pharmaceutical Manufacturers Association DATA BOOK 2022
As can be seen in Table 9, the proportion of non-clinical trials in R&D expenses for US companies
has declined significantly over the past 20 years, and the composition ratio of phase 2 trials has
increased significantly. This point is symbolic in the sense of a change in the way companies are
involved in development.
Table9Composition ratio of pharmaceutical company R&D expenses by stage (US)R&D expenses（Milllion $）Composition
ratio

composition
ratio(including
uncategorized)Year

Pre-clinical study

Phase1

Phase2Phase3

Approval
application

Phase4

Subtotal

2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020

9,647.4
10,481.6
10,983.3
9,585.7
10,258.1
11,816.1
13,087.4
12,795.6
11,717.4
12,578.2
10,466.3
11,816.3
10,717.8
11,272.7
11,292.6
11,168.7
13,069.0
13,034.3
13,604.0
39.3%
38.1%
33.3%
28.3%
28.9%
28.9%
28.8%
27.1%
25.3%
25.3%
22.3%
24.7%
22.4%
23.2%
21.3%
19.3%
20.4%
20.0%
19.9%
32.5%
33.8%
31.9%
25.9%
25.7%
27.2%
27.3%
27.0%
25.2%
24.8%
21.5%
23.8%
20.8%
21.2%
17.2%
15.6%
16.4%
15.7%
14.9%

1,659.2
1,490.2
2,333.6
2,473.3
2,318.9
2,902.7
3,547.7
3,889.6
3,752.9
4,130.3
4,211.0
3,823.3
3,666.9
4,722.0
6,054.8
6,201.0
7,749.4
7,260.8
6,968.3
6.8%
5.4%
7.1%
7.3%
6.5%
7.1%
7.8%
8.2%
8.1%
8.3%
9.0%
8.0%
7.6%
9.7%
11.4%
10.7%
12.1%
11.1%
10.2%
5.6%
4.8%
6.8%
6.7%
5.8%
6.7%
7.4%
8.2%
8.1%
8.1%
8.7%
7.7%
7.1%
8.9%
9.2%
8.7%
9.7%
8.8%
7.6%

3,151.2
2,968.1
3,809.6
3,770.4
4,670.9
5,687.4
6,251.0
6,089.7
7,123.7
6,483.3
6,096.4
5,756.2
5,351.3
5,697.8
7,426.1
8,277.4
8,436.0
8,045.7
8,429.4
12.8%
10.8%
11.5%
11.1%
13.2%
13.9%
13.8%
12.9%
15.4%
13.0%
13.0%
12.0%
11.2%
11.7%
14.0%
14.3%
13.1%
12.3%
12.4%
10.6%
9.6%
11.1%
10.2%
11.7%
13.1%
13.0%
12.9%
15.3%
12.8%
12.5%
11.6%
10.4%
10.7%
11.3%
11.6%
10.6%
9.7%
9.3%

4,502.2
6,268.4
8,038.1
9,682.1
10,176.4
12,187.3
13,664.7
15,407.4
16,300.1
18,598.1
17,392.9
15,926.8
15,239.2
15,264.4
18,327.3
21,377.0
23,033.2
23,979.8
24,773.1
18.3%
22.8%
24.4%
28.6%
28.7%
29.9%
30.1%
32.6%
35.2%
37.4%
37.0%
33.2%
31.8%
31.5%
34.6%
36.9%
35.9%
36.8%
36.3%
15.1%
20.2%
23.3%
26.2%
25.5%
28.1%
28.5%
32.5%
35.1%
36.7%
35.8%
32.1%
29.5%
28.7%
28.0%
29.9%
28.9%
28.9%
27.2%

2,307.9
2,455.0
4,145.4
3,415.3
2,750.0
2,649.3
2,413.8
2,225.8
2,046.9
3,108.3
4,033.4
3,834.6
5,395.4
2,717.7
2,413.8
2,788.7
2,647.6
3,538.8
3,932.5
9.4%
8.9%
12.6%
10.1%
7.8%
6.5%
5.3%
4.7%
4.4%
6.2%
8.6%
8.0%
11.3%
5.6%
4.6%
4.8%
4.1%
5.4%
5.8%
7.8%
7.9%
12.0%
9.2%
6.9%
6.1%
5.0%
4.7%
4.4%
6.1%
8.3%
7.7%
10.5%
5.1%
3.7%
3.9%
3.3%
4.3%
4.3%

3,286.9
3,855.2
3,698.1
4,902.9
5,284.2
5,584.6
6,439.9
6,835.8
5,302.7
4,839.0
4,760.9
6,776.5
7,574.2
8,827.0
7,466.1
8,152.9
9,230.2
9,321.1
10,512.4
13.4%
14.0%
11.2%
14.5%
14.9%
13.7%
14.2%
14.5%
11.5%
9.7%
10.1%
14.1%
15.8%
18.2%
14.1%
14.1%
14.4%
14.3%
15.4%
11.1%
12.4%
10.7%
13.2%
13.3%
12.9%
13.4%
14.4%
11.4%
9.5%
9.8%
13.7%
14.7%
16.6%
11.4%
11.4%
11.6%
11.2%
11.5%

24,554.8
27,518.5
33,008.1
33,829.7
35,458.5
40,827.4
45,404.5
47,244.0
46,243.8
49,737.2
46,961.0
47,933.8
47,944.8
48,501.6
52,980.7
57,965.7
64,165.4
65,180.5
68,219.7
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
82.6%
88.7%
95.8%
91.4%
89.0%
94.0%
94.8%
99.7%
99.6%
98.1%
96.5%
96.7%
92.9%
91.1%
80.8%
81.2%
80.6%
78.6%
74.9%

Uncategorized
R&D expenses

Total

5,167.9
3,493.7
1,445.2
3,188.4
4,399.4
2,611.6
2,498.6
139.1
197.8
972.6
1,684.0
1,653.8
3,668.7
4,751.5
12,557.6
13,433.8
15,437.4
17,775.7
22,906.6

29,722.7
31,012.2
34,453.3
37,018.1
39,857.9
43,439.0
47,903.1
47,383.1
46,441.6
50,709.8
48,645.0
49,587.6
51,613.5
53,253.1
65,538.3
71,399.4
79,602.8
82,956.3
91,126.3

17.4%
11.3%
4.2%
8.6%
11.0%
6.0%
5.2%
0.3%
0.4%
1.9%
3.5%
3.3%
7.1%
8.9%
19.2%
18.8%
19.4%
21.4%
25.1%

100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%(Note) Data for 2015 are not published.
(Source) PhRMA: Industry Profile 2001-2012, PhRMA Annual Membership Survey since 2013
From Japan Pharmaceutical Manufacturers Association DATA BOOK 2022
29

[Regarding sales and employment levels]
Sales on a major company basis have approximately doubled over the past 20 years despite
continued mergers and other factors. Japanese companies, in particular, are in a situation where
growth in the existing domestic market is limited to a certain extent, considering financial constraints.
In terms of sales, besides the major companies whose figures can be continuously obtained, there
are other companies such as Chinese companies and bio-venture companies that have rapidly
increased their sales over the past 5 to 10 years. Therefore, the sales growth by major companies issomewhat limited.
However, even if such factors are excluded, the level is somewhat moderate compared to theincrease in venture capital investment and the increase in R&D expenses / intangible fixed assets on
the corporate side.
Employment by the companies is even more extreme, with major global companies on the decline,
and a cessation of growth even in Japan. However, it must be noted that the fact of the intermediatestage of development occurring outside the company may have led to an increase in employment at
peripheral companies and venture companies.
3.2 Ecosystem transitions
I would like to organize the changes in research and development up to this point in a somewhat
schematic way, chronologically.
3.2.1 1980s-1990s: Dawn
Looking at the changes in numbers from the 1980s to the 1990s, it can be inferred that theevolution of science and the growth of companies basically moved moderately.
The following chart plots the development of each process based on an image of the amount (seepage 34). It is created to give an overview of how the balance has changed over time.
Fig18 Image of each player in the 1990s
6

U.S.

0.1

0.9

5

2.3

4

Europe

0.9

3

2

Japan

0.7

1

0.5

0
0

0.5

1

1.5

Academia

VC

30

2

2.5

Major companies

3

From academia's point of view, although there are translational R&D projects that are being put topractical use, in the era of small molecule drugs, the function of corporate research laboratories was
also important, and it is surmised that academia played a strong role in basic science.
For example, in the case of San Diego (see 2.2.1), the hub of the ecosystem is the venture company
Hybritech, and in this era the ecosystem was born in the form of decentralized venture companies.
In this era, "business risk" itself was embodied in independent venture companies; and in terms of"interdependence risk", venture capital funds themselves were limited in terms of the size of themarket as a whole and could not be used to supplement this risk. On the other hand, regarding"integration risk", although the number of acquisitions was gradually increasing, it was still small, andintangible fixed assets were small compared to the total assets of major companies.
3.2.2 2000s: Beginning of a clear division of roles
In the first decade of the 2000s, changes occurred in the business scale of each player.
Fig19 Image of each player in the first decade of the 2000s
6

U.S.

3

5

0.4

3.3

4

Europe

1.4

3

5

0.1
Shaded cells are intangible fixed assets

2

Japan

0.5

1

0.01

0.2 0.6

0
0

0.5

1

1.5

Academia

VC

2

2.5

3

Major companies

As for the business risk itself, it can be imagined that the risk increased in the early stages as themodalities began to gradually shift away from the focus on small molecule drugs.
On the other hand, there are only a limited number of countries where research and development
increased significantly at universities. The United States is an exception among them, with an increaseof about three times over a decade beginning in the mid-1990s. The NIH budget has also increasedby 2.5 times, immediately accelerating spending on life sciences.
The appearance of vertically integrated large companies contributed to a large movement in which
R&D expenses of major companies increased by about 2.5 times. By the way, the increase inintangible fixed assets is not necessarily invested in research and development. It also is used as astrong reward for the development of venture companies; thus the shading in Figure 19.
Also, venture capital investment has increased, and as mentioned above, in the United States, the31number of pre-clinical developments by large companies has decreased, and development costs havebegun to slide from Phase II onwards.
From the company's point of view, this is an act to fill in the "uncertainty" risk. On the other hand,with the industrialization of venture capital and the intensive and time-consuming development ofventure companies, the risk related to "time" has been somewhat buried.
As a result, even in new development, a complementary relationship between venture capital andventure companies was created, and the response to "integration risk" has progressed.
But with the exception of the United States, research and development in academia has not moved
much in terms of money. Since the investment environment for venture capital has not yet been
established in such places, it cannot be said that the development is interdependent from a global
perspective.
3.2.3 2010s: Dynamic ecosystem
In the 2010s, research and development by companies, investment by venture capital, andincreases in research and development expenses at universities began to occur in parallel, and thesigns were seen not only in the United States but also in Europe.
Fig 20 Image of each player in the 2010s
6

U.S.

4

5

1.6

2.0

4

Europe

1.7

3

7-9

0.3
Shaded cells are intangible fixed assets

2

Japan

0.7

1

0.03

0.8

1.5

0
0

0.5

1

1.5

Academia

VC

2

2.5

3

Major companies

As business risks continue to rise, responses to the above-mentioned interdependence risks arechanging further. In the United States, the investment amount of venture capital increased to a levelthat cannot be ignored compared to the research and development expenses of companies anduniversities, and the relationship between science and venture capital deepened.
As research by academia becomes more translational, it can be said that the logic of budgetingdevelopment costs has been established; and at the same time, it has become easier to collectexternal funds. Therefore, research and development spending at universities also continues to risein the United States and some European countries.
In venture capital, the participants gained experience as the number of projects accumulated, thus
expanding the range of practical responses to ‘company creation’, which increased the trust of32universities and research institutes.
Under these circumstances, venture companies have found expanded opportunities around theglobe for their exits. International barriers to business development are also considerably lower.
Above all, company commitment to development began happening at an earlier stage. This ispartly linked to the improvement of corporate strength and companies proceeding in the directionof building their own portfolios.
The following diagram shows this flow. The important point is ‘order’: after the corporate strength
was strengthened, the venture capital market was strengthened and, as a result, funds flowed intoscience again. This hypothesis is based on the transition so far.
Fig21 Ecosystem transition
1980s-mid1990s

late1990s-2000s

Big company

Big company
Universities
and other
research
institutes

late2000s-2010s

Universities
and other
research
institutes

VC
Start-up

Global company
Universities andother research
institutes

VC
Start-upTurning of science into TR
Sophistication of company creation
Acceleration of early corporate collaboration

3.2.4 Summary
In this chapter, I discussed how the life science ecosystem creates its complementary relationship.
I presented an overview of what has been achieved in tracing the changes in the industrial structure.
It is not that one player has pulled it in one direction in a visionary way: companies, venture capitalists,
and academia have moved in their own directions with an eye on the next step.
This chapter has only looked at trends in R&D expenditures, but it can be seen that the mechanism
for "commercialization of science" is gradually changing: product launches with new modalities areprogressing more than before.
And within this overall composition, there are countries that have developed their own ecosystems
by exercising originality and ingenuity. It is impossible for a single country to create a framework
identical to the global one, but it is beneficial for Japan to see the process of forming its own
ecosystem while connecting its own flow to the global framework.
Chapter 4 looks at the history of biotech ecosystem formation in Belgium as an example.

33

Explanation of conceptual illustrations (unit numbers: USD 10 billion)
Academia:
United States- Figure 12 1995 (90s), Figure 14 around 2005-09 (00s), Figure 14 around 2015 (10s) *Notshown for NIH
Europe- It is assumed that the countries in Figure 13 account for about 80% of the total expenditurein Europe. For Italy and the UK, in 1995, 3.5 million was added (1990s); in 2005, 2.5 million wasadded (00s). Both numbers are multiplied by 1/0.8.
Japan- Figure 13 figures for 1995 (90s), 2005 (00s), and 2015 (10s)
VCs:
United States - 1995 (90s), 2005 (00s), 2015 (10s) based on NVCA published data
Europe - see the text below Table 5(00s and 10s)
Japan - see Figure 17, 2015 (10s)Note: European 90s and Japanese 90s and 00s are kept to a minimum.
Major companies _Research Expense (in Europe, America and Japan):1990s ⇒ Total value of Tables 6 and 7 as of 2000
2000s ⇒ Total value of Tables 6 and 7 as of 2005
2010s ⇒ Total values of Tables 6 and 7 as of 2020 (because the figures for 2015 are irregular)
Note: Intangible fixed assets are set at one-tenth of net increase (total value) for each age
group.

34

Chapter 4 History of Belgian bio-ecosystem formation







Belgium has created a robust bio-industry in terms of science, R&D and production.
One of the roots of this was the strengthening of science. A symbolic example is theestablishment of VIB. It has worked side by side with universities and has produced
results by implementing organizational management while incorporating peer reviews,
centering on the career development of scientists.
After the fact, this trend spread to the Wallonia region. Then, the financing to support it
was also formed in each area. As a result, human resources from academia are steadily
being supplied to industry.
Now, the focus is on strengthening human resources, such as the Advanced Master
School and the EU Biotech Campus. This is the latest form of development in the country,
given the importance of 'investing in human resources'.

4.1 Assumptions of Belgium's life science ecosystem
As an example of ecosystem formation, this chapter discusses the formation of an ecosystem
related to biotechnology in Belgium. The reason why I chose Belgium as the subject of our analysis isthat it is characterized by the process of growing the base of science, bringing about the developmentof the industry, and obtaining employment and evaluation from the market.
4.1.1 Geographical features of Belgium
Belgium's regional administrations are divided into the Flanders region (hereafter Flanders), theWalloon region (hereafter Wallonia) and the Brussels metropolitan area. Basically, Flanders in thenorth is the Dutch-speaking region, and Wallonia in the south is the French-speaking region. There isalso a German-speaking community: Deutschsprachige Gemeinschaft in the east.
Fig22 Belgium map

Source：Wikimedia Commons
The total population is about 11 million, which is about one-tenth of Japan’s, and population trends
are as follows.

35

Table10

Population trends in Belgium and its regions (thousands)

Belgium
FlemishWallonia
Brussels

1981

1991

2001

2011

2021

9,855

10,022

10,31011,036

11,584

5,642

5,795

5,973

6,351

6,699

3,218

3,276

3,358

3,546

3,663

994

951

979

1,139

1,222

Source: NBB.stat
4.1.2 Universities
First, major universities in Belgium are listed in Table 11 (listed in order of establishment). Vlaams
Instituut voor Biotechnologie (VIB), which will be described later, is an organization that connects
these universities (especially in Flanders).
It is said that the reason for the existence of two separate universities in 1970 is that the Universityof Leuven and the Free University of Brussels were split between the French-speaking and Dutchspeaking countries after student disputes in the late 1960s.
Table11

List of major Belgium universities
Establishment

City

RegionCatholic University of Leuven(KUL)

1425

LeuvenFlanders

The number ofstudents
65,186

Ghent University

1817

Ghent

Flandes

49,216

University of Liege

1817

Liege

Wallonia

28,064

Free University of Brussels(ULB)

1833

Brussels

Brussels metro area

30,880

University

University of Antwerp

1852

AntwerpFlanders

21,428

Catholic University of Louvain(UCL)

1970(split)

Louvain-la-Neuve

Wallonia

34,318

Free University of Brussels (VUB)

1970(split)

Brussels

Brussels metro area

19,156Created by the author based on various materials
In this list, the University of Leuven ranks in the top 100 in biological sciences according to theTimes Higher Education World University Rankings 2023, followed by the University of Ghent (within
Japan, the University of Tokyo and Kyoto University are also in the top 100).
Among the major national universities in Japan, the University of Tokyo has the largest number ofstudents (over 26,000—not limited to life science students). The comparable number in other major
national universities is around 20,000. Per-capita matriculation is larger at major Belgian universities
than at Japanese national and public universities.

intentionally blank36

4.1.3 Major pharmaceutical companies
Table 12 below lists major pharmaceutical companies in Belgium.
Table12Major pharmaceutical companies located in Belgium
Company

Location

Overview

JanssenBeersePharmaceutica

A large base where more than 5,000 people work at theJanssen campus. Establishment of a new CAR-T therapy
center in Zwijnaarde.

GSK

Wavre, Rixensart

GSK's research and production base for vaccines

UCB

Braine L'alleud

Pfizer

Puurs

SanofiGeel

TakedaLessines

Transitioned from a chemical manufacturer to a biotech
company. Currently focusing on gene therapy.
Manufactures over 400 million doses of injectable vaccinesand medicines in a variety of formats. Production of COVID-19
vaccine is also underway.
Production of therapeutic proteins from cell cultures for the
purpose of producing biological drugs. In 2016, it evolved into a
multi-product facility with monoclonal antibody production.
Purification and packaging centers for immunology andhematology products covering over 80 countries worldwide.
Recently opened a plasma production line.

Created by the author based on materials published by each company
Here, I need to explain three Belgian-origin companies (including those currently under theumbrella of a major global pharmaceutical company). The three companies are Janssen
Pharmaceutica (Janssen), GSK, and UCB.
Janssen is currently a leading company in Flanders. Since Dr. Paul Janssen established the research
institute in 1953, it has created many new compounds, including the pain medicine fentanyl and theantipsychotic drugs haloperidol and risperidone. In 1961, it joined the Johnson & Johnson Group(hereafter, J&J) and still occupies a central position in the company's pharmaceutical business division(like J&J, currently headquartered in New Jersey, USA). Beerse is an innovative pharmaceuticalresearch base and a main production base (employing over 5,000 people). Recently, theestablishment of a hub for CAR-T treatment in Zwjinaarde was announced.
GSK is a global company headquartered in London, formed in 2000 by the merger of SmithKline
Beecham and Glaxo Wellcome. Belgium is home to the company's global headquarters for vaccines(three major vaccine sites: Wavre, Rixensart, Gambloux), whose origins lie in the company RIT(Recherche et Industrie Therapeutique) founded by Pieter Desomer (who was also the Rector of KUL)
together with Christian de Duve. GSK currently has 1,800 scientists conducting research and over
9,000 people working in Belgium.
UCB was established as a chemicals company in 1928. In 2004 it acquired the UK-based biotech
company Celltech (transitioning to a biopharmaceutical company after having entered thepharmaceutical market) and developed drugs such as the blockbuster ‘Cizmzia’. Currently, thecompany has entered the gene therapy field, aiming to have 25% of its pharmaceuticals based ongene therapy by 2030. In September 2022, it announced an investment of EUR 1 billion over the next
10 years in this field.
4.1.4 Characteristics of the Belgian life science field
As seen in 4.1.3, it is clear that Belgium already has a certain industrial concentration related topharmaceuticals, but again I would like to look at the relationship between academia and industry.
37

(1) Resource investment and performance in academia in Belgium
As mentioned in Chapter 3, among the countries for which OECD data can be obtained
continuously, R&D investment trends at Belgium universities have been growing steadily (Figures 11
and 13-2).
Fig 11 Changes in the number of R&D personnel (medical and health sciences) per 100,000
population
R&D pesonnel_Medical and health sciences_Total internal personnel per 100,000
population
140
120
100
80
60
40
20
0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Belgium

FinlandGermany

Italy

Netherlands

PolandPortugal

Spain

Japan

DenmarkFig 13-2 Trends in R&D spending in the fields of medical and health sciences in higher education (perpopulation)＄

Gross domestic expenditure on R&D by sector of performance and fieldof R&D：per population

200
180
160
140
120
100
80
60
40
20
0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Belgium

FinlandGermany

Italy

Japan

Netherlands

PolandPortugal

Spain

United Kingdom

Denmark

The number of papers per capita in Europe is also shown below. Although this level is inferior to
Switzerland, Denmark, and Sweden, it maintains a high level on par with the Netherlands.
38

Table13

Number of papers per million population (Basic Life Science_FY2017-19(average))
Number of papers

PapersPer 1million

Top 10% corrected

population

number of papers

PapersPer 1million

Top 1% corrected

population

number of papers

PapersPer 1million
population

Switzerland

9,174

1,067.8

Switzerland

1,689

196.6

Switzerland

250

29.1

Denmark

6,082

1,053.7

Denmark

1,016

176.0

Denmark145

25.1

Sweden

7,582

755.5

Sweden

1,294

128.9

Sweden192

19.1

Australia

16,855668.8

Netherland

2,013

117.7

Netherland

316

18.5

Netherland

11,103

649.4

Norway572

106.3

Ireland87

17.8

Belgium

6,588

570.9

Australia

2,660

105.5

Norway91

16.9

Austria

4,661

520.5

Finland533

96.3

Australia

360

14.3

Canada18,757

501.4

Belgium

1,093

94.7

Finland

79

14.3

U.K.

30,021444.6

Austria

757

84.5

Belgium

161

14.0

Germany

29,262

350.4

U.K.

5,147

76.2

Austria

112

12.5

Spain

16,325

349.3

Canada

2,535

67.8

U.K.

699

10.4

U.S.

112,508

341.9

Israel552

64.8Israel

85

10.0

Italy

19,513322.3

Portgul599

58.6

Canada342

9.1

France19,050292.5

Germany

4,415

52.9

Germany

573

6.9

Korea

13,024

254.2

U.S.

15,981

48.6

U.S.

2,042

6.2

Poland

7,664

202.3

Spain

2,216

47.4

Spain

274

5.9

Taiwan

4,557

193.1

Italy

2,810

46.4

France

366

5.6

Japan

21,768

171.6

France

2,747

42.2

Italy

328

5.4

Iran

8,636

104.2

Korea

1,081

21.1

Korea

131

2.6

Brazil20,542

97.3

Poland647

17.1

Poland80

2.1Turkey

6,270

75.2

Japan

1,623

12.8

Japan

193

1.5

China

83,780

59.3

Iran

866

10.4

Iran

103

1.2

Mexico

5,874

46.0

China

9,203

6.5

Brazil143

0.7

Russia

5,983

41.0

Brazil

1,307

6.2

China

848

0.6

India

16,971

12.0

India

1,295

0.9

India

158

0.1

Processed and created by the author based on “Science and Technology Indicators 2022”, National
Institute of Science and Technology Policy, Ministry of Education, Culture, Sports, Science andTechnology. Data source: Web of Science XML from Clarivate(2) Investment in development funds in industry
Regarding R&D in the industrial sector, a comparison within Europe reveals that R&D expenditures
are at a very high level when converted to per capita amounts.
Table14

Pharmaceutical Industry Research and Development in Europe
AmountPer 1million

AmountPer 1million（€ Million)

population（€ Million)

population

Switzerland

6,383

743.0

Italy

1,600

26.4

Belgium

3,846

333.3

Spain

1,212

25.9

Denmark

1,543

267.3

Hungary242

25.0

Sweeden

1,104

110.0

Norway126

23.4

Germany

8,466

101.4

Bulgaria

91

13.0

Slovenia

180

86.6

Portugal

117

11.4

U.K.

5,437

80.5

Croatia40

9.7

Cyprus85

70.9

Poland339

8.9

France

4,451

68.3

Czech Rep,

62

5.8

Ireland305

62.5

Russia727

5.0

Netherlands

642

37.6

Greece51

4.9

Austria311

34.7

Romania75

3.9

Finland182

32.9

Turkey137

1.6

Created by the author based on EFPIA (European Federation of Pharmaceutical Industries andAssociations) 2019 data39

As can be seen in Table 14, Switzerland ranks among the highest in this area, but this is inevitablegiven the country’s concentration of head offices of global pharmaceutical companies.
At the same time, neighboring Denmark reflects the active research and development situation in
the area connected to Sweden in the form of the so-called "Medicon Valley."
Since the figures in Table 15 are per capita, the figures for Germany, France, and the United
Kingdom are larger on an actual value basis, but Belgium ranks fifth after France.
Next, in Table 15, I would like to look at employment and pharmaceutical production.
Table15 Employment and production in the pharmaceutical industry in Europe
Employment

Units

AmountPer 1million

Production

population（EUR
million)

Per 1million
population

Ireland37,000

7,578

Switzerland

54,305

6,321

Switzerland

46,652

5,430

Ireland

19,305

3,954

Slovenia

11,213

5,394

Denmark

14,391

2,493

Denmark

24,821

4,300

Belgium

17,547

1,521

Belgium

38,4893,335

Sweeden

9,840

980

Greece25,7002,454

Slovenia

1,659

798

Hungary

23,300

2,406

Italy

34,000

562

Malta

1,033

2,346

France35,848550

Bulgaria

15,0002,143

Hungary

3,859

398

Romania

35,000

1,807

Germany

33,158397

Austria

16,094

1,797

Netherlands

6,180

361

Czech Rep.

18,000

1,684

U.K.

23,039341

France98,7801,517

Finland

1,877

339

Iceland

500

1,475

Spain

15,832339

Cyprus

1,755

1,464

Austria

3,024

338

Germany

119,994

1,437

Iceland89

263

Croatia

5,763

1,395

Cyprus253

211

Latvia

2,232

1,171

Norway1,072

199

Netherlands

20,0001,170

Portugal

1,737

170

Sweeden

11,012

1,097

Croatia

664

161

Italy

65,8001,087

Latvia

255

134

U.K.

72,0001,066

Greece1,376

131Finland

5,672

1,025

Czech Rep.

858

80

Spain

47,4491,015

Poland2,550

67

Portugal

9,000

880

Slovakia

356

65

Norway4,000

744

Turkey

3482

42
40

Poland24,736

653

Russia5,881

Turkey39,000467

Romania655

34

Lithuania

1,220

442

Bulgaria

121

17

Slovakia

2,287

419

Estonia380

287

Created by the author based on EFPIA (European Federation of Pharmaceutical Industries andAssociations) 2019 data
Even in these two fields, Belgium maintains its position next to Germany, France, the United
Kingdom, and Switzerland on an actual value basis. Given the fact that it is among the top three invarious indicators per capita, it can be seen that not only biotech but also the pharmaceutical industry
as a whole has established a stable position in Europe.

40

(3) Overall balance
Currently, Belgium is in an environment where relatively large amounts of development costs canbe invested in the life science field, both in academia and industry. In the midst of this trend, newbiotech companies have been born, and their market capitalization has remained stable in the top
three in Europe for the past ten years.
Not all of this process has been completed within Belgium, but it is characteristic that, despite
being positioned as a hub in Europe, the country is developing by appropriately cultivating humanresources. An ecosystem different from that of the United States, which has a different scale, hasbeen formed.
Based on the situation, I would like to focus on the aspect of biotechnology and use it as a casestudy in ecosystem formation.
4.2 Formation of an ecosystem in biotechnology
4.2.1 Movements up to the 1990s
I would like to start with the prehistory of biotechnology's establishment in Belgium after the global
rise of biotechnology. Initially, it was mainly deployed in Flanders.
(1) Pioneering biotechnology
In the 1980s, in addition to the companies shown in 3.1.3 having a strong presence in the world ofsmall molecule drugs and vaccines, the biotechnology industry was born in Belgium. Its origins dateback to 1982 with the establishment of Planet Genetic Systems (PGS), a spin-off of the Institute of
Plant Genetics at the University of Ghent. Dr. Marc Van Montague and Dr. Jozef Schell founded thecompany after developing genetic engineering methods for plants. The company was not involved inpharmaceuticals, but focused on the production of genetically engineered plants, known today as
genetically modified organisms (later sold to AgrEvo GMBH in 1996).
In 1982 Prof. Van Montagu came to the just-incorporated GIMV (public Flanders investmentcompany) with the first evidence of stabilized genetic change in plants. After discussion about theprotection of the IP and identifying a suitable CEO bringing private investment along, GIMV decided
to invest in PGS. (The first investment of a very long series of pioneering LS/VC-investments by GIMV)The first biotechnology company in life sciences was InnoGenetics, founded in 1986. This company
is also a spin-off company, in this case of the Institute of Molecular Biology at the University of Ghent,
and its founder is the eminent scientist Dr. Walter Fiers (1931-2019). Dr. Fiers was also one of the cofounders of Biogen in 1978, at that time in the suburbs of Geneva. InnoGenetics is a company withtwo business segments: diagnostic drugs (CNS and infectious diseases) and therapeutic drugs(vaccine against type C infectious virus [HCV]), and GIMV is also a shareholder.
The company was the first Belgian biotechnology company to list on EASDAQ, in November 1996,
and its market capitalization exceeded USD 1 billion in May 1998, just two years after the listing. Later,in September 2008, it was acquired by the Belgian chemical company Solvay and delisted. In 2010 itwas sold to the Japanese company Fujirebio, and three years later the company name was changed
to Fujirebio Europe NV.
Although it is not a research institute directly related to life science, I would like to cite theestablishment of IMEC (Interuniversity Micro Electronics Center) as one of the important events ofthat era. In the history of research institutes in Flanders, IMEC (1984), VITO (1991), VIB (1996), and
VIB Make (2003) have created organizations that cross the boundaries of universities, and IMEC was41the first to do so. It is an institution in which six Flemish universities collaborate, jointly promoting
the research functions of each university, and is one of the world's leading microelectronics research
institutes.
(2) Walloon district at that time
In Wallonia at that time, EuroGentec was established (in Liège in 1986). The company was founded
by Joseph Martial and Andre Renard from the molecular biology laboratory at the University of Liège.
EuroGentec’s main business is the sale of research tools, and they have units for producing
oligonucleotides for genome sequencing and biologics (recombinant antigens for producing
recombinant vaccines) using bacteria. The company was acquired by Kaneka, a Japanese company, in2010.
In 1994, EuroScreen, the creation of three professors at the Free University of Brussels Medical
School, was spun off, after which the company was renamed Ogeda and developed drugs to treat
menopause-related vasomotor symptoms. The company was eventually acquired by Astellas Pharma.
These were independent movements by the companies, and the related development of Wallonia
as a whole had just begun.
4.2.2 Trends in the 1990s(1) Trends in private venture capital
Several venture companies were born in this way, but in the 1980s the only one in terms offinancing for ventures was GIMV. But GIMV targeted biotech companies based in Flanders, not
Wallonia. Fundraising was not easy at first, and for InnoGenetics, the first bio-venture company, there
was no exception. The flow was to collect funds from a small number of entrepreneurs, followed by
procurement from GIMV.
In 1995, the investment company PMV (100% owned by the Flemish government) was established
as a spin-out from GIMV and became independent in 1997. In addition to PMV, around 1996, Life
Science Partners (Netherlands), Forbion (Netherlands), Gilde Healthcare (Netherlands), Sofinnova(France), Apax Partners (France), Abingworth Management Ltd (UK) and others appeared as firstgeneration life sciences venture capital. Some commercial banks have also set up their own
biotechnology private equity funds.
Then, in addition to EASDAQ, Germany's Neuermarkt and London Stock Exchange's Alternext were
established as markets for start-ups, expanding the possibilities of IPOs for biotechnology companies.
However, after InnoGenetics went public, there were no IPOs of biotechnology companies born in
Belgium until 2006.
(2) Existence of a research institute called VIB
In terms of the success of bio-ventures, there were no major movements at that time, but in termsof science, a new movement was born in Belgium in the 1990s. It was the establishment of VIB(Dutch: Het Vlaams Instituut voor Biotechnologie / English: Flanders Institute for Biotechnology) fromthe Flanders government. VIB is an important institute; thus, I would like to introduce the concept
and set-up in detail.
This content is based on an interview held at their Ghent office in August 2022 with Dr. Jo Bury
who today is Director emeritus of the VIB
Twenty-six years ago, he was instrumental in setting-up the VIB and in writing its charter, and, along42with a co-managing director, has led its development for all these years.
I. Overview
VIB is an organization founded in 1996 by the Flemish government. It was established with the goalof not only creating a university-like organization that produces excellent research, but also creating
an organization that has a global impact and can lead science.
The Flemish government visited areas such as Boston, San Francisco, and Stanford, and was
surprised by the industrial development based on research and development of universities, and thisproject was launched.
The basic concept is to integrate all biotechnology-related research activities at all five Flemish
universities and operate the resulting organization (called the VIB) like a single research organization.
The project itself is operated under a management agreement with the Flemish government, andevaluations are carried out every five years (currently in the sixth cycle).
The annual government grant as of 1996 was EUR 22 million, which remained unchanged for the
first five years, but then increased as the organization's evaluation improved. At present, it is EUR 80
million per year.
Its governance is non-profit, and its identity is that of a research institute. As a result of expanding
from time to time, VIB has strong partnerships with five universities and is structured as nine research
centers, all based on the campus of one of the partner universities.
The important point is that it is established as a double affiliation (qualified by both the relevant
university and VIB). All IP that is generated by VIB-projects is jointly owned.
VIB currently has more than 1,700 co-workers of 78 nationalities.
VIB's focus area is "discovering molecular differences in cells", and it is broken down into separate
areas: cancer, immune system, nerve system, and plant biology. The approach and targets areconstantly being renewed, but the concept itself has not changed since its establishment.
II. VIB as a research center
As a research institute, VIB aims to create a "big difference", and has continued to improve theenvironment to create top-level science. Only top 5% level research is advanced for each adopted
research project, and others are not allowed to continue within VIB.
Such a system puts a strong selection pressure on researchers. If each field is likened to a kind of‘league’, it is important to be the champion, and the papers and IP that result from that are thecornerstones of achievements.
In order to promote these movements, VIB makes various investments on its own and adds new
initiatives each year to improve the research environment of VIB. In terms of investment, corefacilities are important, and they have continued to invest in them. Currently, VIB has 10 core facilities,
serving the scientific community of VIB and beyond with state-of-the-art and emerging technologies,
supporting expertise and advanced equipment.
In terms of human resources, the group leader (hereafter, GL) will hire 10-15 staff members to run
the lab; so, the GL needs to improve the environment. Each team consists of young PhD-students,
postdocs in their 30s, lab technicians and GLs. The average age is around 34 years old. And they go
to a new step every five years. In that sense, it is also an investment in the career development of theconstituent members.
The annual research budget of VIB as a whole is now about EUR 150 million a year, of which about
a quarter is granted by the Flemish government, and the rest is domestic grants, PhD and43

postdoctoral fellowships, and international grants. Direct funding from the Flemish government isonly one-fourth, and the leverage is effective.
This balance results in half being funded by the universities and half by the VIB.
This double affiliation structure constitutes a mirror, providing for VIB and each university to share
the returns with each other.
Fig23

Sources of VIB's research budget

VIB research budget: 155 M€ in 2022
PhD &postdoc VIB Grant
fellowships Flanders
governments
BelgiangrantsInternational
grants /Industry

Source: VIB materials
An important point for VIB is "impact", and while the more than 800 peer-reviewed articles areimportant, the more important thing is the existence of more than 270 breakthrough articles a year.
The number of papers published by journals in the 5% Tier is increasing year by year, and thepercentage of most cited papers worldwide is ranked next to MIT and Rockefeller, and exceeds thoseof Oxford and Cambridge universities.
Fig24

Changes in the number of VIB papers published in top 5% journals)

VIB Publications in top 5% journals (T5)
280
260
240
220
200
180
160
140
120
100
80
60
40
20
0
'95 '96'97 '98'99 '00 '01 '02 '03 '04'05 '06 '07 '08 '09 '10

Source: VIB materials

44

'11

'12

'13

'14

'15

'16

'17

'18 '19 '20'21

Fig25Comparison of highly cited papers by VIB

Source: VIB materials
In parallel with these scientific results, many VIB group leaders (>1/3) have a running ERC(European Research Council) grant.
III. Translational research
The next important part is translation. Here is an excerpt from an interview with Dr. Bury14.
--How did you develop the research department into the industrial world?
Dr. Jo Bury (hereinafter referred to as J): It is necessary to convert knowledge into value, but I firstcame up with a basic framework for translation while observing the efforts of MIT and various
research institutes. Prepare members who observe science on a daily basis, and grasp what ishappening.
On top of that, one important theme is collaboration with existing companies such as out-licensing,and the other is fostering start-ups. To date, 34 start-ups have been born as a result, and these startups have been able to attract about EUR 3.4 billion equity investment.
--Where do you find it difficult?
J: To begin with, most scientists are basically not interested in filing for IPs or collaborating withindustry.
On the other hand, it is also important that VIB itself is non-profit and has a goal to bring value "forpatients and consumers". We approached the scientists in various ways. We tried to see how theirresearch could be applied to the business world and provided them with a team of tech transfer
professionals that turn their science into IP and translational actions.
In addition to direct employment of scientists, a large number of jobs are being created from newly
created companies. This is an important part of local government efforts.
There are cases where start-ups receive funds from overseas venture capital, and this is also proof
14

VIB’s former managing director/current director-emeritus. Dr.Bury has a master’s degree in
Pharmacy and a PhD in Pharmaceutical Sciences (University of Ghent). He obtained an MBA degree
at the Vlerick School for Management in Ghent. After performing scientific research in the field of
atherosclerosis for several years, he has made a career in science policy.
45

that "funding basic research creates ripple effects in terms of economic expansion".
Of course, the evolution of VIB itself is also important. For example, most recently, it was involvedin establishing an international school for children of scientists from all over the world. This enables
VIB researchers to easily find a local international school for the education of their children.
IV. Scientist career path
-I think it's also a difficult issue to decide when to receive evaluations for these efforts. Life sciences
require time for research and development, but do you think it would be better if, for example, they
could be evaluated every six years instead of every five years?
J: Yes, of course. We have evaluated the pros and cons of a 5-year cycle versus as 6-year cycle. The
major disadvantage of a 5-year cycle is that it is short. In fact, in the fourth year, VIB starts preparing
for the evaluation of all VIB research groups and spends a considerable amount of time on this. In
the fifth year, the institute (VIB) is evaluated by the government, involving peer review, consultants
and bibliometric analysis. That means that in a 5-year cycle, two years are spent on evaluation andonly three years are available to develop the institute to the next level. If we extend it to six years,
the period of developing the institute would be four years, which provides a better balance between
development and review. In fact, we proposed a 6-year cycle to the government, and it was almost
accepted. However, in the end the government administration responded, "In that case, let's do aninterim evaluation after three years". I believe that if the assessment had been made at anintermediate time point, the outcome would have been much worse. So, we decided to stick to the
5-year cycle.
Scientists are generally promoted in a 5-to-7-year cycle, especially at the top level. We've talked a
lot about postdocs. What kind of cycle is good for postdocs? We expect that some of our mostpromising postdocs choose an academic career. The next step for them is to become an independentgroup leader and to apply for funding. A major – high standard – funding resource in Europe is the
ERC. However, to apply for an ERC starting grant, scientists are only eligible in the time window 2-7
years after attaining their PhD. As a postdoc in life sciences normally takes 5-7 years, only limited
options are available to these scientists to apply for such a position.
Instead, if we create an environment where they can do it well for 5-6 years, the scientist will beable to continuously ride the cycle and produce more results.
V. Back to 1995
J: Now I want to go back to 1995. Lucky for us is that we "stand on the shoulders of giants". In Flanders,Belgium, we had a number of extraordinary scientists with world-class reputations in life sciences.
They were the starting point of VIB, and it was through them that we were able to attract
international researchers.
In 1995, there were only five biotech companies in Flanders (Plant Genetic Systems, InnoGenetics,
Eurogenetics, Tibotec, and Corvas.). On the other hand, during the Pre-VIB era, an initiative called
Flemish Action Program Biotech (1990-1996) was running, and its vision was to realize a "knowledge
economy".
Among them, VIB advocated molecular biology and genetics. But the problem was ‘How?’. The
original running Flemish Action Program Biotech, like many other projects, invested in 'projects'. But
it didn't do much, and it didn't have the impact of reaching critical mass. So, we thought we needed
to pick ‘people’ and invest in them, not projects.
It took time to obtain the cooperation of each university. We kept trying until we got the46

understanding that the efforts were mutually complementary. For example, on a trivial note, it took
a considerable amount of time to ask for the VIB logo to be included in their papers. Of course, we
set the rules, but the scientists (still embedded in the universities) did not understand it well; so, we
contacted them each time and asked them to make a presentation with the VIB affiliation. Of course,
we don't have that trouble now.
In any case, nine university departments were selected for the opening in 1996, 650 scientists were
nominated, and multiple sites were started.
--It is said that they are mutually complementary, but where was the incentive for the university tocommit to this story?
J: That's right, the university side felt that, "Scientists don't want to create such a center. I understandthe part that actually creates critical mass, but I doubt if this will actually work".
Naturally, there were opinions of whether it would be better to directly fund the university.
However, seven years after its establishment, during a meeting to review the program in 2002, thethen-serving rector of the University of Leuven said "Had these funds been put into the university forthe same amount of time, they wouldn't have achieved as much. Stopping this project now is notgood”. The story called a response in various places and the evaluation went up.
Regarding the discussion of critical mass, it is difficult for each university to gather good humanresources with only one PI. As the project progressed, each university realized that something like
VIB can be created by gathering a certain number of excellent PIs: creating a critical mass of
excellence.
Peer reviews were also important. In the first peer review five years later, it was still halfway to thepoint for evaluating the science, but scientists from all over the world joined the reviewers andevaluated the contents on-site over several days. As a result, we were evaluated to the effect of, "Thisis very good content; it would be a waste to stop it halfway". It was significant that the reviewers
were international rather than domestic.
Anyway, ‘time and trust’ are important. We gained credibility by spawning two new companies in
the first five years (devGen and CropDesign), both in agro-biotech. Both also attracted early VCfunding, another necessary component of the ecosystem. After that, spin-out companies wereformed relatively smoothly (Ablynx, etc.). Then, this trend gradually became a trigger to attract the
support of global companies.
VI. Subsequent VIBs
- Did things go smoothly after that?
J: VIB has indeed created an ecosystem (see Figure 26), and it has been strengthened especially since
the beginning of the 2010s. The ecosystem has started to work, and various initiatives have taken theform of being able to do it here.

intentionally blank47

Fig26

Ecosystem built by VIB

Source: VIB materials
And not only for VIB: among the initiatives one called Bio-Incubator and Bio-Accelerator was
created.
-Is there a big master plan for these efforts?
J: It's true that there was no big master plan, but the process has been completed in a gradual manner.
I've seen other cases of people investing in projects and failing. After a few years, when the project
stops, nothing remains, and it doesn't lead to the formation of an ecosystem.
We have invested in people and created venture companies. As a result, as shown in Figure 27,
VIB-originated start-ups are the main investment destinations of venture capital, and occupy thecurrent mainstream. This can be said to be a good impact of creating an ecosystem.
Fig27 Venture investment environment created by VIB

VIB is driving the VC rounds
through start‐ups,…

…that grew to go
public successfully

Cumula ve VC Capital raised by Private
Startups in all of Belgium

Capital Raised by Public Life Science
Companies over VIB's existence

Independent of VIBVIB Start-up
V-Bio Company

€400M

€352M

Bone Therapeu cs €116M

Mithra €101M

€296M

300

Oxurion €292M

MDxHealth €212M

Celyad €238M

ASIT biotech €37M

Hyloris €74M

€210M
€192M

200
€119M

100

0

Ablynx€701M
Devgen €164M

2013 2014 2015 2016 2017 2018 2019 2020 2021
Year of last Fund Raising
ytd
59M

0M

€523M

€111M
€92M

€85M

€5M

VIB
Start-up

98 BiocarƟs

Galapagos€1.467M

6M

84M

82M

27M

’96-’00

41M 111M 76M’01-’05

iTeos
€364M

argenx€2.871M’06-’10’11-’15

Period of Founda on

Source: BCIQ, updated March 2021

Source: VIB materials-Is it important to know ‘what kind of discipline to follow’?
J: That's right, and it's quite possible that the amount of science being translated is limited despite
the huge amount of research expenditure. There are parts where the university side has to change
its stance. The system inside is necessary.
It is difficult for each university's TTO to cover everything. I think it is necessary to create the bestorganization from the viewpoint of how far we can actually cover.
48

[Supplement 1] Flanders.bio
Flanders.bio was founded in February 2004 with VIB being one of the founding partners.
The idea to create a biotechnology cluster organization had matured a few years before its creation,
to a large extend from discussions held within the VIB board of directors, from a growing awarenessabout the need to provide specific support to start-ups and spin-off companies in their earliest stageof development, and from the realization that such kind of support was difficult or impossible toorganize from within the existing organizations in the ecosystem.
Basically they share roles in seminars, conferences, technology transfers, education, etc. outsideof VIB's core business. The number of member companies was initially extremely limited, but now it
is 340 or more. Biotech and pharmaceutical companies account for only about one-third of thenumber, and many business operators in areas such as professional services and consulting and othersupport have joined. In terms of area, 70% are from Flanders, but there are also those from Brussels
and Walloon, as well as companies from outside Belgium.
They are also focusing on SMEs because the number of SMEs has increased along with the growthof the biotech industry. They regard SMEs as key catalysts for the growth of the ecosystem andsupport them.
In Flanders, a system has been put in place to create a system centered on science in this way andto continue to disseminate it to its base.
[Supplement 2] QBICAs a further supplement, I would like to take up another organization that has been influenced by
VIB's movement. QBIC is a private fund in Flanders. It is explained below by Danny Gonnissen, apartner in QBIC I.
Danny (hereafter, D): There is no horizontal connection between Technology Transfer Offices (TTOs)
of universities in Flanders for funding university spin-offs in the Flemish region. Learning from theinteruniversity approach introduced by VIB in life sciences, TTOs from the universities of Ghent,
Brussels and Antwerp (the University of Leuven decided to continue working with its own seed fund)joined forces and created an interuniversity fund: QBIC. QBIC is a seed and early-stage venture capitalfund that provides entrepreneurial support and funding to spin-offs of these universities. Its activities
are not limited to life sciences.
The people managing QBIC are independent from the universities but know very well how the
TTOs work and can count on external expertise that is present in the universities to analyze the spinoff projects.
Before QBIC, each university had its own, small seed fund. This allowed it to encourage
entrepreneurship, but it was difficult to sufficiently fund a project after it was incorporated as acompany. QBIC solved this.
-Why does this kind of culture exist in Flanders?
D: This is largely due to the fact that research institutes such as VIB in life sciences, but also IMEC in
micro-electronics, have collaboration programs across each university and have achieved very goodresults in translating scientific knowledge into business.
QBIC was established in 2012 with the three aforementioned universities. Later other universities,
such as the University of Liège in Wallonia, and research institutes such as VITO (multidisciplinary
research institute in Flanders) also joined this framework.
As you can see from the portfolio in which QBIC has invested, the origin of the companies is nicely
49spread over the different universities and knowledge centers, showing a good variety of projectsources. Favorable project exits are steadily appearing.
4.2.3 Flow of the first decade of the 2000s
In Belgium in the early 2000s, with core research institutes such as VIB, biotech companies weregrowing conspicuously and, at the same time, their expansion into Wallonia was also conspicuous.
(1) IPO market trends since 2000
The second wave of IPOs of biotechnology companies in Belgium came in the latter half of the first
decade of the 2000s.
2006 ThromboGenic, 2007 Ablynx, Tigenix
2013 Cardio3 Biosciences
2014 Galapagos Genomics, ArGen-X
Among them, Galapagos, Celyad (formerly Cardio3 Biosciences), and ArGen-X have also succeededin dual listing on Euronext/NASDAQ. In particular, ArGen-X raised USD 114.7 million on NASDAQ in
2017. The company, which was born from Ghent University's technology, was founded in the
Netherlands, but later moved to Belgium.
(2) New developments in public financeIn 2006, SFPIM (Societe Federale de Participations et d'Investissement), an investment company
owned by the Belgian government, was established.
SFPIM has played a role as a government investment institution, including investments in funds
such as Vesalius and participation in privatized public works such as Brussels Airport and Brussels
Airlines.
As of 2020, the investment balance was EUR 1,956 million, approximately JPY 270 billion, and theinvestment ratio of portfolio companies was 10-25%.
SFPIM itself has a matching fund-like function, and has the aspect of matching investment withexternal capital, and has achieved a traditional priming effect.
Also, the life sciences sector also accounts for 8.5% of their current portfolio.
(3) Deployment in Wallonia
Wallonia currently has support organizations for life sciences called WELBIO and Biowin, whichwere established in 2009 and 2006, respectively. WELBIO is a support organization for fundamental
research, and Biowin is a support organization when spin-out companies are established fromuniversities.
I interviewed Vinciane Gaussin (Managing Director) for WEL Research Institute (the name of theinstitute has recently changed from WELBIO to that name) and Marc Dechamps (International Affairs)for BioWin.
[WELBIO (WEL Research Institute)]
WELBIO has the role of cross-cutting basic research between universities located in Wallonia andwas created within the framework of the Marshall Plan II. It was established to support basic researchand translate scientific discoveries into biomedical applications.
As for the program for researchers, WELBIO calls for applications every two years, has them submit
applications for a four-year program (research grant), and has them screened by an international50

scientific evaluation commission (11-12 people in total).
During the research period, they have regular meetings with WELBIO members to develop an
intellectual property search and valuation plan. At that time, Biowin, SPW, and people from theindustrial world also participate in the discussion, and WELBIO provides support to create a spin-off.
As a result, the project has progressed for six terms so far, and 630 papers have been produced in
88 projects. Scientists have also been able to get 12 grants from the ERC.
In terms of translation, WELBIO projects have implemented 33 intellectual property applications.
Also, Chromacure, Generon, NeuVasq, and Santero have spawned four spin-offs, and Ncardia,
OncoDNA, and Eurogentec (Kaneka) have collaborated with industry.
Governance members are well-balanced (academia, industry, government, and the outside world),
and WELBIO itself has fewer occasions of exclusive control, and is built into the existing system.
Research programs are submitted by Principal Investigators in universities of the Wallonia-Brussels
Federation. Funded Principal Investigators are automatically affiliated with WELBIO (WEL ResearchInstitute). The composition of the evaluation committee in the international lineup, the period, theevaluation method, etc. are influenced by VIB.
In terms of relationships with industry, the pool of corporate human resources in Walloon is large.
But in addition to the number of human resources, the fact that representatives of the main Walloon
life science industries are part of the Governing Board is a great asset.
[Biowin]As I wrote in the section above, Biowin was born as an organization that connects the bio-industry
within the framework of the Walloon government's Marshall Plan II.
The two priorities for 2020-2023 have been defined as (1) accelerating the production of vaccinesand biomanufacturing, and (2) making Wallonia a champion in the field of healthcare innovation.
Specifically, Biowin has provided support in terms of promotion of collaborative research projects
related to innovation, scale-up of companies, international expansion support, human resource
development, and communication including conferences.
With strong leadership by local governments and the provision of funds by public institutions such
as SRIW(an investment fund in Wallonia / current ‘Wallonie Entreprendre Life Science’), Wallonia iscurrently seeing a rapid increase in funding for companies. Wallonia, which used to have a strong
color as a manufacturing division centered on GSK, is now turning to innovation.
Mr. Alain Parthoens of Newton Biocapital, who was also present, said, "Previously, we were in asituation where we would rush around to create various elements for a start-up, but now we canconsult with Biowin first, which is a big difference".
[Ventures in Wallonia]
And at this time, in parallel with the above movement, a movement of bio-ventures in Wallonia
also have become active. Companies such as Promethera BioSciences, Iteos Therapeutics, Bone
Therapeutics, Novadip, MasTherCells, Univercells, Epics Therapeutics, Neuvasq Technologies, etc.
have been born.
In particular, the Walloon local government has been promoting the development of cell therapies(adult stem cells, CAR-T cells, iPSCs) as the core, characterizing the current development of Walloon's
life sciences.

51

4.2.4 Situation in the 2010s
With the growth of biotech companies and their expansion into Wallonia conspicuous, since the2010s, the growth of these emerging companies and the core companies have once again crossed
paths.
I asked Marc Dechamps, who was mentioned earlier, and Frēdēric Druck, Director of Essenscia, an
industry association in the pharmaceutical industry, about the current Belgium situation.
(1) Current Belgian industry- What do you think of the current strengths of the Belgian life sciences industry?
Mr. Dechamps (De): Belgium is currently established with the following stakeholder balance.
Fig28

Stakeholders in the Belgian ecosystem

Source: Biowin & Flanders.bio material
I think the strength in innovation has been discussed separately, but apart from that, the large
number of clinical trials is one of the characteristics. Belgium accounts for 2.6% of the EU population,
but the number of clinical trials is 16%.
At the same time, it is also characteristic of ‘roles of a production base and a supplier’. In thecurrent Covid19 situation, one billion doses of vaccines are being deployed worldwide, mainly by
Pfizer. EU Chairman von der Leyen also mentioned the contribution of Belgium to production
technology in dealing with this Covid19 era.
At the same time, thanks to the geographical advantage of being in the center of Europe, capital
investment by major pharmaceutical manufacturers is progressing smoothly. In relation to thepandemic, the role of the EU-led Health Emergency Preparedness and Response Authority (HERA) is
also significant.
Amidst these movements, strong employment has been created, with more than 120,000 people,
including over 40,000 in direct employment.
- What are the current challenges?
De: The biggest part is human resources. Aptaskil in Wallonia and ViTalent in Flanders are running
human resource development programs, and in 2025 a center called the EU Biotech Campus will beestablished in Wallonia.
The purpose of these human resource development movements is not only for start-ups, but also
to develop people who work in this industry, including in production, and to support conversion fromother industries.
Such initiatives are already being undertaken in Ireland, Paris, and Barcelona, but are new to52

Belgium.
Note: Mr. Dechamps is heavily involved in human resource development for innovation at Solvay
Brussels School (SBS), which will be discussed later.
(2) EU Biotech Campus Initiatives and Collaboration with Companies
The EU Biotech Campus will open in 2025, and I asked Mr. Druck, who is also involved in the project,
about the current situation.
--It seems that human resource development in Belgium is now becoming buzzword-like. What is the
background?
Mr. Druck (Dr): Of course, the aspect of developing entrepreneurs, which SBS is currently doing, isimportant, but the aspect of vocational training related to production is also strong. It is an elementof dealing with the recruitment and training of large amounts of jobseekers, the upskilling of industry
workforce as well as the reskilling of employees from other industries. Aptaskil started in 2010, but
has recently changed its framework. ViTalent officially kicked-off in late 2022. Since the EU Biotech
Campus is added to this, you can think that these efforts are being made at the same time. The EU
Biotech Campus itself is not a master program, but on the other hand, one of the features is that soft
skills needed in pharmaceutical companies are addressed in the course. The main purpose of the EU
Biotech Campus is nonetheless to address the need for training in advanced biomanufacturing
processes and in digitalization/data management applied to biotech innovation and manufacturing
processes.
--I think that collaboration between large companies and start-ups is always an issue worldwide, butwhat about Belgium?
Dr: That's right, but the system has changed recently. Fifteen years ago, collaboration with small
companies became a must in order to obtain subsidies and other funds from local governments. As
you can see in these stories, agility is a strength these days. Even during Covid19, the production lines
were flexibly reassigned, and cooperation was implemented.
(3) Dialogue with venture company: Epics Therapeutics
So far, I have discussed the recent expansion of the industry. Next, I also interviewed a key manager
of a venture company that embodies the innovation that is the core of the Belgian ecosystem: Mr.
Graeme Fraser, CSO of Epics Therapeutics, who grew up in the environment. The company is anepigenetics company, and its key members are the former members of a company called Ogeda that
was acquired by Astellas in 2017 for EUR 800 million with a greater than 20x return to Ogeda
shareholders.
- What do you think are the characteristics of the Belgian ecosystem?
Mr. Fraser (F): Belgian universities are certainly a foundation for producing good start-ups. The
companies EuroScreen, Ogeda and Epics, for example, were born out of ULB, and KUL is also verystrong. Ghent University is also extremely strong in the field of antibodies. Each has its own specialty
and is learning from its successes. I'm from Canada and came to Belgium; so, I think it's possible to
make a comparison with other areas, and Belgian universities are modest about enforcing rights of
the university to limit the business ventures of its researchers to some extent, which is positive forallowing companies to start. Then the universities actively try to create spin-outs, add entrepreneurs,
and create various team compositions. In that respect, Belgian universities deal with those aspects53

very well.
As for whether talents gather in Belgium, it is easy to attract young talents because of its strengthin science. Wallonia also has a strong scientific culture, with a large number of knowledgeable
scientists. And because Wallonia is French-speaking, there is also a tendency to attract qualified
people to move here from France. Also, tax rates on surplus income are entrepreneur-friendly, whichhelps in the recruitment and retention of top managers.
In comparison with North America, ‘valuation’ for start-ups is also a good balance between
entrepreneurship and science. Investors also tend to take moderate risks while waiting foropportunities, including long-term holdings. However, in terms of finance, the greater amounts offinance required to move to the next phase in clinical trials is still weak. There are not too many big,deep-pocketed financial investors in Belgian; so, finding finance at this stage of company maturation
is difficult to do in Belgium. So, this is probably where the Belgian ecosystem can still change.
- Could you explain about the transition process from Ogeda to Epics (Epics was already established
as a spin-out from ULB, and the members joined Epics after Ogeda's deal)?
F: While Ogeda was being sold, the acquirer (Astellas) was looking for compounds and did not needhuman resources. The team at the old Ogeda are all very close and have all moved on to the newcompany. In Belgium, the members have a relatively close relationship, and they know each other
well. That transfer was a natural process.
--When Epics succeeds, wouldn't the influence of these members on the ecosystem also be great interms of producing human resources?
F: Ogeda's team members were originally all very young. The young members have come this far
while learning how to realize drug discovery; so, the experience is really great. Of course, I do notknow how this team will develop in the future, but it is certain that it is a very strong asset.
I think that "learning at university" and "pursuing drug discovery on a business basis" are reallydifferent. The process of teaching students how to do something different from what they havelearned at university will become important in the future.
SBS is creating a new master school this time, and I think this is a very good initiative. In order tothink about how to develop a business company on a business basis, it is necessary to consider
various elements in the development process. Many people in the field participate as faculty
members in this new program. This is a feature not found in other programs, and these kinds of things
are 'teachable', I think.
4.2.5 Coming Up Next: Solvay Brussels School
The need for national concerns in developing human resources is discussed above. Lastly, I spokewith Academic Directors Marc Dechamps and Philip Vergauwen about the human resource
development program for the life sciences that started in October 2022.
This course is a master course opened by Solvay Brussels School belonging to ULB, and is called
Advanced Master in Biotech & Medtech ventures. The problem lies in making up for the shortage ofentrepreneurs in the biotech and medtech industries. Another feature is that it is a course thatincorporates plenty of practical experience.
The course itself consists of the five modules listed below and an intensive program of 1,800 hours
in one year, with over 20 coordinators for each course. In addition, about 40 guest lecturers arescheduled to be on stage in connection with these lectures.

54

[5 modules]
1. Basic Knowledge of the Start
2. Starting Up the Development – Company Seed Stage Funding
3. Initiating the Clinical Development – Series A Funding Preparation
4. Consolidating the Company and the Governance – Preparing Series B Funding
5. Finalizing the Clinical Development – Preparing for Market AccessFor biotech, medtech and digital health, students will learn a continuum of processes for ideationand product development, clinical trials and approval processes, finance, launch and market
development. The details and concepts are as follows, according to the interviews of the directors.











This course is divided into five modules, and the first module is designed to provide a bird's-eyeview of the whole. In the end, it will return to the content touched on in module 1 many times.
We anticipate that there are about 25 students per grade, and we would like to have a diverse
range of backgrounds and nationalities. Since the selection of students also considers learning
as a "team", it is always in my mind to distribute roles well.
The current membership consists mainly of young people with corporate experience and ascientific background like a PhD in sciences—for example, bioengineer, pharmacist.
We are thinking having the research center adopt a style of analyzing industry and making policy
recommendations instead of writing a thesis at university. Large-scale research cannot be
conducted without proper team composition, and even in the real world, working in a teamdoes not necessarily go well. It is necessary to find each role in it.
This is an attempt by both biotech and medtech, and this is the first time that such an advanced
master course has been created.
I think there are three major challenges for this program: (1) gathering the best talent, (2)organizing appropriate programs and a lineup of industry professionals, (3) fostering trust andpromoting networking. We are assembling a course thinking about how to address thesechallenges concretely.
In that sense, rather than “teaching”, we think that the proposition is how to stimulate theentrepreneurial candidates who are already there.

4.3 As a summary of the Belgium part
Notable scholars in bio, initiatives such as VIB based on their works (and IMEC's initiatives beforethat), efforts of individual venture companies, regional horizontal development of measures, andconstruction of ecosystems including large companies: the SBS Master Course is an extension of allthat.
Considering the intimacy and flexibility that flow through the core of this course, I felt it was a very
emblematic program.
This case study does not touch on finance, but in the process of forming the ecosystem in Belgium,the existence of various public funds and private venture capital, starting with GIMV, has supported
this movement.
These interviews were held in Brussels, Ghent, Wavre and other cities in late August 2022. With
the help of members of Newton Biocapital (NBC), which is one of such venture capital firms and isinvesting in both Europe and Japan, I was able to do the interviews. I would like to express mygratitude to those members at the end of the book.
55

In addition to the interviewees listed here, I heard many stories during the above interviews, but
not all of them are listed in this chapter. However, the essence is reflected in each item.
Lastly, the history of individual Belgian venture companies was based on information provided byNBC's Louis De Thanhoffer. Without that information, this chapter would not have been possible. I
want to thank him deeply.

56

Chapter 5 Comparison of Belgium and Japan as Ecosystems — As a methodology for strengthening
human capitalAs depicted in Chapter 4, individual players in Belgium’s ecosystem grew in line with thegrowth of major global pharmaceutical companies, achieving their own development
based on investment in science and human resources in a form that can be connected tothis environment.
In Japan, major pharmaceutical companies are showing some growth in the midst of
globalization, but the growth and maturity of finance and academia are not sufficient.
However, by (1) improving funding methods for academia and (2) flexibly implementing
human resource development methods for VCs and entrepreneurs, the shortage of seeds
will be resolved. Then, if it is possible to encourage the early commitment of thecompanies, there is a possibility of realizing a mutually complementary ecosystem.

In this chapter, while referring to the ecosystem theory mentioned in Chapter 2, I compare thedevelopment processes of the ecosystems in Belgium and Japan and find out the implications.
5.1 Formation of Belgium's bio-related ecosystem
5.1.1 Changes in ecosystem formation
As with any country's life sciences ecosystem, from today's point of view, the 1990s was a periodof foundation building. In Belgium, an organization like VIB was created based on successful casessuch as IMEC, and R&D was cross-linked. At the same time, companies were investing in R&D and
improving employment.
Fig29 Image of the 1980s - mid 1990s in the Belgium ecosystem

Big company
Universities
and other
research
institutes

Figures 29 – 32 were created by the author.
Since the beginning of the 2000s, support for science has steadily been strengthened, and thismovement itself has likewise been strengthened, including horizontal expansion to Wallonia.
What was important during this period was that science-based start-ups were born and their value
blossomed.
In the process, along with the government's support, venture capital was active, but it would beappropriate to think that various European funds were also active in Belgium. In addition to theventure companies’ focus on development, their exits targeted global companies rather than being
confined within Belgium.

57

Figure 30 Image of the mid 1990s - 00s in Belgium’s ecosystem
The brown partalso has a joint
research
institution incooperation.

Universities
and other
research
institutes

Domestic and foreign
major companies

VC

Governmental
Fund

AbroadStart-ups

The major point since 2010 is that these movements have been integrated and diversified at thesame time (this aspect can also be seen in the recent trend of VIB).
The way large companies interact with each other, including cooperation in terms of humanresources, is changing in a complementary way.
Belgium’s strength in science attracts human resources. And after a venture company exits to a
global company, the human resources are circulated domestically. At the same time, as large
companies collaborate with research institutes and venture companies, human resources from large
companies will also circulate in the labor market, including venture companies. Therefore, the variousorganizations strengthen their human resource development programs, which effectively raises thelevel of the human resources that exist there.
In this way, a unique ecosystem has been formed in present-day Belgium.
Fig31 Image of the late 00s - 2010s in the Belgium ecosystem
Collaboration is occurringin multiple areas

Universities
and other
research
institutes

Universities
and other
research
institutes

Major domestic andforeign companies
VC

Governmental
Fund

AbroadVC

Start-ups

5.1.2 What kind of complementarity was observed?
I would like to examine how the concepts of "mutual complementarity" and "integrated
complementarity" have worked in relation to these changes.


Mutual Complementarity
Scientists in Belgium, based on the perspectives and evaluations they naturally face, improve their
quality and develop their research results in a translational form, creating a situation where it is easy
to build relationships with venture capital.

58

Integrated complementarity
In order to contribute to the creation of added value generated from the ecosystem, large
companies and venture companies create a situation in which human resources are exchanged witheach other, raising the overall industry level.
In addition, the transition itself takes the following process: "building with the minimum elements","expanding step by step", and then "succeeding".
Below I list the actions that seem to have worked particularly well in realizing the system, pickedup from Chapter 4.






Local government support, including financial support. Support for collaboration between large
and small companies.
Collaboration between research institutes and universities, the idea of "people, not projects",
and awareness of one’s positiion in one’s field.
Providing programs that align with the career plans of scientists, and management, byincorporating international peer reviews.
Awareness of issues in each layer related to human resource development and responses tothem.
Actual circulation of human resources, including among large companies (see Appendix 5-1)

Behind these activities lie trust and respect for scientists, epitomizing the notion of "standing on
the shoulders of giants".
Appendix 5-1. Example of ‘Knowledge-transfer’
Returning to the case of VIB, I would like to present an image of how human resources spread within
the industry. The following excerpts from an interview with Jo Bury by Jean Claude Deschamps (NBC)are reproduced with permission.


It is important to know how the renewal of staff happens inside VIB. The academic world ingeneral encourages the staff to move on to the general employment market. Of the 1,800 in
total currently employed (including supporting staff) the breakdown is as follows.
*
PhD students total around 600. On average they will be in the VIB for 4 or 5 years and leave.
*
PostDocs are around 550. They have a 3 – 6 year span of presence in VIB, and then leave.
*
Once a person moves up to the level of staff scientist, VIB provides them with a long-term
employment contract. Together with the lab technicians, they form the backbone of theinstitute.
 In total throughout the five universities, there are 90 VIB research-teams, each with a Teamleader. VIB might want to retain Team-leaders “for life”, though still under “rolling tenure”,
requiring excellence demonstrated in the peer reviews, which come up every five years. Thosefailing these reviews move on—that is, they leave.
In total the 5-year rhythm-of-evaluation results in about 17%~20% of the staff leaving eachyear. This rate of turnover requires VIB to hire on average at least one new member every day.
 Where do the leavers proceed to? What kind of employment is their next one, after leaving VIB?
*
Half of those who leave find a job in academia—a majority of them outside Belgium.
59

*
*

Another 37% find their next employment in industry—over four out of every five in the local
biotech industry in Flanders.
Roughly 10% find their way into education, hospitals, government.

5.2 Current status of the ecosystem in JapanAs seen in Chapter 1, a life science ecosystem has already been established to some extent in Japan.
However, depending on the scope, it has been ten years since the level of permeation has been
relatively in line with global trends. As seen in Chapter 3, there are unbalanced elements when
considering the transition of each player.
5.2.1 Overview of large companies
First, I would like to take a look at large Japanese companies that are globalizing. Chapter 3 showschanges in Japanese companies over the past 30 years.
For the past decade, Japanese companies have realized the main part of their businessdevelopment through overseas sales growth. At the same time, the business development
capabilities of Japanese companies have certainly improved over the past decade.
In fact, as can be seen from Table 16, some companies are proceeding with the acquisition ofventure companies and the introduction of technology from venture companies.
Table16

Recent acquisitions of overseas companies by Japanese companies

2016

2017

2018

Acquisition company

Acquired company

Acquired company
location

AstellasGanymed Pharmaceuticals

Germany

Dainihon-Sumitomo

Tolero Pharmaceuticals

U.S.

Dainihon-Sumitomo

Cynapsus Therapeutics

CanadaTanabe-Mitsubishi

NeuroDerm

IsraelTakeda

ARIAD Pharmaceuticals

U.S.

AstellasOgeda

Belgium

OtsukaNeurovanceU.S.

TakedaShire

Ireland

TakedaTiGenix

Belgium

OtsukaVisterra

U.S.

Astellas

Mitobridge

U.S.

AstellasProtenza Therapeutics

U.S.

AstellasQuethera

U.K.

Astellas

Universal Cells

U.S.

2019

Dainihon-Sumitomo

Roivant Sciences

U.K.

2020

AstellasNanna Therapeutics

U.K.

TakedaPvP Biologics Inc.

U.S.

2021

TakedaMaverick Therapeutics

U.S.

TakedaGammaDelta Therapeutics

U.K.

Created by the author based on various materials
In tandem with this trend, the amount of R&D investment as a company has remained steady overthe past 30 years (see Chapter 3), and it is important that core companies exist at a certain level.
This is an important feature when considering ecosystem formation in Japan. However, since there isa limit to the growth of the domestic market, maintaining and strengthening each company’s stability60

is also an urgent issue.
5.2.2 Positioning of venture capital
As can be seen from Table 16, many of the acquisitions are overseas. The number of acquisitionsin Japan is limited, and the scale of many of them is small.
In Japan, there are companies that have expanded their ventures, achieved IPOs, and continued
to grow their value while maintaining their independence. In the US and Europe as well, being
acquired by a company is not the only exit story. In that sense, Japan is not incongruent with othercountries, but the reality is that there are extremely few exits to companies.
As seen in Andrew Lo’s thesis in Chapter 2, considering the high risk, it is unavoidable in this fieldthat some countries have underdeveloped venture capital markets due to differences in the degreeof risk selection. On the other hand, the United States, as a result of its investment activities, hascreated a kind of ‘baton relay’ market and has adapted to development risks and development
periods.
At the same time, large companies increased their financial strength through mergers and othermeans.
It can be said that it is rational not to force the venture capital market to expand in Japan wheresuch a situation is not ready. But considering the situation where Japanese companies are able tocarry out business development activities, a change is necessary.
In fact, Japanese venture capital firms with global experience and networks are also growing, asituation linked to the movement of certified venture capital by AMED. The direction of improvement
can be seen.
5.2.3 Research and development environment in academia
Next, regarding science, research budgets are in a trend cycle of decreasing and then increasing
again. But fixed management, rather than the degree of global growth, is the aspect that isconspicuous. In addition, not only are the numbers of researchers and the budgets important, butalso the quality of the journals.
The increase in university-launched venture companies is conspicuous, but there is a possibility
that the purpose of establishment has become a KPI separate from quality. It will be necessary to pay
attention to whether high-quality venture companies will be born from such movements.
Financial factors are also a major factor behind the stagnation of research and development trends
at universities in Japan. Another factor is the prevalence of the "selection and concentration" strategy,
which, as has been pointed out, presents problems such as "research themes that are easy to adopt
are selected on the premise that narrowing down are carried out, and basic research capabilities may
decline".
5.2.4 Overview of Japan as an ecosystem
The situation in Japan is as shown in Figure 32. While continuing to retain a large portion of inhouse development, it incorporates innovation from overseas. Therefore, the venture capital market
and translation from academia are still weak, and the mutual connection between the two seems to
be lacking.

61

Fig32 Current ecosystem image in Japan
There is a highpossibility thatoverseas
seeds willenter theshaded part.

Universities
and other
research
institutes

Global Company

VC
Start-ups

However, this is not such a strange story. From the view of a company, it is not important wherethe "mutually complementary functions" are located. Corporate efforts exist in challenging
themselves to apply new technology, no matter which country produces it.
On the other hand, it is difficult for academia to move geographically. Of course, it is normal forstar scientists to move between countries, but it is impossible for the university itself to leave thearea. Considering the budget levels of individual universities, it is easy to imagine how difficult it
would have been to expand beyond the status quo. This is because the university itself does not exist
to form an ecosystem.
It seems that the phenomenon is occurring in various parts of the world where the domestic
environment does not shift to a complementary structure, doing so while being connected to theglobal ecosystem that has been completed.
How should we approach that challenge?
5.3 Necessity of mutually complementary functions: Formation of an ecosystem that only
progresses in a complex manner
As we saw in Chapter 3, there is a structure in which academia expands after or at the same timeas the company grows, and venture capital also grows along with this growth.
One way to expand academia is through a kind of political investment, like in North America. An
alternative is a strategy of strengthening academic capabilities through connecting existing research
institutes, like in the case of VIB. In any case, the structure does not expand naturally.
Whether venture capital is in the form of a giant industry (USA) or in a form that strongly stimulates
the movement from science to translation (Belgium), the entire system moves in a complementarymanner, and the flow from academia to industry moves dynamically.
Japan's problem is that it has not been able to form an ecosystem in a mutually complementary
relationship, even though the level of science and R&D expenditure are not necessarily low. In what
direction should each part move?
There are two major problems facing academia. First, since scientists are doing research for thesake of science, translation is essentially secondary. There are TTOs to solve that problem, but how
do you deal with the situation where universities are dispersed and exists independently?
The second, more fundamental, problem is that while development funding does not rise, it'sdifficult make careers as scientists attractive.
It is essential to find a way to develop good scientists in this environment. VIB-like methodology
may be one way to address the issue.
Next, venture capital players must first create a situation in which they can commit to company
62

creation regardless of region. However, there is an absolute lack of human resources on both the VC
side and the entrepreneur side, and there is also a lack of funds in the background. Development riskin the life sciences is a big factor behind the lack of funds. However, it could be the case that earlyexit measures on the part of large companies could reduce this risk. In that sense, it is necessary to
improve the communication between VCs and venture companies and, thus, “human resource
development” is important in the sense of creating an environment conducive to such
communication.
Behavior of large companies is such that if there is a level of translational output that can be
expanded globally from universities and ventures, they will acquire it. Of course, it would be better if
companies would improve their strength and be able to commit to projects at an earlier stage. But"ecosystem formation" is not a driving corporate concern for them, and I don’t anticipate that pointchanging significantly in the future. However, there is a possibility for earlier commitment timing anda more-active ecosystem.
Each player needs to improve little by little and compromise. Ultimately, however, what is needed
is a methodology to strengthen science. In order to create a local environment for that purpose, itwill be necessary to set rules and invest in people.
5.3.1 Cooperation of multiple universities and research institutes and improvement oforganizational/academia environment
What should be paid attention to in Belgium's movement away from "competing alone" in science.
When it is difficult to show overwhelming strength in science, it is important to maintain acompetitive ecosystem level by collecting multiple pies and choosing the best from them.
First of all, it is important for universities and research institutes to seriously think about how they
impact the global structure. The reality is that each organization's history and existing personnel tend
to narrow the scope of this thinking, but what is needed is an appropriate set of scale, autonomy,
and duration.
First, regarding scale, Flanders has a population of 7 million, and the Wallonia district, which has
newly followed this system, has a population of 4 million. If the movement had been attempted at
10-20 times that scale, I highly doubt it would have worked. To some extent, specifying the area andscale is key to the need.
Next is autonomy, or governance. For example, in the case of Belgium, it is under the auspices of
the Flemish government, which has delegated a significant amount of authority to VIB. In order toensure that autonomy, they are gathering human resources who can judge the progress and directionof research on a global basis. It would be difficult for the local members to pull this debate together
and pick the best (peer review feature).
On top of that, it will be necessary to give universities and research institutes the function of
making their own investment decisions.
And for this to work, we need a certain "duration" as the selection period. Of course, it is necessary
to consider the compatibility the duration with the career path afterward; so, it is necessary to makeuse of the existing university functions.
Now, let's say that we could divide Japan into 5 to 10 areas (such as Hokkaido/Tohoku, Kanto,
Hokuriku, Tokai, etc.), conduct the project jointly among multiple universities, and create an"independent institution" on one side. Would there be incentive for universities to cooperate withand provide business to this scheme?
63In order to do that, it would be necessary to instill trust that such a team and system would produce
results. A step-by-step method, such as starting with cross-collaboration among TTOs and thenstrengthening the selection of research and development, may also help.
5.3.2 Education of professional human resources
Strengthening human resources who can create impact in academia is essential, and it is not hard
to imagine that it will take time. The first thing we can do is strengthen human resources involved intranslational research. These human resources include many support personnel from universities andresearch institutes, entrepreneurial personnel, and venture capitalists.
A good example would be the “Biodesign” program in the medical device sector. "Biodesign" wasstarted in 2001 by Dr. Paul Yock of Stanford University as a human resource development program tolead medical device innovation based on design thinking. It is characterized by an approach thatrealizes innovation. In collaboration with Stanford University in October 2015, Osaka University,
Tohoku University, and the University of Tokyo announced the launch of the "Japan Biodesign
Program", which has been developing in Japan ever since.
Fig33 Processes of the Biodesign Program

Source: "Method of Innovation for Japanese Med-Tech Industry – Essence of Silicon Valley Styleand How Japan Can Tap IT“ (Development Bank of Japan)
New efforts are being made in Belgium, as we have seen at SBS, and are other countries have theirown human resource development programs. Development of entrepreneurial human resources andinvestors who will complement each other is considered urgent, either by introducing a new such
system or by partnering with a university that already has such a system.
And when taking such actions, it is important to have a sense of the distance between the researchsites and the project site and of how to create hooks in the system. Industry's commitment isessential—that is, a university’s new "initiative" is not enough.
5.4 Summary of this chapter: How should we exercise ingenuity?
Japan's problem in life sciences is that although the level of science and R&D expenditure are notnecessarily low, the ecosystem has not been fully formed in a mutually complementary relationship.
My point is not to simply create a framework like the VIB or SBS master schools but to supply theparts that are missing from the flow that has already been completed (including finance, of course).
A global ecosystem has been created through various transitions in the process from research anddevelopment to product launch. Japan has strengths within the ecosystem. Among them is the factthat major Japanese pharmaceutical companies continue to maintain a certain position in the global
market. Another strength is that, even though its global ranking is dropping, Japan still publishes solid
papers in science, in and out of the top 10.
Japan needs a framework in which individual players compete with each other and humanresource development is fostered, focusing on the following measures.
1) provision of a high-level R&D support framework in academia (including a VIB-like format) that64matches the global career paths of scientists,
2) development of human resources who support venture human resources on both the
management side and the investment side, and3) commitment of major companies to the domestic ecosystem, including the circulation of humanresources.
Providing a high-level R&D support framework is particularly critical, as investment in academia,
not just companies, is increasing not only in the United States but also in Europe. It is not easy to
significantly increase the amount of money, but it is important to consider how to efficiently produce
results that are commensurate with the investment.
Japanese academia and VCs also exist in the overall composition shown in Figures 18-20. It will benecessary to consider this in order to have a discussion that transcends individual historicalbackgrounds. I believe that by creating such changes, it is possible to realize the mutuallycomplementary ecosystem shown in Figure 9. I would like for us to make an effort to do so.
Fig9 Matrix of complementary relationship

Uncertainty
Imputation/
Large

New
omics,New
modalityStrengthening the commitment of academia,
company creation by VCs, and finallydelivering the fruits

Companyʼs early commitment, in addition to
everything listed in the column to the left

Uncertainty
Imputation/
Small

Existing
modality

VC investment with an eye on the exit and its
exit

In-house development or collaboration level
relationship

Late stage involvement

Involvement from Pre-clinical

Time interpolation/Small

Time interpolation/Large

Created by the author

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Conclusion
Although this paper is written on the life science industry and management, it is not based on thequantitative analysis that can be found in recent papers on business administration. As such, it is anattempt to look back on Belgium's efforts over the past 30 years and compare them with those ofJapan.
On a personal note, my first encounter with the Belgian life science industry was in 2017 when I
spoke with the late Mr. Goro Takeda and Mr. Jean Claude Deschamps, who greatly contributed to thewriting of this article.
To be honest, I first had felt that this may be a type of story in which countries around the worldstate the strengths of each area. However, I can understand why I came to hear such stories in Japan
at that time by looking at the recent trends in Belgium, which has created a system that allows
research and development funds to flow into the life sciences.
In discussions of ecosystems in the life sciences, systems made in the United States naturally takeprecedence. In particular, the size of the venture capital industry is at a level that makes it difficult
even for Japan to think about catching up. There are so many things to learn from that system, but at
the same time, while knowing the essence of it, I feel the need to consider a model that can beapplied in Japan as well.
It has probably been more than five years since the term “ecosystem” became widely used in theJapanese life science field. As a person in a financial institution, I focused on trying to grasp the overall
structure of “ecosystem” in that context, while searching for a theoretical basis for that ambiguousterm.
In the overall structure, one discovery is that in the life sciences, the expansion of the scale of large
companies preceded the expansion of scale in academia and venture capital (or at the same time).
This is highly compatible with the ecosystem theory that the actor is not alone. In the end, when eachactor continued to make best efforts, those disparate efforts coalesced to form the current global
ecosystem.
When thinking about "what can be done in Japan", a clear question is, “How can we connect tothe global system?” However, that question only addresses a goal, and what is truly important isingenuity in the process. The case study in Belgium has much to teach in that regard. The mostimportant message is Dr. Jo Bury's quote, "Put your resources in people, not projects". This word ofadvice is also linked to the recent human resource development project in Belgium.
I hope that this article will serve as an opportunity for lively discussion for future creativity and theformation of Japan's unique life science ecosystem.

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[References]※Documents written only in Japanese are omitted.

Chapter 1
Tamas Bartfai, Graham V. Lees (2006), “Drug Discovery”, Elsevier Academic Press
Daria Mochly,Rosenm Kevin Grimes (2014), “A Practical Guide to Drug Development in Academia: The
SPARK Approach”
Paul G. Yock, Stefanos Zenios, Josh Makower et al (2015), “BIODESIGN 2nd edition”, Cambridge
University Press

Chapter 2
Zucker et al (1998), ‘Intellectual Human Capital and the Birth of U.S. Biotechnology Enterprises’, NBER
WORKING PAPER SERIES
Zucker et al (2002), ‘Commercializing Knowledge: University Science, Knowledge Capture, and Firm
Performance in Biotechnology’, Management ScienceVol. 48, No. 1
Mika Kulju (2002), “Oulun Ihmeen Tekijat”, Ajatus Kirjat
Gary P. Pisano (2006). ‘Can science be a business’, Harvard Business Review Oct.2006
Gary P. Pisano (2006), “Science Business”, Harvard Business School Press
Ron Adner (2006), ‘Match Your Innovation Strategy to Your Innovation Ecosystem’, Harvard Business
Review April.2006
Ron Adner (2012), “The Wide Lens”, Portfolio
Ron Adner (2021), “Winning the right game”, The MIT Press
Steven Casper (2007), ‘‘How Do Technology Clusters Emerge and Become Sustainable?: Social
Network formulation and Inter-firm Mobility within the San Diego Biotechnology Cluster’, Research
Policy 36
Michael G. Jacobides et al (2018), ‘Towards a theory of ecosystems’, Strategic Management
journal/Volume 39, Issue 8
Chi Heem Wong, Kien Wei Siah and Andrew W. Lo (2018), ‘Estimation of clinical trial success rates
and related parameters’, Biostatistics
Andrew W. Lo (2021), ‘Can Financial Economics Cure Cancer?’, Atlantic Economic Journal 49, 3–21.
Andrew W. Lo et al (2022), ‘Financing Corelated Drug Development Projects’, The Journal of
Structured FinanceAndrew W. Lo et al (2022), ‘Financing Vaccines for Global Health Security’, Journal of Investment
Management, Vol 20. No.2
MIT Laboratory for Financial Engineering, ‘Project ALPHA’, https://projectalpha.mit.edu/

Chapter3
European University Association (2021), ‘Innovation ecosystems for a sustainable Europe’, eua
websiteEuropean Commission (2022), ‘SCIENCE, RESEARCH AND INNOVATION PERFORMANCE OF THE EU
2022’, EC website
NVCA (2022), ‘Yearbook 2022’, NVCA website
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OECD, ‘Science, Technology & Patents’, OECD website

Chapter4
Bernard A.Cook (2002), “Belgium A History”, Peter Lang Publishing
Essenscia website
VIB annual report

Chapter5
Tatsufumi Aoyama“Method of Innovation for Japanese Med-Tech Industry: Essence of Silicon Valley Style and How
Japan Can Tap IT”, Sep. 2015. DBJ Research Report“Market Circumstances of Medical Device Industry and Logic for Building a Strategy for Innovation by
Japanese Companies”, Jul. 2016. DBJ Research Report[Interviewees] (List of only those who were directly reflected in this manuscript)
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Marc Dechamps, Philip Vergauwen (Academic Director, Solvay Brussels School) Aug 22 & 26,
2022
Danny Gonnissen (Chief Operating Officer, Newton Biocapital) Aug 22, 2022
Marc Dechamps (Director International Affairs, BioWin) Aug 23, 2022
Frēdēric Druck (Director of essenscia wallonie and essenscia bruxelles, Secretary General bio.be)
Aug 23, 2022
Wouter Piepers (CEO, flanders.bio), Willem Dhooge (COO), Katrien Lorre (Programme Manager),Charlotte Pauwels (Data Manager) Aug 24, 2022
Jo Bury (Director-Emeritus, VIB) Aug 25 & Oct 18, 2022
Vinciane Gaussin (Managing Director, WELBIO(current WEL Research Institute)) Aug 26, 2022
Graeme Fraser (CSO, Epics Therapeutics) Aug 26, 2022

[Accompanying and cooperating with the interview] Newton Biocapital
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Jean-Claude Deschamps, Chairman Emeritus and Advisor to the Board of NBC I and NBC II
Alain Parthoens, Chief Executive Officer
Els Hubloux, Chief Investment Officer
Guy Heynen, Chief Medical and Regulatory Officer
Tomoko Asaoka, Scientific Director
Danny Gonnissen, Chief Operating Officer
Pierre Detrixhe, Venture Director
Kaori Sano, Global Relationship Director
Toko Senna, Assistant to the CEO Office Manager (Brussels Office)Louis de Thanhoffer de Völcsey, Senior Advisor, Independent Directors
Dirk Boogmans, Vice-Chairman and Chairman of the Audit Committee of NBC I and NBC II
Sadashi Suzuki, Japan Representative

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