GERMANY

Insights into Europe’s Biggest Economy 3 / 23

ALL EYESON GERMAN­HEALTHCARE
Structural changes are creating new­opportunities in Europe’s largest market

DATA-DRIVEN
MEDTECH

German hospitals are getting smarter by the day.

Big things are afoot inGerman biopharma.
Page 8B

BIONTECH AND
BEYOND

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ib
ili e
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Page 4

Photo: Illing & Vossbeck Fotografie

FOCUS

HEALTHCAREREDUXTechnological innovations arechanging the face of the German
health sector: Germany’s hospitals.
Page 4

MEDICAL TECHNOLOGY

DEMOGRAPHIC CHANGE“People are living longer lives. It means theirneeds and desires arechanging — and creating
new markets.”
Dear Reader,

BEYOND BioNTech

Retirement Reinvented

Germany’s biopharma and healthcare sector isback, and international companies can profit.

As the median age in Germany rises, seniors’
importance as consumers is growing.

Page 8Page 14ENERGY

MORE ARTICLES IN THIS ISSUE:

From
stability toflexibility

In brief: Avoiding food waste with AI, sustainablechemistry and supply-chain solutions........ Page 20

Germany needs novel forms of­electricity storage for its ­transition
to clean power.
Page 26

Future of food: The founder of PlantA talks
dairy alternatives and investing in oats..... Page 22
Prefab's big comeback: Sustainable modular
construction is booming .............................. Page 24
Fintech ESG: Addressing demand for sustainable, ethical business.................................... Page 30
The “AI Champions League”: The head of theGerman AI Association talks turkey............ Page 32
German–Italian AHK: Promoting trade between Germany and Italy....................... Page 35

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richstraße 60, 10117 Berlin, T. +49 30 200 099-0,

Notes: © Germany Trade & Invest, October 2023

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has been gathered with the utmost care. We assume
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Circulation: 5,000

Of course medicines are just one aspect of the
sprawling health industry both in Germany andbeyond its borders, so we broaden our focus to
examine the effects of demographic changes in
Europe’s largest economy. People are living longer
lives, which is naturally good news, but it alsomeans that their needs and desires are changing —and creating new markets. There will be a greater
demand for doctors and healthcare facilities in the
future. One key to coping with this phenomenon
is better use of data, something we explore in our
first feature on medical technology.
Today’s seniors are more active and affluent thanprevious generations of older people. New markets are emerging in various areas, for example, insenior-friendly vacations and forms of mobility.
Germany’s over-60s are busy reinventing retirement, it seems.

All information provided by Germany Trade & Invest

Director Corporate Communications:

Editor: Jefferson Chase

Germany is rightly proud of the role the country
played in combatting the global coronavirus pandemic — and particularly of the contribution madeby the biopharma company BioNTech. Germany
has a long history of pharmaceutical excellence,
but what comes next? In this issue, we take anin-depth look at the latest trends in biopharma,
including potential treatments for everythingfrom dengue fever to cancer.

We hope this issue of Markets Germany finds you
in good health — and that it gives you some ideas
about how to make your business more robust.

of the publisher. Unless specified otherwise, the copyright for pictures is held by Germany Trade & Invest.
Order number: 21355
Cover: Science Photo Library/
Pasieka, Alfred

Dr. Robert Hermann, CEO
Email: invest@gtai.eu

Photo: Gordon Welters/laifIsraeli entrepreneur Viktoria
Kanar (left) with her co-founder
Revital Nadiv. The two want toclean up the polluting textiles
industry with their textile­waste recycling solution.

VIKTORIA KANAR: CO-FOUNDER OF RE-FRESH GLOBAL
In late 2021, Viktoria Kanar and Revital Nadiv
Zivan relocated their textile recycling start-up
Re-Fresh Global from Israel to Berlin to benefit
from the sustainable textiles revolution that is
sweeping Europe and to tap into Germany’s
textile research expertise. In line with the EU’s
Strategy for Sustainable and Circular Textiles,
all textile products will need to be recyclable
by 2030. But with the current textile recycling
rate a dismal one percent, there is a pressing
demand for new solutions.
Re-Fresh Global’s proprietary technology creates three high-quality raw materials by upcycling waste textiles: bioethanol, sanitized textile pulp and nanocellulose. The last is a new
biodegradable material that replaces plastic
and synthetic products used in the packaging
and electronics industries. The pulp can bereconstituted for industrial fabric production.

The ethanol is an alternative to biofuel and canbe applied in the pharmaceutical and cosmetic
industries.
“When I previously worked as a PR and event
producer for the fashion industry, I was alarmed
to see that there was little sense of responsibility about the waste and a strong tendency
to unsustainable over-capacity,” Kanar recalls.
“So, in 2021 we launched a pilot program in an
Israeli town that succeeded in recycling 80 to
90 percent of collected municipal textile waste.
Then we moved on setting up a very nice R&D
network in Germany, including, for example,
the Sächsische Textilforschungsinstitut STFIin Chemnitz and the Textilforschungsinstitut
Thüringen-Vogtland TITV in Greiz.”An additional draw to Germany was the country’s ecological mindset. Kanar points outthat Re-Fresh Global can now benefit frompolicymakers, industry stakeholders and ahigh level of consumer awareness of the textile
waste problem.

Quick facts
NAME
Viktoria Kanar
JOB TITLE
Co-founder, CEO
NATIONALITY
IsraelQUALIFICATION 	MA Interdisciplinary
PRIOR EXPERIENCECOMPANY NAME
LINK

Communications Studies
Fashion PR manager, 		
event and TV producer
Re-Fresh Global
re-fresh.global

LOCATION 	Berlin HQ, offices in

Israel and USHEADCOUNT:11

INDUSTRY

Greentech

4

MARKETS GERMANY | Focus

DATADRIVEN
MEDTECH
Changes in German law have given the digitalization of German
healthcare new momentum. That’s creating a new businessenvironment in Europe’s largest health market.

W

ith a few mouse clicks, a specialist
from the Charité University Hospital in Berlin can perform diagnostic checks on a patient in a small hospital
hundreds of miles away. He does this using atelemedical robot made by the US company Teladoc Health. It has remote controls connectedto advanced cameras, lenses, sensors and microphones, enabling the doctor to perform basic
clinical examinations. It can also be linked todiagnostic equipment like CT and MRI scanners.

THE BOTTOM LINE
The German government isinvesting heavily in the moder­nization and digitalizationof hospitals. This has opened
up niches that international­companies can help fill.

By integrating robotics with broadband, telerobotic treatment integrates robotics with connectivity and can help save the lives of patientswith restricted access to specialist care. It’s one
example of how German medtech is increasingly data-driven — and how international
companies can benefit.
One key is a major piece of legislation. The
2020 Krankenhauszukunftsgesetz (KHZG), or
German Hospital Futures Act, has seen thegovernment commit EUR 4 billion to mod-

MARKETS GERMANY | Focus

HOW ARE GERMANY’SHOSPITALS ORGANIZED?
Germany has lots of hospital beds per capita but also high numbersof inpatient treatments and comparatively long hospital stays. New
hospital reform legislation currently in the making will further increase the financial efficiency and quality of medical care.
Today, hospitals are operated by private companies, non-profit organizations or the state. Most hospitals are owned by companies (about
39 percent), followed by non-profit organizations (about 33 percent)and the state (about 28 percent). State-owned hospitals, however,account for nearly 50 percent of all hospital beds, compared to only
about 20 percent for private companies.

The “da Vinci X” surgical assistant atwork during an operation. Its American
creator Intuitive Surgical is expanding its
German operations.

The situation varies somewhat between regional states, but there
are essentially four different levels of care. Basic care is provided byboth large and small hospitals, while larger hospitals offer additional,
specialized medical services.

BASIC

Photo: DaVinci Xi Robotic Surgical System®

Basic care with specialist internal medicine
and surgery departments

STANDARD
Standard care with hospitals having departments such as gynecology or ear, nose andthroat medicine

SPECIALIZED

ernizing Germany’s roughly 2000 hospitals.
One focus is bridging gaps between town andcountry — a key use of Teladoc’s technology.
“In Germany, just like in many other healthcare markets, we strive to support the creationof networks in which university hospitals in urban areas are able to provide expertise to smaller
hospitals in rural areas,” says Thomas Geuenich,
Teladoc’s General Manager Hospital & Health Systems International Markets. “The German market
is one of the largest healthcare markets in Europe.”

Specialized care, with hospitals having additional departments for areas like pediatrics
and neurology

MAXIMUM
Maximum care, with hospitals, often university clinics, equipped to handle all themost serious medical conditions and having
extremely specialized departments, forexample, rare diseases

5MARKETS GERMANY | Focus

Teldadoc’s telemedical robot enables
doctors to perform basic clinical examinations remotely. The US manufacturer isthriving in the German market.

The new law has given digitalization a true boost.
“This is a paradigmatic example of the legal

Digital networks
Changes are also afoot in how academic re-framework driving innovation,” says Germany
Trade & Invest health expert Gabriel Flemming.

search institutions and hospitals and doctors’
practices exchange information. Several university hospitals in Germany have teamed up
with research centers to form an initiative
called SMITH — the acronym stands for “Smart
Medical Information Technology for Healthcare.” It’s intended to make routine medical
data available for research. The German Ministry of Education and Research put some EUR
55 million into the first phase of developmentfrom 2018 to 2022.
Networking is also a watchword concerning
operating rooms. German hospitals have morethan 9500 operating rooms, more and more ofthem smart or otherwise digitally networked.
The rise in numbers has been impressive. Hundreds of such hybrid-equipped facilities now
exist in Germany, compared with only thirty
in 2016.
The equipment involved combines surgicalprocedures and imaging technologies such as
angiography, computer tomographs or magnetic resonance. That allows doctors to better
manage surgery.
One international company at the heartof this development in Germany is Intuitive
Surgical. The US medtech firm specializes inrobot-­assisted surgery, among other things,
and has been doing business in the southwestern German city of Freiburg since 2019.
The company’s “da Vinci X” and “da Vinci
Xi” surgery assistance systems are known theworld over.
Intuitive Surgical produces the optics for
its systems at two sites in Germany, among
other places, and is now planning to expand
its German operations. What also attracted
Intuitive Surgical to Germany was the excellent
healthtech environment, including education,in the region.

The next stage
The KHZG is an important motor within alarger trend. In recent years, German hospitals have already undergone a great deal of
digitalization (see Markets Germany 3/21 —“Germany’s Life Science Revolution,”tinyurl.com/55dedbb7).
More than 30 percent of German hospitals have currently reached level five of sevenin the Electronic Medical Records Adoption
Model (EMRAM). Level five signifies that
insitutions can integrate data from various
sources and provide telemedical and virtual
care services.
There are various forms of digital innovation in hospitals. Smart hospitals integrate
special applications and artificial intelligence(AI) into their hospital operations. Voice assistance and voice control systems can optimize everyday processes when doctors callup relevant information.
The process known as “ambulatorization”
also has great potential in Germany. It involves
doctors continuing to accompany discharged
patients via an app. The patient’s data is madeaccessible to family members, physicians andhealthcare providers. This form of telemedicine could enable earlier discharges from hospital and shorten the duration of inpatient
stays. Furthermore, doctors can also detect
the symptoms of illnesses earlier, improving
patient health while cutting costs.
These changes are needed because efficiency is more crucial than ever. Hospital stays
in Germany are comparatively long, and its
population is aging (see article on the reinvention of retirement, p. 14).

Photos: Teladoc Health, Inc.

6

MARKETS GERMANY | Focus“Germany leads
Europe in medical
technology patentapplications.”
GTAI health expert Gabriel Flemming“Businesses in Germany can find skilled workers at an absolute top level, especially inprecision mechanics and optical production,” explains Intuitive Surgical Senior Vice President
Dirk Barten.
A global patent leader
Currently, Germany is the world’s second-­largest medtech location behind the US —ahead of Japan and China — according to industry association BV Med. But there’s moreto the German market than size alone.
“Germany leads the European field in medical technology patent applications and is far
ahead in basic research,” says Germany Trade &Invest health expert Gabriel Flemming. One
reason for this is Germany ’s world-renowned
Fraunhofer, Leibniz Helmholtz and Max Planck
research institutes.
“International companies have the opportunity to further develop their products locallywith application-oriented researchers for the
medical technology market,” says Flemming.
And, of course, applications developedwith German regional expertise can used todrum up business outside Germany’s borders.
Teladoc, for example, sees a lot of growth potential outside of Germany, as well.
“In order to strategically position ourselvesin the hospital digitalization landscape in Europe,” says Teladoc‘s Geuenich, “Germany isclearly a key anchor market.”More and more ­people
in Germany use­healthcare apps.

CONTACTgabriel.flemming@gtai.eu
GTAI health expert

78

MARKETS GERMANY | Focus

BEYOND BioNTech
The success of BioNTech in developing one of the world’s most widely used Covid-19 ­vaccines
refocused the world’s attention on Germany’s biopharma industry. This and other health­sectors are attracting more and more international companies, and the prospects for future
breakthroughs are bright.

W

hen Germany’s BioNTech announces the start of a new project,
the company is sure to grab global
attention. In the spring of 2023, the eyes of
the international health industry once again
turned to Marburg, the university town where
BioNTech and its international partner, theUS company Pfizer, began producing theirgame-changing coronavirus vaccine in autumn 2020. This year, BioNTech is spending
EUR 40 million to increase the capacity of its
Marburg location.
“Since the acquisition of our manufacturing facility in Marburg, we have continuously invested in the site to expand ourmanufacturing capacity and capabilities,”
said Uğur Şahin, CEO and cofounder of BioNTech. “We plan to increase manufacturing of mRNA-based products for our clinical
trials at the Marburg site while preparing forcommercial manufacturing of personalized
oncology therapies.”
In other words, the company that helped
contain Covid is turning its attention back to
the disease in which it specialized before thecoronavirus pandemic: cancer.
A key to the twenty-first century
BioNTech is emblematic of the developmentsin German pharma, which enjoys the express
support of the country’s government. On a re-cent trip to Marburg, German Chancellor Olaf
Scholz expressed the nation’s sense of pride in
the industry, which he called “a key technologyof the twenty-first century.”“The pandemic proved what Germany can
do as a location for innovation and manufacturing of medicines,” said Scholz. “Germany
and Europe are becoming more resilient bybuilding local value chains.”
Promising opportunities are alreadyemerging for international companies interested in the German market. But because Germany has established pharma, medtech andhealth clusters, leading research universities
and scientific institutes, there is no need tocompletely reinvent the wheel.
“New space and new infrastructure are being created all over the country right now to
attract pharmaceutical companies with strong

THE BOTTOM LINE
Germany is actively promoting
the healthcare industry. Companies and investors in pharma, biopharma, medtech andrelated sectors can find optimal
conditions and opportunities
for innovation and growth.

research and development capabilities, butalso manufacturing companies, healthcare
service providers and medical technology
innovators,” says Gabriel Flemming, healthindustry expert at Germany Trade & Invest.
Europe’s biggest player
Genetically engineered mRNA drug development of the sort done by BioNTech is a highly
innovative and high-tech discipline that hasenabled breakthroughs in the treatment of diseases such as multiple sclerosis and rheumatism as well as respiratory illnesses and cancer.
In general, biopharma is an absolute
growth market: well over half of all newly-approved drugs are biopharmaceuticals. But the
production of these innovative drugs is very
demanding technologically. With the largest
number of health companies in Europe, Germany is second only the US.
“The industry’s strength comes from thepresence of both established companies andstart-ups,” says Flemming. “Industry, government and the research sector are working in thesame direction to build on the sector’s alreadystrong market foundations.”
Production efficiency, medical innovation
The decisive step toward success for biopharma projects is the production of marketabledrugs. So a company’s location is crucial, ex-9MARKETS GERMANY | Focus

The laboratory at BioNTech’s expanded, state-of-the-art R&D facility in
Marburg, Germany.

€17.8bnsales of biopharmaceuticals
in Germany in 2022
Source: VFA

30
new original­biopharmaceuticals
registered in Germany in 2022
Source: VFA

50,000employees working in medical
biopharma in Germany
Source: VFA

Photo: BioNTechMARKETS GERMANY | Focus

German Chancellor Olaf Scholz meetswith Uğur Şahin, cofounder and CEOof BioNTech, on a visit to the company’s new plasmid DNA production
facility in January.

Much ado about Mainz
The Mainz city government is doing its part.
It has set up a life sciences and biotechnology

Photo: BioNTech

10plains Marburg Mayor Thomas Spies. “When it
comes to moving from development to actual
production in this high-tech field, you need agreat many highly specialized professionals,
suppliers and service providers,” he says. “A
quick and efficient production start-up needs
to rely on existing infrastructure and local networks at the production site.”
BioNTech, for example, was able to relyon the support of specialists such as Siemens
Healthineers when it upgraded its Marburg plant
for the production of the coronavirus vaccine.
Healthcare clusters such as Marburg have along tradition in the field. R&D in this sector has
been going on there since the early twentiethcentury. Local and regional universities andscientific institutes have produced Nobel Prizewinners and a host of internationally successfulcompanies.
With its own Innovation Hub and concerted infrastructure investments, Marburg andits neighboring municipalities aim to be an
ideal location for the next generation of innovative companies. International firms also finda world-class research landscape, with a poolof young, highly educated healthcare professionals living in and around this cosmopolitan
university town.

Canada meets Marburg
One of the international pharmaceutical players benefiting from this location is the Canadian company Nexelis. In 2021, it acquired thevaccine production lines of the British firm
GlaxoSmithKline (GSK), which has been active in Marburg since 2015. Nexelis invested
a further EUR 160 million in those facilities.
“We are thrilled to welcome on board newcolleagues with a legacy of over 20 years under
Novartis and GSK leadership in clinical laboratory activities supporting the development ofvaccines against viral and bacterial diseases,”
Nexelis CEO Benoit Bouche said at the time.
“We believe that this transaction is a decisive
step in establishing Nexelis as an unrivaled
global vaccine player.”
The industry cluster in Marburg closelycooperates with other healthcare locations in
the wider region of western Germany. For example, there is a lot of activity around the cities
of Frankfurt am Main and Mainz.
Mainz is not only where BioNTech was
founded as a spin-off of the city university.
It’s also home to groundbreaking company
Novo Nordisk. The Danish diabetes specialist
opened its new German headquarters there in
September 2023.

hub called Biomindz to attract businesses andhelp them esablish themselves.
In addition, construction is underway on
a new complex, Innovationlabz, at the Mainz
Innovation Park.
“Stakeholders interested in setting up
shop here initially receive essential information about the location and are then forwarded to us as project developers of laboratorybuildings,” explains Albrecht von Pfeil, thehead of the innovation park. “The goal of ourInnovationlabz is to create a future-oriented
laboratory and office space for the new biotechnology and life sciences hub as quickly
as possible.”
Mainz is already home to a roster of spinoffs from the science sector that are hoping tofollow in BioNTech’s footsteps. This competitive, hothouse atmosphere fuels innovation.
“Promising developments in the fields ofhealth, food and plant protection, for example,
are currently in the pipeline,” Pfeil says.
Medical technology manufacturer Lifecare
AS is one international company enjoying thenew possibilities in Mainz. The Norwegian firm
will begin producing microsensors for measuring blood sugar in the new Biotechnology
Hub’s inaugural building, LAB 1, from 2025.
Lifecare’s approach has the potential to revolutionize blood glucose monitoring, making
the firm a hot prospect.
Making waves in Munich
Life sciences clusters can also be found in thesoutheast of Germany. Several large pharmaceutical companies are currently expanding
their German facilities around the Bavarian
capital of Munich.

MARKETS GERMANY | Focus

ACROSS-THE-BOARD GROWTH PROSPECTS
Net sales of biopharmaceuticals in Germany in 2022 in million EUR (change compared to previous year)+ 15 %

6,000+ 23 %+ 15 %+ 1%– 1%+ 35 %+ 2%+ 2%+ 11 %+ 16 %

4,000

5228

4945
2,000

2488

y
og

y

ol

og

nc
O

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un
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m

y
og
at
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em

fe
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as s
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sy o u
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et
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i ra
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1226

1190

1002

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299

143

Se

440

Biopharmaceuticals are an ABSOLUTEGROWTH MARKET IN GERMANY
spread across a number of specialist
fields and disciplines, with the biggest
annual sales in oncology, immunology andmetabolism. Dynamic growth areas in thepast 12 months include infectious disease
treatment (35% growth compared to2021), cardiovascular medicine (23%) andoncology (16%).

Source: IQVIA Commercial, BCG

NEW REGISTRATION RECORD
Share of biopharmaceuticals among newly approved drugs andnumber of new biopharmaceutical registrations in Germany

18 %

29 %

30 %

30 %

37 %

51 %

58 %

45 %

45 %

46 %

59 %

60
50
40

65

30

49

20

56

50

47

45

38

33

28

10

63

56

In 2022, a total of 63 drugs with a new active
ingredient were approved. The 37 newly approved BIOPHARMACEUTICALS INCLUDING
BIOSIMILARS CORRESPOND TO A SHARE
OF 59% of all new registrations — higher thanever before.

22
20

21
20

20
20

19
20

18
20

17
20

16
20

20

15

14
20

13
20

20

12

0

Source: EMA, European Commission, BCG

135

50,000672

Number of biopharma companies inGermany in 2022. International players
include Mayer, Merck and Boehringer
Ingelheim.

Number of employees working in thepharmaceutical industry in Germany,
most of whom are highly trained technical experts, researchers and specialists.

Number of ongoing projects in Germany(2022), which has the most dynamic
and well-funded R&D landscape after
the US.

Sourc: VFA

Sourc: VFA

Sourc: VFA

11

In the lab of Sandoz Germany,
where biosimilars are developed.
The Swiss company is expanding
its biopharma technical development facilities in Bavaria.

Listen to
GTAI

4
REASONS WHY THE
GERMAN BIOPHARMASECTOR IS SO DYNAMIC

1Market size:
Germany is home to Europe’s largest pharmaceutical market and has a highly efficientpublic healthcare system as well as a growing
demand for personalized medicine.

2

Existing clusters
Germany is home to a number of global industry leaders, internationally renowned universities and excellent R&D institutes. Finding
experienced partners, suppliers and service
companies is easy.

3High level of innovation
In 2022, 59 percent of new drug approvals inGermany were biopharmaceutical products.
Some 672 new development candidates are in
the pipeline.

4

Political tailwind
The German government is actively promoting the growth of healthcare, medtech and(bio-)pharma. German Minister for Economic
Affairs and Climate Change Robert Habeck
has taken a personal interest in the industry,calling for approval procedures to be made“leaner and faster.”

The French company Roche, for example, isinvesting EUR 620 million to digitally upgrade
its diagnostics division at its Bavarian site in
Penzberg.
Roche chose Penzberg because the pharmaceutical and diagnostics sectors work in
unique proximity there. In Penzberg, furthermore, the entire value chain, from R&D to production, can be covered. As a result, the city
has become a global center for the productionof diagnostic tests and input materials, analytical systems and biopharmaceutical active
ingredients.
“In the modern healthcare industry, medical technology, biotechnology and pharmaceuticals are moving ever closer together when it
comes to finding innovative new solutions,”
says Gabriel Flemming.
A one-billion Genesis
Another highly specialized industry center,the Biopharma Cluster South Germany, canbe found in the city of Ulm.
The Israeli drug manufacturer Teva hasjust invested one billion US dollars in a new
facility there to produce new active substances,paticularly to fight cancer. The Genesis factory,
as it’s known, was completed in May 2023 andis the largest business investment in Teva’s
120-year history.
“Genesis represents a clear commitment
to the expertise of the Ulm team,” says Teva
Germany’s managing director Andreas Burk­
hardt. “We’re keeping the know-how on site,
becoming more independent of suppliers andstrengthening our supply chains.”“With Genesis, Teva is investing in the future, because biopharmaceutical products are
becoming increasingly important,” adds Stefan Fügenschuh, managing director of Teva’sbiopharma production at the Ulm site. “Overhalf of all newly approved drugs are now biopharmaceuticals.”
Private equity for German healthcare
Little wonder, then, that private equity investors have been getting in on the act. In May
2023, US equity firms Advent International andPhoto: Sandoz AG/A Novartis DivisionMANYt INTO GER
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Warburg Pincus announced that they would
jointly acquire the Biopharma Solutions (BPS)
division of one of the world’s leading medical
technology companies, Baxter International.
While Baxter intends to focus its energies
on medtech in the immediate future, the newinvestors will develop the biopharma division
BPS with its sites in Halle in eastern Germany
and Bloomington, Indiana. The volume of thedeal is a staggering USD 4.25 billion.
BPS is expected to generate revenues ofapproximately USD 600 million for the fullyear 2023. It will be operated independently
in partnership with Advent and Warburg Pincus as a so-called Contract Development andManufacturing Organization (CDMO).
This is not unusual: CDMOs are becoming
increasingly important in medtech since they
offer specialized services related to the development, research and manufacture of medical
products and drugs.

MARKETS GERMANY | Focus

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Investors court start-ups
Fledgling health companies are also attracting the interest of big global investors. In
April 2023, Ariceum Therapeutics at the
Berlin-Buch Campus research center in theGerman capital announced the successful
completion of a Series A expansion round,adding a further EUR 22.75 million to a
EUR 25 million Series A financing roundin June 2022. The company develops radiopharmaceutical products for the diagnosis
and treatment of especially stubborn formsof cancer.
The financing was led by new investors
Andera Partners (France) and Earlybird Venture Capital (Munich), with participation fromexisting investor Pureos Bioventures (Switzerland). The firm’s ambitions are international.
Ariceum already has offices in Germany and
Switzerland and operates in Europe, North
America and Australia.

Thanks to the double financial infusion, Ariceum was able to acquire the British company
Theragnostics in the summer, a private radiopharmaceutical company involved in the development of radioactively labelled inhibitors
for the diagnosis and treatment of tumors.
Ariceum’s rapid success story is typical ofthe dynamism of the biopharma sector. It’s agood example of what can be achieved given
the right location, enthusiastic financiers andan experienced management team.

CONTACT
harald.mylord@gtai.eu
GTAI biopharma experterldwidwoloyees

z emp
Sando

s
peratendoz oh Sa
in whic13

14

MARKETS GERMANY | Demographic Change

Huge market
German spending on
healthcare in 2021

€ 498bn
Source: DESTATISOne day,
one billion
Gross value added by
the healthcare industryin Germany per diem€ 1.2
billionSource: German Ministry for Economic
Affairs and Climate Action

Photo:Halfpoint/Adobe StockMARKETS GERMANY | Demographic Change

15

The median age in Germany is rising.
At the end of 2022, 17.7 million people
were 65 years old, which means 1 in 5
Germans are now senior citizens.

REINVENTING­RETIREMENT
The median age in Germany has been rising for years, but “the new old folks” are different from the seniors of the past. More active and wealthier than previous generations,they’re also a more attractive market.

T

he town of Zschopau is located justunder 60 kilometers southwest ofDresden, and you wouldn’t necessarily expect to find lots of opportunities forinternationally listed companies there. At theend of the 1920s, Zschopau was home to one of
the largest motorbike factories in the world, butthese days the only trace of that proud traditionis the town’s regular motorbike race.
But scratch the surface and you’ll see thatplaces like Zschopau are buzzing right now.
The baby boomer generation, which happened
later in Germany (1955–1965) than elsewhere, isgradually leaving the workforce. That’s creatinga new business demographic.
Belgian real estate company Aedifica,
which specializes in care facilities for senior

THE BOTTOM LINE
Germany will experiencea wave of retirements incoming years. ­International­businesses in the health­industry and many othersectors can profit from the­Germany’s growing, affluent,
new “grey ­demographic.”

citizens, began expanding to Zschopau in 2018.
It started by acquiring a freshly renovatedhousing complex for senior citizens for ninemillion euros.
The listed company, which operates
throughout Europe (see box-out on real estate), knew what it was doing. Even back in
2018, on signing the contract, Aedifica projected a gross initial yield of five percent. Fiveyears later, Aedifica has rented out the property with 127 residential units to a Germancare home operator. In addition to residential
units for permanent nursing care, there arealso residential units for seniors who requirecare on request only but want to live in anage-appropriate environment. The home alsooffers places in a daycare facility.

MARKETS GERMANY | Demographic Change

70 is the new 60
The real estate market is just one of many sectors that will be influenced by demographic
changes in Germany. Put simply, the country
is getting older. The number of people over theage of 67 already rose by 58 percent between
1990 and 2021: from 10.4 million to 16.4 million,out of a total population of 83.2 million. By themid-2030s, at least 20 million will be over 67.
Increases in life expectancy mean not justlonger lives, but higher gross numbers and percentages of older people in Germany. Next toJapan, Germany has the highest median age inthe world, although German age demographics
remain comparable to those of other countries
in the European Union. In other words, Germany is like many other places, only more so.
German baby boomers are very different
from their parents. People in this new “greydemographic” have worked longer, have morefinancial resources at their disposal and are
physically fitter than previous generations ofseniors. Moreover, evidence suggests that more
people in Germany continue working at least
part-time although they are eligible for retirement. 63 percent of people aged 60 to under
65 are currently in work compared with only
47 percent ten years ago. The figures for 65to 70-year-olds are 19 percent compared to 11

Germany’s over-65s are far more active than previous generations were.
Seniors tend to prefer outdoor fitness
activities such as hiking, jogging andswimming.

percent. Therefore, German seniors are in aposition to be much more active consumers.
Hans-Werner Wahl, a professor and age
researcher at the University of Heidelberg andauthor of a book on the psychology of aging,says, “Today’s 70-year-olds are about as physically and mentally fit as 60-year-olds weretwenty years ago.” Wahl divides older generations into phases according to how they age
and experience aging. Of the cohorts, the socalled “young olds” are a particularly interesting market. In Germany today, retirement
usually takes place between the ages of 60 and
65, and this bracket encompasses people 15 to
20 years from the time of retirement.“Young“Today’s 70-yearolds are about
as physically andmentally fit as
60-year-olds were
20 years ago.”olds” typically have the financial resources andthe good physical condition to more actively
shape their own lives.
Not just about care
Greater longevity and a higher median age ofthe German population inevitably means anincrease in the number of people requiring
longer-term medical care, nursing or needsbased assistance. That’s an expanded niche for
medical service providers and medtech manufacturers in the growing, high-tech healthmarket. (For more detail, see the article on thedigitalization of hospitals, pp. 4–7).
The next decade will also see an increasein the number of over-60s consumers who
are travel-happy, adventurous and relatively
affluent, that is, who will want to spend theiryears after retirement enjoying themselves.
Be it river cruises through Europe, age-tailored
hotels or mobility services, the demands ofseniors are diverse. International companies
that can meet that demand have every reason
to expect prosperity in the German market.
“The change affects not only tourism, but also
many other consumer markets in Germany
that are evolving along with this demographic
shift,” says Germany Trade & Invest Consumer
Industries Director Marc Rohr.

Hans-Werner Wahl

Photo: insta_photos/Adobe Stock

16

MARKETS GERMANY | Demographic Change

TELEMEDICINE ON THE RISE
More and more physicians in Germany are
retiring. So an increasing number of seniorcitizens is meeting a decreasing number ofdoctors. Some rural areas already face shortages of doctors.
The situation is compounded for elderly
people with mobility issues. Digital healthsolutions like telemedicine are certain to be a
key element in increasing efficiency and better
serving patients young and old.
“Teleconsultations improve the quality oftreatment very significantly,” says Gernot Marx,
director of the Clinic for Operative Intensive Care
Medicine and Intermediate Care at the University Hospital RWTH Aachen. “They allow thehighest medical expertise to be made available
quickly and easily throughout the country.”
Telemedical treatment has been permitted
by the German medical professional code inGermany since only 2018, so there’s still a lotof room in the market.

“Teleconsultations
improve the qualityof treatment verysignificantly.”
Gernot Marx, director of the Clinic forOperative Intensive Care Medicine andIntermediate Care at the University
Hospital RWTH Aachen

German entrepreneur David Meinertz originally founded his telemedicine company, Zava, in
London with his British partner Amit Khutti,
but now has an office in Hamburg. The firm offers a range of services including an online skincheck by photo, test kits for lay use at home andprescriptions based on questionnaires filled
out by patients.
“Patients want medical advice anytime,
anywhere — without appointments, without
traveling, without waiting,” says Meinertz.
That holds just as true for older as foryounger patients. And there are signs that
German seniors are willing to use digital andremote options. According to Germany’s digital industry association bitkom, coronavirus
restrictions improved older people’s general
attitudes toward the internet. A 2020 survey ofinternet users aged 65 and above showed thata large majority either had used or were open
to using most e-health solutions.

HEALTHY ­E-RETIREMENTThe German healthcare market has been
expanding for decades. Since 1992, German
spending on health has risen continuously,from EUR 159.5 billion to EUR 474.1 billion in
2021. All the data suggests that this trend will
accelerate because of demographic change.
In Germany, this trend opens up particularly
attractive growth opportunities for medtech
companies: per capita health expenditure here
is significantly higher there than in many otherdeveloped economies. Two reasons for thisare comparatively long hospital stays and thewidespread use of state-of-the-art equipment
in hospitals and by resident doctors.

British firm Isansys Lifecare Europe, which
has its European HQ near Berlin, also wants
to benefit from the demographically driven growth of the German medtech market.
Isansys has developed a wireless system formonitoring patients’ vital signs in real time.
At its heart is a digital telemonitoring platform called the “Patient Status Engine.” Thesensor technology and the monitoring platform help doctors react more quickly whena patient’s condition deteriorates. “We seegood opportunities to be able to operate commercially successfully from here,” says MD
Michael Heinlein.

The Patient Status Engine by British firm
Insansys is a reactive telemonitoring platform.

17

18

MARKETS GERMANY | Demographic Change

HOME, SWEET HOMEAs Germans make provisions for their old age,
many find themselves rethinking their housing
arrangements. After all, their current home
may not be suitable for their golden years. Steps
from the street to the front door can become
an obstacle, and the high-edged bathtub that
seemed like a luxury a few years back could
pose a risk to someone with a bad hip.
The German long-term care insurance
system (Pflegeversicherung) subsidizes senior-­
friendly renovations with up to EUR 4,000 perperson. But that’s often not enough, and many
people choose to move into age-appropriate
housing. A study conducted by the consulting
firm PwC found that investors anticipate rising prices for senior properties such as nursing
homes, assisted living and senior residences.
“Senior citizen compatible properties are
attractive in the long term, and investors expect
a peak net initial yield of 4 percent for nursing
homes as well,” says Dirk Hennig, a partner
at PwC Germany and an expert in real estate.

That benefits domestic and international operators of properties for age-appropriate living
as well as construction companies and developers. Belgian company Aedifica, for example,
specializes in real estate for people in need ofcare and senior citizens across eight country
markets. The firm recognized the importanceof the German market ten years ago and has
been steadily expanding here ever since. Currently, Aedifica has 103 locations in Germany,
most of which were developed in partnership“Senior ­citizen­compatible­properties are­attractive in the longterm, and invest­
ors expect a peaknet initial yield of 4
percent for nursing
homes as well.”with local specialists such as the nursing homedeveloper/operator Specht. In 2020, Aedifica
and Specht signed a cooperation agreement
for the development of ten new “care campuses” in Germany. Aedifica is investing around
EUR 200 mil­lion in the projects.
“This deal underscores the importanceof the German market, which will enable ourcompany to sustain its growth,” said Heinz
Beekmann, country manager at the time thedeal was signed.

Age-appropriate housing for elderly
Germans, including nursing andretirement homes and assisted living, isa guaranteed growth market.

Dirk Hennig, partner at PwC Germany
and expert in real estate valuation

NEW NEEDS AND DEMANDS
People (million) needing long-term care in Germany
by age group
under 70

70–79

80–89

2.4

2,5

2.0

1,0

1.4

1.3

1.2

1.1

0.9
0.7

0,5

40
20

21

0

20

Photo: David L/peopleimages.com/Adobe Stock

2,0

1,5

over 90

Source: Federal Statistical Office; Federal Institute for Population Research

MARKETS GERMANY | Demographic Change

ON THE MOVE
The stereotype of senior citizens retreating totheir homes has never been less true. 65- to
80-year-olds in Germany are typically in better
physical condition and have more time andmoney to be active than previous generations.
Senior mobility, for instance, is a growing
market in Germany, and one dynamic sector
is cycling. Older people are increasingly using
bicycles — and e-bikes in particular. In 2022,
2.2 million e-bikes were sold here, almost 10
percent more than in 2021.
“Many senior citizens in Germany are asking themselves how they can maintain theirindividual mobility — and are increasingly turn-ing to e-bikes,” says Reiner Kolberg of the German bicycle industry association ZIV. “They dosomething good for themselves and stay mobile,which is why e-bikes are very popular, especiallywith the older customer groups.”
This opens up business opportunities forinternational players. Many senior riders favore-bikes with the classic Dutch design, which areeasy to get on and off and have comfortable highhandlebars. The Dutch manufacturer Gazelle

In April 2023, Gazelle opened its latest test center next to Berlin-Brandenburg Airport. There,riders old and young can extensively test thecomplete Gazelle line of cycles in all frame sizes
and with all technical features, modifications
and accessories on more than 800 square meters. Two test tracks are available, one for indoor
and one for outdoor conditions.
“The interest in e-bikes in Germany continues to grow exponentially,” says Andreas

specializes in exactly these sorts of vehicles.
On the company website, there is a dedicatedsection offering information and tips for seniors
on how to buy the right sort of e-bike.

Jansen, managing director at Gazelle. “For us,
it’s therefore a logical step to open the e-bike test
center in Berlin to convince even more peopleof the benefits.”

Seniors in Germany are increasingly taking
to electric bikes.

MOBILITY TREND
Number of e-bikes in Germany(in millions of units)

9.8

10

8.5

9
8

7.1

7

5.4

6
5

4.5

4

2
1

22
20

21
20

20
20

19
20

18

0

20

Photo: Halfpoint/Adobe Stock3

Source: Zweirad-Industrie-Verband

19

IN BRIEF
Businesspeople around the world admire the spirit of invention that drives theGerman economy. Here we highlight some of the most intriguing trends andresearch projects.

SUSTAINABLE CHEMICALS IN LEUNA
Saxony-Anhalt gets new facility to support

Photo: picture alliance/dpa/dpa-Zentralbild/Jan Woitas

the transition to renewables
Leuna Chemical Complex in Saxony-Anhalt is a manufacturing base for more than a hundred companies
from 11 countries, making it one of the largest sites of its
kind in Europe. Now with Project Leuna III, the complex
is expanding to add an area roughly the size of 280
soccer fields.
The key difference with the new complex is that all new
investment projects under consideration must be categorized as “sustainable chemistry,” according to Christof
Günther, head of InfraLeuna, the owner and operator of
Leuna Chemical Complex’s infrastructure.
The project is the latest in a series of initiatives at thecomplex to transition from fossil raw materials to renewables. The Finland-based UPM group, for instance,
is currently setting up a biorefinery that will use waste
wood from forestry. Among the refinery’s major customers will be Coca-Cola, which will source monoethylene
glycol needed to produce PET bottles.

Christof Günther ofInfraleuna in the chemical
park’s visitor center.

www.infraleuna.de/en

NEW USES FOR OLD ELECTRIC VEHICLE BATTERIES
Expired EV batteries can be

After EV batteries have become too old for cars,
they can still be used to store renewably generated electricity. A group of companies fromthe eastern German city of Zwickau recently
presented a large-scale storage system madeof used EV batteries. The system can store up
to 2.5 megawatt-hours of electricity, depending on how many modules are combined. The
modules are installed in ordinary containers, so
the storage system is easy to install.
“There’s a lot of interest in the different storage
systems, and that means inquiries from acrossEurope,” said Matthias Schmidt, CEO of Zwickaubased Erlos Produktions- und Recycling, one of thecompanies involved in the project.
www.imws.fraunhofer.de/en.html

Photo: Malika/Adobe Stockre-­purposed to store electricity

A technician retrieves a spent­lithium-ion battery from an e-car.
It will be refurbished for use in astationary storage system.

RECLAIMED METALS FROM FUEL CELLS

Making it easier for financial, legal and health companies to use AI

New Fraunhofer factory for recycling materials from FC stacks

While the likes of OpenAI, Google and Baidu are competing fiercely for the general artificial intelligence chatbot markets, Heidelberg-based start-up Aleph Alpha isfocusing on lucrative niches, including health services, the financial sector and thelegal system. The company recently presented a benchmark study showing that its
AI language model Luminous has overtaken those of US and Chinese tech giants interms of efficiency. Luminous is equipped with a trailblazing explanation feature thatallows users to better comprehend how authoritative the system’s data output is andhow it manages their data.
“Rather than wanting to build a machine to have a nice chat with, we want to create
one that can support complex work processes with high safety requirements,” says
Jonas Andrulis, Aleph Alpha’s founder.
www.aleph-alpha.com

Jonas Andrulis, founderof Heidelberg-based AI
chatbot start-up Aleph
Alpha

Photo: dpa / photothek | Thomas Trutschel

PROFITABLE AI NICHESThe dismantling of fuel cell stacks — the heart of fuel cell power systems — at
the end of their use lives requires a high level of manual labor, but that may not
be the case for long. The Open Hybrid Labfactory in Wolfsburg is working on theworld’s first pilot line for fully automated stack dismantling.

Photo: Alpha

The research team, which includes the Fraunhofer Institute for Machine Tools
and Forming Technology (IWU), wants to keep key raw materials in the loop “tosave resources and reduce reliance on imports.” Platinum is one of the priorities
on the list of the target materials.
Under the National Action Plan Fuel Cell Production (H2GO), the Fraunhofer
IWU coordinates a total of 19 Fraunhofer institutes to lay the foundations for
efficient mass production.
www.open-hybrid-labfactory.de

AN END TO BOM HEADACHES?

COMBATTING FOOD WASTE AI-STYLE

Munich start-up takes the pain out of supply chain hold-ups

Berlin start-up tackles food waste with smart supply anddemand software
40 percent of all food grown ends up being wasted — something the Berlin
start-up SPRK.global wants to change. It has developed an AI-driven trading
platform that brings together supply and demand, while conserving resources
and considering climate protection. For example, SPRK.global distributes surplus
fruit that is perfectly fit for the production of fruit salad for the B2B sector. SPRK.
global claims that it has acquired 80 partners since its founding in 2020, including
food processors such as mirontell fein & frisch AG and Eurest Deutschland. It
received EUR 6 million in a successful founding round in February 2023.

Supply chain bottlenecks have been the norm since the pandemic, with supply
shortages and delays to production. Major automakers have been (repeatedly) forced
to halt assembly lines due to chip shortages. Munich-based start-up Luminovo aims
to cure major bill-of-materials (BOM) headaches with software that manages themonitoring, quoting and procuring of electronic parts and components. The company
says it offers access to more than 15 million part alternatives, and its services include
the tracking of lead times and a years-to-end-of-life prediction for individual parts.
“Our software inspects your BOM and instantly provides you with up-to-date availability, lifecycle, price and compliance data on millions of parts, so you don’t haveto,” Luminovo says on its website.
www.luminovo.ai

www.sprk.global
Alexander Piutti, CEOof the impact startup SPRK.global, on a
mission to redistribute
overproduced food.

Photo: SPRK.global

Photo: Adobe Stock“Today, it is no longer enough to just build a marketplace,” says Alexander Piutti,
CEO of SPRK.global. “It is important that it is also linked to verifiable goals fora better world, and with SPRK we are doing just that.”

MARKETS GERMANY | FoodTHE INTERVIEWEEHarry Rønneberg is CEO and main investor of PlantA, a Norwegian company
that makes plant-based dairy products in
Anklam, Germany. Rønneberg, who leads a
consortium of industrial investors, founded
PlantA in September 2020 after getting
support from GTAI.

THE FUTURE
OF FOOD
Germany is Europe’s biggest market for a product vital to the future of the
global food supply: plant-based food. GTAI spoke to CEO Harry Rønneberg
about how his company PlantA started — and why it came to Germany.

Where did the idea for PlantA come from?
HARRY RØNNEBERG: The whole thing started
with my good friend and cousin, who was originally a chef. He had been experimenting withnew and different types of food production formany years before he got interested in plantbased food. He found he wanted to scale up the
production of plant-based yogurt, and he knew —that I had some production experience, so hecame to me. That was when we started to searchfor suitable locations to launch production.

THE BOTTOM LINEThe market for vegan andplant-based foods is boomingin Europe, with Germany at theepicenter of this trend. International plant-based producers
will find a land of opportunity
here — as PlantA discovered.

Why did you choose Germany for yourfactory?
HR: It turned out that it was possible to get goodfunding in eastern Germany from European
Union grants, so we started discussing Germany.
And, of course, if you’re a food producer, “Madein Germany” is a stamp of quality. I’ve been
involved in other companies that have operated elsewhere in the region, but we know that,compared to other countries, the same producthas added value if it’s made in Germany.

Photos: tilialucida/Adobe Stock, Planta A

22

MARKETS GERMANY | Food

The Norwegian company specia­
lizes in plant-based dairy products. It's building a large factoryin Anklam, northeastern Germany,
to serve the growing European
market for dairy alternatives.

THE GERMAN GOVERNMENT’S NEW FOOD
STRATEGY
Led by Food and Agriculture Minister
Cem Özdemir of the Green Party, theGerman government is putting together
a new, holistic food strategy.
The plans focus on three main areas:

Also very important for us is that Germany
is the biggest locomotive in the plant-based
food market in Europe — and in the world, I
think. So Germany is also the biggest market
for PlantA, and we wanted it to be our homemarket. Because of these major changes, there
are particularly great growth opportunities forcompanies offering new types of food — Germany is more attractive to the industry thanever before.

Creating a sustainable andhealth-oriented environment
This means making plant-based, sustainable food more available in everyday life,
especially where food is eaten communally:in canteens, schools and kindergartens.

Subsidies for regional and resourceefficient food production
The government’s target is to make 30
percent of Germany’s agriculture industry
organic by the end of this decade. That
promises benefits for those willing to invest
in new technologies.

Providing information on healthy diets
The government wants to ensure that vulnerable social groups — children, immigrantcommunities and people on low incomes —have access to information about better
diets. That means more civil initiatives toreach those groups.

Why did you settle on Anklam, a small
coastal city in Germany’s northeastern region of Mecklenburg Western-Pomerania?
HR: We contacted GTAI, who have beenworking closely with investors in the region.
That’s how we found some suitable plotsof land in Anklam. And then, when I got
to Anklam, the welcome there was simply
great. They had lined up with people andengineers from the municipality. Even the
mayor was there. We felt that they wanted
business to come there, wanted the factory
and wanted to create jobs. We immediately
felt that Anklam was open to new things
being created.
This was important for us because we’re
not just building one factory. We’re planninga whole series of them. We’ve already started
the drawings for a second one, so it was really
important to have a good location where there
was motivation in the local community.
How much have you invested in Anklam
so far, and how many people are you employing?
HR: We invested about EUR 8 million and are
currently employing 12 people. But we’re expecting to increase that to 18 by the end of 2023.
Our plant has a capacity of about 10,000 tonsof yoghurt per year.
What’s special or unique about the veganfood market right now?

HR: Well, we don’t actually consider ourselves avegan company. We use the term “plant-based,”because the vegan sector is a very small percentage of the market. If you look at what somepeople would call flexitarians — people who
occasionally want to eat plant-based food —that is actually 75 percent of our market in Germany. The market used to be only for vegans
and vegetarians who had a very strong focus
on certain ingredients. It’s now a market foreveryone. Some people see plant-based foodas healthier, some as more environmentallyfriendly. For all those reasons, there is a really
big growth in this market.
You mentioned that you’re already planning a second factory. What else are you
hoping to achieve in the future?
HR: The big picture is to continue to develop
the market for plant-based dairy alternatives.
We strongly believe that oats are the future of
the plant-based industry, so the second factory will be very much focused on producing
oat products from scratch: oat milk, oat puddings, oat desserts, oat ice coffees, etc. That’s
the second factory. In the third factory, whichis envisioned for further down the line, we’ll belooking at vegan cheeses and cheese alternatives. We want to continue to develop all thisin Anklam — hence the need for more space.
You say that the future of the industry isgoing to be oats. Why is that?
HR: Well, from an environmental point of view
it’s because they can be grown locally, so you
don’t have to transport them far. If you compare
oats to coconuts, for example, coconuts areproduced in Sri Lanka or Indonesia, so first
you have to transport the raw materials, andthey’re expensive. Oats are local and cheap.
And everyone already sees oats as something
healthy. So for me they tick all the boxes. The
trend in the market is very, very clear: plantbased dairy is growing.

23

24

A prefab room module is assembled at Daiwa’s factory in the
Netherlands. Each module has a QR code for tracing.

Prefab Construction

MAKES A COMEBACK ­The innovative Japanese–Dutch modular construction company Daiwa has sucessfully expanded to eastern Germany and is ready to provide solutions to the German housing shortage. It’s a
new take on a familiar idea.

Orders for prefabricated housing
solutions and modular constructionin Germany and central Europe are,you might say, stacking up. That’s good news
for Daiwa House Modular Europe (Daiwa).
The Japanese–Dutch company opened its
first German office in the western city of Bochum more than four years ago. “Since then,we have constructed a student residentialbuilding in nearby Essen with 106 apartments
in 10 months and have begun a community
campus building in Bochum with 737 apartments for students and expats — ready in two
years’ time,” says Daiwa’s head of marketingand communications Michiel Gieben. All themodules for these buildings were produced

THE BOTTOM LINEThe need to make construction sustainable has breathed
new life into the idea of prefabbuilding in Germany. International companies can be partof the renaissance.
in Daiwa’s factory in Montfoort in the Netherlands. “But with increasing housing demandin the German market, we decided to build amegafactory in Fürstenwalde near Berlin, for
the industrial production of modular houses,”
he says.

The Daiwa concept
The Daiwa process works like this: modules
are produced from steel, concrete and timberand fitted with bathroom, kitchen, wallpaperand floors in the factory. They are then transported to the building site, where they arestacked into complete residential buildings.
This makes construction quicker and moresustainable, with less waste and disruption,
while costs are easier to plan. Many Germans
are familiar with the concept of Plattenbauten,
or prefabricated buildings, from the former
communist east. More than thirty years since
the end of the Cold War and the reunification of Germany, the idea is experiencing arenaissance.

In just five months, this student complex in
Utrecht with 400 studios was built using a
modular construction method.

Photos: cojanvantoor.nl

Industrialised production is increasingly taking placeusing digitalised and robotised processes. Not only
because of efficiency advantages, but also becauseof the rising shortage of construction workers inwestern Europe.

WELCOME TO
GERMANY!

Government support
The German government itself has begun u­ singprefab elements in the construction and renovation of state buildings. That’s because thesystem brings greater sustainability, higher
energy efficiency standards and an overall lower carbon footprint — important componentsof Germany’s ability to achieve its ambitious
climate protection goals in the building sector.
According to the Federal Office for Building
and Regional Planning, Germany’s estimatedannual need for new homes was approximately
350,000 in 2021. A market study by GII Global
Information forecasts nearly 6.5 percent annual
growth in the German modular construction
market between 2023 and 2030. This makes
Germany a lucrative market for modular companies like Daiwa.
Daiwa House Modular Europe began life asa company founded in the Netherlands in 1960
by Jan Snel and is now the market leader in the
Benelux countries. In 2021 it was bought by
the Japanese group Daiwa, the seventh-largest
construction company in the world.
With the investment in Fürstenwalde, Daiwa wants to grow its business in Germany, explains Gieben: “We had the opportunity to buy

a large piece of land with two large production
halls and an office, perfectly suited for us.” Thecompany is convinced it will find a good laborpool in the area. “With the Tesla gigafactory
nearby, the region is popular with high-tech
suppliers and workers,” he says.
International collaboration in Berlin
Daiwa has already won a major contract in Berlin. Together with the real estate management
expert Capital Bay and the housing company
Gewobag, it is realizing one of the world’s largest modular housing projects there.
Daiwa and Capital Bay signed a joint venture agreement in 2022 with the aim of building
capacity for the distribution and productionof prefabricated building modules. On the
joint website www.creatingthefuture.eu, they
provide information about the advantages ofmodular construction.
“With our participation in the Berlin housing project, we can help provide more than
2,000 people with a high-quality and affordable home in the near future,” Andreas Göbel,senior project developer at Daiwa, told Deal
Magazine. “We hope that our way of building
for the benefit of people and nature will become

With GTAI, Daiwa’s expansion toeastern Germany was successful.
The teams in Tokyo and Berlin worked
closely together, analyzing the company’s needs, helping to find a locationand providing on-site support.

even more widespread and that a rethink willtake place in the rather conservative building
industry,” he added.
Germany Trade & Invest’s teams in Tokyo
and Berlin worked closely together to facilitate
Daiwa’s expansion. “The team in Tokyo wasvery close to the company and analyzed Daiwa's needs very precisely when looking for alocation,” GTAI sustainability expert Bénédicte
Winter recalls. “The German GTAI team thenassisted in the search for a suitable plot of landand ensured optimal support on site.”

CONTACT
robert.compton@gtai.eu
GTAI sustainability expert

25

MARKETS GERMANY | Energy

GETTINGFLEXY!
Germany’s legally enshrinedtransition to clean energy requires a massive increase instationary electricity storage
capacity. International companies are already benefittingfrom the energy revolution.

Germany’s electricity grid operators
are investing heavily in stationary
battery storage to increase stability
and efficiency.

RENEWABLES ON THE RISE

Annual share of renewables in net public electricity generation in Germany

8.9%
2002

Source: Fraunhofer Institute for Solar Energy Systems

25.8%
2012

49.8%
AS OF: 08/2023

Photo: loveguli/Getty Images

26

MARKETS GERMANY | Energy“We are currently seeing a newlevel of business cases for battery
storage in Germany.”Lars Stephan, Growth Associate, Fluence Energy GermanyT

he small town of Arzberg near theGerman–Czech border has a long history in the electricity business, even
if the coal- and gas-fired power plant there wasclosed down in 2003. And if MW Storage has
its way, Arzberg’s electricity story will begin a
new chapter. Together with local partners, theSwiss company is planning to build one of thelargest battery storage facilities in Germany
there — with an output of 200 MWh.
“The region is innovative and has implemented several energy projects,” CEO Wilfried
Karl explained to a local newspaper. “So it
makes sense to work together.”Germany aims to be completely climate-­
neutral by 2045, and initial interim targets for2030 and 2040 have been set in climate protection law. German energy legislation, for example, stipulates that renewable energy must
count for at least 80 percent of Germany’s grosselectricity consumption in 2030. By comparison, the actual figure in 2022 was 46.2 percent.
“Due to the legally required expansion ofrenewable energy, we will see a massive increase in demand for large-scale electricity
storage in Germany,” says Heiko Staubitz, energy expert at Germany Trade & Invest (GTAI).
It would be an understatement to say thatthe process is proceeding rapidly. In Germany in 2021, the 3.78 GWh of installed battery
capacity was able to deliver up to around 2.49
GW of power; by mid-2023, that had more thandoubled, with 8.71 GWh of installed battery
capacity able to deliver up to 5.90 GW of power.
Staubitz is convinced that “there are attractive business opportunities for international
investors in the growing and dynamic market
around large battery storage systems.”

Where arbitrage comes in
When you hear the word stability, you may not
immediately think of flexibility. But the battery
storage economy doesn’t function exactly as
many laypeople might imagine. “Battery storage offers valuable flexibility potential, the useof which is becoming increasingly importantthe more fluctuating green power there is in theenergy system,” Bernhard Strohmayer of theGerman Association of Energy Market Innovators writes in an article for the energy portal
Energate Messenger.

THE BOTTOM LINE
Stationary battery storage
systems are essential to the expansion of renewable energy inGermany, and their applications
are rapidly evolving. International companies should take note.

Battery storage was once mainly used tostabilize voltage in transmission grids. That’s
still a lucrative business (see our interview with
Christian Schäfer). But in the medium to longterm, the expansion of renewable energy inGermany will feature multiple applicationsof stationary electrical storage.
It was this opportunity that lured entrepreneur
Benjamin Henecka back to the country. Having
worked for 20 years in sub-Saharan Africa, he

has returned to distribute zinc-­powered batteries for industrial and grid-scale applications,produced by NASDAQ-listed manufacturer
Eos Energy Enterprises in Germany, Austriaand Switzerland.
“I didn’t come back because I’m German,”he says, “but because Germany is currently
one of the most exciting markets for stationary
energy storage due to the REPowerEU Plan
and the ambitious but necessary net-zerogoals of the government. Without large-scalebatteries, the energy transition will be impossible.”
Zinc batteries have distinct ecologicaladvantages over lithium-ion but are heavier
and thus more suited to large-scale stationary
storage systems. Meanwhile, stationary battery storage is a crucial ancillary technology
for solar parks and wind farms. It’s difficult toforecast when weather conditions will result inlarge amounts of renewables being produced,
so large batteries are needed to buffer excess
electricity when wind speeds are high and on
sunny days. Conversely, if no storage is available, renewable electricity sources might evenhave to be switched off. In the worst-case scenario, that could lead to shortages in periodsof unfavorable weather conditions.
This can cause the price of renewable electricity to fluctuate wildly, sometimes within aday. With battery back-ups in place, operators
can sell the stored electricity profitably when
prices surge. “Energy trading as a business caseis becoming more relevant as the expansionof renewables results in larger spreads on the
spot-market. Storage is the key source of flexibility to support the integration of renewableenergy and to generate profit,” says Henecka.

27

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MARKETS GERMANY | Energy

WIND POWER: GERMANY WAY OUT IN FRONTWind power capacity in European Union countries at the end of 2022
(in gigawatts, top 10 countries)

THE POWER OFSECONDARYRESERVE
Beyond the wholesale energy market, battery storage systems are powerful andprofitable applications in ancillary service
markets. We speak to Christian Schäferfrom the information portal regelleistung-­
online.de.
What role do large battery storage facilities play in balancing the energy market inGermany?
Battery storage has its strengths in the flexible
provision of Frequency Control Reserve (FCR),
where it already is the key supply technology
in Germany. I also see attractive business opportunities in the area of Automated Frequency
Restoration Reserve (aFRR).
How will the market for balancing energy
develop in Germany in the next few years?
The demand for balancing power in Germany
will likely not increase overall, but business opportunities for battery providers are emerging
elsewhere. Electricity trading has become more
efficient and faster thanks to automation anddigitalization, and battery storage is well suited
to generate revenues from several markets
thanks to its flexibility.
What other use cases should battery
storage operators be looking at besides
ancillary services?
A stable and long-term business for battery
storage systems is provision of baseload electricity. But battery storage also makes economic sense in behind-the-meter applications
for industrial consumers who want to manage
energy costs efficiently during peak loads.

Familiar tech, new application
The use of stationary batteries for grid stability and efficiency is still of fundamental
importance — and something that all four
German transmission system operators areinvesting in heavily. For example, grid operator TransnetBW is building one of the firstgrid boosters in Germany in partnership with
the German–American joint venture Fluence
Energy. “The innovation is not the storage
system, but the application, which we are
now implementing in pilot projects in Germany,” says Julian Jansen, head of businessdevelopment at Fluence Energy.
This is because the power lines in Germany are not fully utilized to protect against
overload. In addition, there are so-called re-

66.2

29.0
SPAIN

GERMANY

18.7
FRANCE

14.6
SWEDEN� 10
NETHERLANDS (8.7)
POLAND (8.1)
DENMARK (7.1)
FINLAND (5.6)

11.7

PORTUGAL (5.6)

ITALY

Source: EurObserv’ER 2023

dispatch measures, where, for example, windturbines have to be shut down in advance ofa line being downed, and other wind turbinesor power plants have to ramp up to bolster thesection. These measures are expensive, and an
overloaded grid that has to regularly ramp up
and down plants cannot transport as much
renewable electricity as the country needs.
To ensure that the full capacity of the lines
is available for power transmission in the future, the 250 MW grid booster in Kupferzell in
Baden-Württemberg will step in if a line should
ever fail. Other power lines will still be able tooperate close to full capacity and thus be used
more efficiently. This reduces costs for grid
operation and grid expansion and ultimately
makes sense for grid operators. Not least, it

is also a golden opportunity for the battery
storage industry.
“We are currently seeing a new level of business cases for battery storage in Germany,” says
Lars Stephan, responsible for Fluence Energy’s
German market. “A battery can be active in
different markets at the same time in orderto generate revenues there. Overall, this will
result in many exciting business opportunitiesin Germany over the next few years.” There isplenty of room for other suppliers in Germany.

CONTACT
heiko.staubitz@gtai.eu
GTAI energy storage expert

MARKETS GERMANY | Energy

29“90% PLAN TO CONSOLIDATEOR EXPAND IN GERMANY.”
Many Italian companies see Germany as an attractive business location, says
Jörg Buck, MD of the German–Italian Chamber of Commerce (AHK Italy).
Italy and Germany are both part of the European Union (EU) single market. But how
important is Germany for Italian companies as a business location?
JÖRG BUCK: Italy and Germany set the course
for a common European economic area at an
early stage with the signing of the Treaty ofRome in 1957. Today, the two countries are
more closely intertwined than ever before.
In 2022, the volume of trade reached a newrecord EUR 168.5 billion. Germany is the mostimportant trading partner for Italy in terms ofboth imports and exports, with a clear lead overFrance and the USA. Given the current trend
toward nearshoring, it is reasonable to assume
that Germany’s importance as a location for
Italian companies will further increase in the
coming years.

How do managers of Italian companies rate
Germany as a business location? What advantages does it have from their point ofview?
JB: Italian companies see numerous advantages in Germany as an investment location.
Our latest AHK study on this shows that thesimple administrative procedures, the qua­lified workforce and the low corporate taxation compared to Italy are rated particularly

positively. A high proportion (74 percent) of
Italian companies that already have a locationin Germany would recommend investing inGermany. And 90 percent plan to consolidate
or expand their activities in Germany.
Which sectors in Italy are particularly interested in Germany? How does GTAI play a role?
JB: The economic relationship is characterized

by industry, predominantly by companies inthe steel, mechanical engineering, automotive,
chemical and pharmaceutical sectors. In strategic market development in Germany, M&A
increasingly plays a role for Italian companies.
But firms also make strategic investments intheir own production or logistics capacities inthe target market. They can also develop the
European as well as international market from
Germany. In lead generation, we regularly use
Germany Trade & Invest’s industry expertise toprovide Italian investors with a deeper insight
into current and future trends of the target
market Germany. The information provided
forms the basis for Italian businesses to takethe first step towards expansion.
What common economic interests andgoals do the Italian and German governments have? How do GTAI and AHK work
together to communicate this?

Photo: AHK Italien

Jörg Buck, executive board
member and managing directorof AHK Italy in Milan

JB: The Italian and German governments areplanning to further deepen their economic ties
in the interest of European competitiveness.
Just recently, German Chancellor Olaf Scholz
and Italian Prime Minister Giorgia Meloni
agreed to sign a German–Italian action planthat promises closer cooperation in areas suchas the environment, economic development,
and education and research policy. A pipeline
project for the delivery of green hydrogen from
North Africa via Italy to Germany is also in theworks. As AHK Italy, we are shaping the projectwith the entrepreneurial expertise of our community, for example, through concrete proposals for cooperation in the fields of energy, thecircular economy, research and development
and vocational training. The German–Italianaction plan will result in commercial opportunities in the above-mentioned fields.

CONTACT
buck@ahk.it
Jörg Buck, Managing Director
German–Italian Chamber of Commerce
gabriela.heinrichs@gtai.com
Executive Unit Strategic Partnerships(GTAI) and liaison to the German
Chambers of Commerce Abroad

30

MARKETS GERMANY | Information Technology
The global community has set itself
17 Sustainable Development Goals
for social and environmental economic progress.

FINTECHS
Support Best Behavior
The need to combat everything from climate change to social injustice andbad governance has created unprecedented demand for ESG (Environmental,
Social and Governance) services. Germany is Europe’s largest market in thearea, as the fintech sector shows.

As temperatures rise and the impact
of climate change is increasingly felt
across Europe, from severe droughts
to devastating floods, insurance companies
are adapting to the times. The French insurance provider Descartes is growing rapidly tomeet the challenges of extreme weather. It
expanded to Germany last year after raising
USD 120 million in a Series B funding roundfrom international investors in what was seen
as a major deal in environmental, social andgovernance (ESG) investing.
The dangers of natural catastrophes andextreme weather events are becoming more
and more frequent, and new risks will arisein the future, Descartes warns, adding thatits parametric insurance solutions protect
against the economic consequences of climate change.
As Europe’s industrial powerhouse andeconomic engine, Descartes sees Germany
as an essential market, particularly due to its
industrial global network. “The reasons are
obvious,” says Sebnem Elif Kocaoglu Ulbrich,head of the fintech consultancy Contextual
Solutions. “Germany offers a significant market
potential with 83 million citizens, 3.5 million
SMEs and more than 1,500 banks. After Brexit,
Berlin is a strong candidate to replace London
as the EU’s no.1 fintech hub.”The next stage: sustainability
Fintechs have already transformed the financial services landscape by attracting millionsof customers and establishing partnerships
with all the leading German financial service

for sustainable transformation. “EY anticipatesthat most established players will rely, at least
to some extent, on support from fintechs todevelop ESG-related products and services,”says Schmitz.

“German consumers careabout sustainability, re­using products and re­ducing electronic waste,
which is what our technol­
ogy enables them to do.”Hendrik Roosna,
CEO of Fairownproviders. Now the emphasis is on sustainablefinance and ESG consulting.
According to EY, some 50 percent of identified ESG fintechs in Europe offer support services, including carbon offsetting. Around 30
percent provide dedicated investment options
like wealth management solutions and projectfunding. A significant number of companies
that started out as non-ESG fintechs have sinceadded ESG products. Neobanks, for instance,
now offer green accounts. Prominent German
ESG fintechs include Tomorrow, a sustainable
online bank that invests in climate projects,
and Klima, which enables consumers to calculate and offset their carbon footprint.
Christopher Schmitz, partner and fintech
lead at EY Parthenon, says ESG promotion is
growing for government, industry and consumers as the negative impacts of climate change
are increasingly felt. Fintechs are key drivers

Proximity to customers
As Europe’s biggest economy, Germany is at
the heart of this trend. That’s why Estonian
start-up Fairown Finance has just opened a
new office in Frankfurt and is on a recruitment drive. Fairown uses financial tech tohelp businesses participate in the circular
economy by enabling brands to offer theirproducts on a monthly subscription basis —as an alternative to outright ownership — anddriving a cyclical economic effect by collecting and utilizing old products.
The company says coming to Germany
was a case of going where the customers were.
“First of all, Fairown cooperates with retailers
as well as brands that sell their products directly to consumers,” says Fairown Finance CEO
Hendrik Roosna. “Our international customers such as Apple, LG, STIHL etc. have their

THE BOTTOM LINE
ESG is becoming a must in
many business areas, and Germany is no exception. This iscreating a range of new service
niches, as the country’s fintech
sector shows.

Photo: Jürgen Jehle

31

headquarters or regional headquarters in Germany, which is why the German market is so
important to us. We also believe that German
consumers care about sustainability, reusing
products and reducing electronic waste, whichis exactly what our technology enables themto do.” Roosna adds that the company’s lead
investor, Germany’s Commerzbank, provided
a lot of help in entering the market.
“The German economy is undergoing asustainable transformation,” explains GTAI’s
Josefine Dutschmann. “As the examples given show, fintechs are developing solutions
that support this transformation. Germany
currently offers a large market for this, andinternational players are very welcome. GTAI
is happy to support them in expanding here.”

CONTACT
marc.rohr@gtai.eu
GTAI director digital & service
industries

GERMANY IS SECONDONLY TO BRITAIN IN ESG
FINTECH
VC financing, industry-backed accelerators and incubators, anda heterogeneous economic landscape studded with multiple
financial centers, many of which have special focal points, are justsome of Germany’s advantages. Another is the government’s own
digital hub initiative. Fintech hubs in Berlin, Frankfurt, Hamburg
and Stuttgart and insurtech hubs in Cologne and Munich connect
SMEs and corporations with promising new scientific innovatorsand start-ups.
The hubs allow start-ups to network with established, forward-­
looking players across the sustainability spectrum. Germany lastyear boasted 53 ESG fintechs, the largest number of such companies in the EU and behind only Britain in Europe. Investments in
ESG fintechs in Europe have increased significantly since 2016,
due in part to the 2020 European Green Deal, which led to record
investments in 2021. In Germany alone, investments in ESG fintechs totaled USD 201 million from 2010 to 2022.

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MARKETS GERMANY | Information Technology

THE INTERVIEWEEDaniel Abbou, managing director of theGerman AI Association.
Daniel Abbou has been the top representative of the German AI industry association
since May 2020. Previously, Abbou founded AI Hub Europe in Berlin and advised
the private sector and politicians.

“GERMANYPLAYS IN THE
AI CHAMPIONSLEAGUE.”
Germany will be a magnet for international providers of Artificial Intelligence in the coming
years, says Daniel Abbou, managing director of the German AI Association. He also explains
why Germany is attracting so many digital big data and sustainability companies.

Artificial intelligence (AI) will be a huge
growth market in the coming years. Whatrole do companies in Germany play?
DANIEL ABBOU: Germany is well positioned inthis B2B business. AI solutions from Germany
are truly diverse. They’re used in industrial production, but also quality control or detecting
shoplifting, for example. Germany is also very
active in generative AI.
How great is the potential of generative,
i.e. content-creating, AI? Start-ups play a
big role, don’t they?
DA: In Berlin, for example, a start-up called

THE BOTTOM LINE
From HR to assembly lines, thepossibilities of AI are almost
endless. Germany offers numerous advantages to international
companies as a location for AI
development and sales.

Nyonic was recently founded that wants to develop a basic model for AI. It should be suitable
for special applications in business and support
several European languages. Another start-up
that is already very successful is Aleph Alphafrom Heidelberg. It has developed a language
model called Luminous that can create texts
and answer questions. Users can also see thesource the information comes from.
What advantages does Germany offer forinternational companies looking for an AI
development location?
DA: First of all, there is the education. Uni-

Photo: shokokoart/Adobe Stock, Daniel Abbou: Tobias Koch

MARKETS GERMANY | Information Technology

DIGITAL ECONOMY AREAS

GERMAN AI: POWERFUL RESEARCH,
SMART USE CASESBIG DATA FOR
BETTER BUSINESS

Germany’s strategy to promote itself as a leading location
for AI began long before the hype about ChatGPT. In
November 2018, the government unveiled a plan that
foresaw EUR 3 billion in state investment in AI by 2025. In
2020, that commitment was increased to a total of EUR
5 billion. Many new research institutes were founded withthese funds, new AI academic chairs were created at universities and existing research centers were strengthened.
Academia and industry work closely together in Germany totranslate the latest findings in R&D into value-creating use
cases and new business models.

In order to successfully implement AI projects, companies
need large data sources processed in a special way. But
generating and making sense of this data requires bespoke
technologies, approaches and systems. Data skills are
becoming increasingly important and are now required of
new employees in every fifth job advertisement in Germany.
Many international companies are helping German businesses to handle Big Data. For example, Solita, the Nordic
market leader for data-driven digital transformation, hasestablished an expertise unit for generative AI in Germany.
Last year, its workforce grew by 70 percent, and it has since
opened offices in Munich and in Berlin.

AI projects in healthcare, industry and mobility are particularly advanced. Of all start-ups founded in Germany,
only three percent originate from research, for example
as spin-offs from universities and research institutes. The
rate is significantly higher for AI start-ups: 40 percent of AI
start-ups are spin-offs from the scientific sector. German
research into generative AI can certainly compete with theworld’s elite. The software for Stable Diffusion, for example, originated at Ludwig Maximilian University in Munich.

versities in this country produce excellent
graduates in the field of AI, and companies
can also find qualifications that are important for AI business, for example, well-trained
economists. In addition, foreign companies
located in Germany have excellent access tothe entire European market. That’s a big plus.
Moverover, “Made in Germany” is still a signof quality, and this also applies to AI.
How does Germany compare with other European countries as a location for AI companies?
DA: The legal framework in Germany is still
significantly more stable than in many other“The first wave of data science was about making data
­ sable in business decision-making. In the second, thereu
was an understanding that data must be made more
usable by making it available on platforms and not hidden
in silos,” says Florian Disson, Solita’s MD Germany. “Manycompanies in Germany are currently in the third phase —improving the quality of the collected data — and are interested in better data governance and data management.”

European countries. This contributes to thefact that Germany plays in the Champions
League in the field in Europe.
AI solutions are increasingly being used inGerman manufacturing. How importantis proximity to these sorts of customers?
DA: Physical proximity is always useful whencompanies want to establish new customer
relationships. This is especially true for companies that want to sell their products to small
and medium-sized enterprises (SMEs). And
this customer group is huge in Germany — especially in manufacturing. A gigantic market is

opening up here, because many of these SMEs
do not yet use AI solutions. For German andinternational AI vendors and service providers,
this market segment is at least as exciting asthat of large companies.
How important is AI for the German
economy?
DA: AI can automate many tasks and processes
that are currently still very personnel intensive.
This includes everything that runs according
to predefined rules. Thus, AI can mitigate themajor problem of a shortage of skilled workers
in the domestic economy, which will become

33

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MARKETS GERMANY | Information Technology

DIGITAL ECONOMY AREAS

ON THE ROAD TO
AUTONOMOUS DRIVING

THE FUTURE OF ESGIS DIGITAL

Digitalization, electromobility and autonomous driving
are the triad that will shape the future of the automotive
industry — and Germany is Europe’s largest e-car manufacturer. Between 2023 and 2027, the German automotive
industry will invest around EUR 250 billion in R&D, reports
the German Association of the Automotive Industry (VDA).
A further EUR 130 billion will flow into the conversion anddigitalization of automotive production.

Without smart tools, it will be hard to accelerate thetransformation to a more sustainable economy andachieve Germany’s ambitious goal of being climate-neutral
by 2045. The German government is therefore providing
targeted support for companies developing solutions forsustainable cities, the circular economy, new forms of mobility, energy supply and healthcare. International suppliers
take note!

International firms can offer their services to German
OEMs and suppliers as providers of hardware andsoftware. For example, chip manufacturer Sima.ai from
California recently poached Harald Kröger, an automotive
production expert, from Bosch. He’s currently setting up
a location for the Silicon Valley start-up in Stuttgart. Carmakers also have a growing need for big data services andconsulting. Mercedes-Benz has enlisted the French IT consultancy Capgemini to help deal with massive data sets.

A survey by the German digital trade association bitkom
showed that 9 out of 10 companies are implementing theirclimate goals with the help of digital tech, and many willneed third-party solutions. But there’s a challenging side
to this: increased energy consumption and CO2 emissions,electronic waste and shortages of raw materials. And AI
is particularly energy-intensive. Providers who can show
firms how to achieve their digital goals while conserving
resources will thrive in Germany.

even more acute due to demographic change.
Employees will then have more time to focus
on the tasks only humans can do. This is actually a great opportunity. Companies can use
AI to grow.
Which locations are particularly suitablefor AI companies?
DA: The focus is clearly on the major urban
centers, especially Berlin, Munich and Hamburg — that's where most of the established
AI companies are to be found, as well as most

AI start-ups. But other locations outside of the
major metropolitan areas have their attractions
too. For example, Heilbronn in southwestern
Germany has the Innovation Park Artificial
Intelligence (ipai). It will soon boast Europe's
largest infrastructure for AI companies. Thereis also a similar project in Hürth, near Cologne.
AI is just one growth area. What other markets and fields are there in Germany thatare attracting global digital companies?
DA: Above all, big data and sustainability. Many

industries, including automotive manufacturing, plant engineering and the technology sector, all of them German strengths, are facing
digital transformation in the coming years. As
a general rule, the entire digital value chain is
in good hands in Germany.

CONTACTasha-maria.sharma@gtai.eu
GTAI AI expert

How Germany Works
GMBH: THE GERMAN
LIMITED LIABILITY COMPANY
The enduring popularity of theGerman limited liability company(GmbH) is down to a combinationof factors: the flexibility it offers
founders along with the confidence it gives investors, banks
and potential business partners.
It is the preferred option for many
foreign businesses looking to set
up in the heart of Europe.

The German limited liability
company (Gesellschaft mit
beschränkter Haftung —GmbH) is the MOST WIDELYUSED LEGAL FORM FOR
CORPORATIONS in Germany, combining flexibility withrelatively few obligations.
International companies
setting up shop in Germany often opt to establish a
LOCAL SUBSIDIARY.

Engaging with business
partners, suppliers, public
institutions and banks IS
GENERALLY EASIERBY ESTABLISHING A
GMBH rather than setting
up a branch office of aforeign corporation.

LIABILITY FORGERMAN BUSINESSACTIVITIES IS LIMITEDTO THE ASSETS OF THE
GMBH as it represents a
separate legal entity fromits owners.

It’s possible to conduct
the NOTARIAL PROCEDURE FOR GMBH
FORMATION ONLINE.
That requires special eIDs
either from Germany orsome other EU countries.

MOST COMMON LEGAL STRUCTURESREVENUE OF LEGAL FORMS

Number of companies with a specific legal form (selection)in Germany in 2021

Total turnover of specific forms of companies in Germany in 2021

GMBH

EUR 3,154

GmbH:

566,351

Partnerships —non-corporate entities, no capitalrequired (Personengesellschaften),including GbR, OHG and others:

417,082

BILLIONPARTNERSHIPS — NON-CORPORATE ENTITIES,NO CAPITAL REQUIRED (PERSONENGESELLSCHAFTEN),INCLUDING GBR, OHG AND OTHERS:EUR 1,688

BILLION

PUBLIC LIMITED CORPORATIONS — CAPITAL REQUIRED(AKTIENGESELLSCHAFT — AG):EUR 1,018

Public limited corporations —capital required (Aktiengesellschaft — AG):

7,277

BILLION

Source: Statistisches Bundesamt, 2021

Source: Statistisches Bundesamt, 2021

STEPS TO FOUNDING A GMBH
A GmbH can be set up within a few weeks by following these procedures																01DRAFTING OF
ARTICLES OF
ASSOCIATION

Source: GTAI02

NOTARIZATION OF
ARTICLES OF
ASSOCIATION

03

PAYMENT OF SHARECAPITAL

04

COMMERCIALREGISTERREGISTRATION

05

TRADE OFFICEREGISTRATION* A business license or permit is not necessary for registering the business in the majority of cases. In some sectors, a permit or authorization may be required.

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BUSINESS!

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