[Study] Belgium and Flanders, major pharma valley in Europe

If you measure an industry’s stature by its R&D investments, then Belgium and Flanders’ (bio)pharmaceutical industry is best in class. While the country represents only 2.2% of the EU’s population, it lays claim to 12.5% of pharmaceutical investments made in the EU. Among all EU member states, Belgium is the number 1 in pharmaceutical R&D investments per inhabitant. With a total of EUR 3.6 billion in 2018, (bio)pharmaceutical companies invested nearly EUR 10 million per day. This is a massive 40.6% increase over the past 5 years.

Flanders’ R&D-friendly tax system is surely one of the reasons companies are eager to invest, particularly in research-intensive sectors such as the pharmaceutical industry. Examples include:

• investment deduction for R&D – 13.5% of acquisition value/qualifying asset or 20.5% of the depreciated amount;
• payment exemption of 80% of the personal income withholding tax of researchers in certain scientific fields;
• innovation income deduction – up to 85% of a firm’s net earnings from innovation is tax exempt.

Consequently, it should come as no surprise that (bio)pharma firms are an important driver for employment in Belgium and Flanders. In 2018 these companies employed 5,295 researchers. This is the third largest number of (bio)pharma researchers per capita in the EU.

A total of 37,073 people are employed in the local (bio)pharmaceutical sector. This is a 23.8% increase in the period from 2014 to 2017. By comparison, the average biopharma employment in Europe stagnated with just a 0.3% growth in that same period. More than 2.3% of the jobs in Belgium and Flanders as a region are related to the activities of (bio)pharmaceutical companies. The productivity of these employees is substantial as well, as the Belgian (bio)pharmaceutical sector realizes 7.7% of the total added value in Europe.

The majority of these people are employed in Belgium’s northern region of Flanders, which is a seedbed for innovation with its highly-rated universities, academic hospitals, (bio-)incubators and state-of-the-art facilities. Moreover, it is home to heavyweight research institutes, such as VIB, VITO and imec. VIB is Flanders’ strategic research center for life sciences and biotechnology, giving companies access to an international team of 1,700+ leading scientists in diverse domains. Also one of Flanders’ four strategic research centers, VITO is the world’s largest multidisciplinary research center with over 900 employees. High tech research intitute imec collaborates closely with the pharmaceutic industry to bring its pioneering nanoelectronics technology and connected solutions to life sciences. With over 4000 researchers from 97 different countries, imec is surely a pinnacle of Flanders’ diverse and rich research environment.

As a result of this unique and innovative ecosystem, Flanders-based start-ups have the highest chances of survival in Europe according to Eurostat.

Huge investments in R&D combined with a high level of expertise put Belgium in second place in the EU in terms of clinical trial applications per inhabitant. In 2018, two new clinical trial applications were submitted in Belgium every working day. The country has the fastest clinical trial application procedures in Europe, set at a mere 15 days.

When it comes to pharmaceutical and biotech patent applications per inhabitant, Belgium and Flanders rank third in the EU. In 2018, 315 patent applications were filed within these domains in Belgium, an increase of 51.4% between 2014 and 2018.

The productivity of the Belgian pharmaceutical industry is further underscored by the huge export figures. (Bio)pharmaceutical companies located in Belgium accounted for 12.1% of Europe’s total exports in 2018. This makes Belgium the second largest exporter in (bio)pharmaceutical goods per inhabitant in the EU.

These export figures are equally impressive on a global scale. Belgium ranks third in world exports of (bio)pharmaceutical products, which totaled 42.9 billion euros in 2018. This equals 118 million euros of (bio)pharmaceutical export a day. Nearly half (46.3%) of all (bio)pharmaceutical exports in Belgium go to countries outside the EU, primarily the United States, Canada and China. These export figures amount to a positive pharmaceutical trade balance of 6.8 billion euros.

This global outlook is supported by the KOF Index of Globalization 2018, which recognizes Belgium as the most globalized country in the world. The populous region of Flanders is certainly a big contributor to this globalized position. With its high productivity, transparent trade network and excellent transport infrastructure, Flanders accounts for 83% of all exports in Belgium.

Also in Mechelen, biotech company Galapagos has recently released promising test results concerning its anti-inflammatory medication filgotinib for arthritis patients. The long-awaited clinical trial results have now shown that the drug works better than a placebo, and in most cases, even better than leading arthritis medication Humira. Based on previous test results, analysts predict a peak turnover of EUR 3 to 5 billion per year from the sale of filgotinib.