Presentation at CUBCCE Conference 2019, Budapest

1. The way toward
a vibrant RDI red biotechnology ecosystem
in Hungary
NRDIO – ELTE FIEK - HCEMM
Imre Kacskovics (ELTE FIEK) and Tamás Bíró (HCEMM)
ELTE FIEK, Budapest – 21. 02. 2019
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2. The Hungarian situation- SWOT
STRENGTHS WEAKNESSES
S1: Engagement of leading Hungarian basic and applied research bodies with strong focus
on technology development in molecular and cellular biology
S2: National and regional leaders in several areas including some “omics” research
S3: High level political commitment to boost biotech and pharma industry by dynamising
ecosystem
S4: There are already running SMEs building on the results of the academic sphere
S5: Local success stories in creating excellence and industry-driven research
S6: The related research groups are located in regions with high economic potential
S7: Excellent doctoral and postdoctoral programs at the research institutions
S8: Critical mass of junior and talented researchers in Hungary
W1: Weak connections between basic research and clinically applicable results
W2: Lack of coordinated infrastructure development and lags behind in setting up
joint facilities
W3: Fragmented RDI landscape, isolated research activities
W4: Lack of effective and systematic knowledge and technology transfer
W5: Poor mechanisms for selecting, evaluating and rewarding excellence and
industry-related research, and tools for motivation
W6: Lack of one-stop shop services for industrial partners
W7: Unexploited international potential
W8: Lack of mindset for entrepreneurship
W9: Low rate and number of innovative SMEs
W10: Sectoral data and monitoring is limited
Opportunities Threats
O1: Focusing on international trends
- Biologikumok
- Biomarkerek
- Pharma industry átalakulása (egyetemi beszállítók)
O2: Pilot projects contributing highly to creating a critical mass of excellence and the renewal of
biotech ecosystem (e.g. HCEMM, ELTE FIEK)
O3: Internationalization relations create added values on a national and international level
O4: The development of education in the fields of natural sciences and engineering
O5: The strengthening of talent management in Hungary and globally
O5: Support of the Structural Funds, H2020, Horizon Europe, etc.
O6: Venture capital and seeding funds looking for projects
T1 Brain drain of talented, young researchers to more developed countries
T2: Lagging behind the global leading edge, the new supply of researchers are
insufficient to maintain the internationally competitive level
T3: The growing regional disparities in Hungary make the support of RDI activities in
Budapest and the Central Region difficult from the EU funds point of view
T4: Insufficient financial resources at national level for research activities
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3. International trends
Global pharma industry is forecasted to grow dynamically.
Sales at risk are caused by pricing pressures, a second patent cliff and the high expenditure on R&D.
.
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CAGR: compound annual growth rate
Source: EvaluatePharma Outlook till 2024

4. International trends
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• Orphan drugs face pricing scrunity by policy makers
• Biologics - more than a quarter of the pharmaceutical market by 2020, tailwinds for biosimilars
(30 per cent less expensive)
• Global generic drug sales are expected to make up 29.2 percent of the total pharmaceutical
sales worldwide in 2022 (drive: U.S: cutting health care costs)
• In vitro diagnostics is expected to remain the largest medtech segment with annual sales of
US$70 billion by 2022.3 (2. cardiology, 3. diagnostic imaging)
• Global personalized medicine market is forecasted to grow rapidly
• Therapeutic focus trends: Oncology the most dominant therapy segment.
Source: Deloitte: Global Life Sciences Outlook 2018,
Innovating life sciences in the fourth industrial revolution: Embrace, build, grow

5. The Hungarian situation
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Most innovative industrial sector in Hungary
Supplier of medicine for Eastern Europe and remained at the forefront in the region
• The share of pharmaceuticals in total manufacturing value added is 6,3 %
• Hungary is the largest exporter of medicinal and pharmaceutical
products in the region
(4,9 % of total exports)
• The FDI stock in pharma industry is EUR 3,1 billion – Nr. 1. in the
region
• The pharmaceutical industry provided for 35,8 % of the manufacturing
industry’s R&D expenditures in 2016
• 8 out of globally Top 10 drug and biotech companies have
manufacturing or R&D activity in Hungary
• 48,000 Pharma and Medtech employees
• Academic research fragmented, but competitive in areas linked to
international trends
Sanofi …
Egis
(Servier)
Gedeon
Richter
… GSK
Xellia
Pharma
…Béres
Source: HIPA, based on Eurostat and HCSO data

6. Answers to global and local trends
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• Answers of global industry:
• Significant innovation is coming from small
niche companies
• biotechnology products will represent 52% of
sales in 2024 from 49% in 2017.
• Implementing new business models.
• Supporting biotech incubators and helping
fund partnership creation were seen as a way
to increase competition and collaboration.
Sources: Deloitte Outlook 2018, Ernst &Young Survey of leaders in Pharma Value
Europabio: Current state and prospects of biotechnology in CEE, Part 1-Visegrad Countries
Biotechnology National Technology Platform 2009: The Hungarian Biotechnology Strategy
• State of the art in Hungary:
• Latest available data: 2009: 30-40 red biotech
companies, with high growth rate, near
university cities
In 2019:
• Data on SMEs and academic research & service
portfolio is unavailable
• Number of biotech SMEs is still low
• Lack of joint infrastructure, business
models for long-term collaborations and
partnerships, low effectiveness of industry-
university co operations
Mapping of research and SME sector is necessary. Biotech and pharma is a high-potential sector in Hungary,
with a low rate of SMEs, determining big companies and an unexploited research potential.

7. Overall goal of the biotech strategy
Dynamising the pharma and biotech sector by reacting
proactively to national and international industrial
needs to foster sustainable growth on the long-term
Step 0:
Mapping academic and
company portfolio
Step 1:
Exploiting the research
potential by setting up a
vibrant, university-
centred ecosystem
Step 3:
Highly supportive
environment and supply
chain for innovative SMEs
and pharma companies
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8. Key principles to be achieved
Critical mass
Excellence
Focus and specialization
Building on universities’ primarily and SME’s later
Industry-driven
Strong and value-created partnerships
One-stop shop access to research potential
International presence and embeddedness
Innovation and entrepreneurship-oriented mindset change
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9. 9
Step 2:
Highly supportive environment and supply chain
for innovative SMEs and pharma companies
Step 1:
Exploiting the research potential by setting up a
vibrant, university-centred ecosystem
Step 0:
Mapping academic and company portfolio
2019 2023-25 (?)2019-2020 2030
Key activities
Building a focused and risk balancing
RDI and service portfolio, which is
flexible to industrial needs
Setting up umbrella organization and
management structure
Portfolio mapping with the help of
internationally recognized experts
Starting operation of incubators, joint
infrastructure and highly competitive
company environment

10. Target and lead medicine driven research
High risk – high gain
Market opportunity: biological products (Gedeon
Richter!), and small molecules
Business model:
preclinical focus and clinical phase 1 (Phase 2a?);
cost-effectiveness analysis at an early stage;
Formulation issues
Actors: research groups, clinics and a few companies
CRO type activities
Low risk – low gain
Market opportunity: diagnostics development centres
(biomarkers, early diagnostics), CRO type of services
(biotech cell based assays, chemical and bioanalytical
services), toxicology-safety pharmacology service centres
(animal facilities)
Business model:
Based on collaborations in science parks, industry-academy
interactions
State investment needed to establish core facilities
For profit operation (?)
Actors: research groups, clinics, CEE pharma industry
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Building a focused and risk balancing RDI and service portfolio,
which is flexible to industrial needs

11. Setting up umbrella organization and management structure:
planned activities
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Strategic RDI activities:
 RDI and industry mapping
 Increasing critical mass in RDI (selection, evaluation, rewarding based on excellence and industrial needs – links
to funding procedures)
 Mediating industrial needs towards researchers and RDI results towards potential users
 Effective knowledge and technology transfer
Contract research activities:
 New business models, developing service platforms, contract research services, company creation
 Developing business models/projects for joint infrastructure to support CRO type activities
Business development activities:
 Supporting project development for incubation and acceleration
 One-stop shop toward industry, venture capital and seeding funds
Ecosystem building activities:
 Supporting investment promotion (FDI) and international visibility
 Supporting policy making in order to exploit synergies and avoid double financing
 Entrepreneurship mindset change

12. Setting up umbrella organization and management structure
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Umbrella organisation
universities, research institutions,
clinics, science parks, incubators,
new companies, SMEs
Government (policy and grants) Planned operation of the umbrella
organisation:
Ownership: state
Financing: state
HR : 8-10 employees
Experts: international
One-stop shop: toward industrial partners,
concrete deals are made by university TTO
organisations
Services: finding synergies with existing
organisations (HIPA, etc.)

13. How to predict and measure results?
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Mindset change (excellence & entrepreneurship)
University centred ecosystems
Strong pharma and
biotech industry
Sustainable growth
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