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The Vital Role of Venture Capital

Life sciences has experienced remarkable transformations in recent years, driven by cutting-edge research, technological advancements, and the pursuit of improved health outcomes. The number of early and mid-stage biotech companies has increased substantially in recent decades. There is one, in our view, major obstacle to unleashing the potential of the life science industry in Norway: Access to private capital from specialized life science venture funds.

Venture capital is a crucial catalyst for facilitating the translation of scientific breakthroughs into solutions. We see this clearly in Denmark and Sweden, where big pharma and established venture capital creates a state of mutual growth. Norway has a few success cases. Nycomed (GE Healthcare), Dynal (Thermo Fisher), Pharmaq (Zoetis), Algeta (Bayer), and Nykode are examples of companies with a solid footprint in international markets. With the exception of the latter, all are now fully owned by global entities.

With the relative lack of both big pharma and venture capital, the Norwegian scale-up companies are experiencing tough times when access to capital in general is low.”

Still, the local value creation is high due to strong competence hubs. Sarsia played an important role as an early-stage investor for Nykode while Hadean Ventures is the first example of a Norway-based specialized European life science VC. These are positive examples, but the potential is so much larger. With the relative lack of both big pharma and venture capital, the Norwegian scale-up companies are experiencing tough times when access to capital in general is low.

Norwegian excellence in life sciences research

The foundation of any successful life science industry rests on the quality of its research institutions and of the research being conducted. In this regard, Norway has demonstrated its dedication by financing life science research.

In 2020, NOK 12 billion was invested in R&D, of which the business sector itself accounted for NOK 2.8 billion. The country has nonetheless failed to convert this research into value in the form of competitive exporting companies – and export revenues.

The role of support infrastructure

Venture capital investment is just one facet of a multifaceted support infrastructure that underpins the success of the life sciences sector. Clusters are instrumental in nurturing a vibrant ecosystem that spans academia, industry, and healthcare, facilitating the translation of basic research into clinical applications.

In many ways, The Life Science Cluster aims to make up for the fact that Norway lacks an industrial locomotive to drive a national pool of industry expertise and competence.

Evolving the Nordic venture capital landscape

The Norwegian government supports commercialization and early-stage innovation through various grants. These mechanisms however do not meet the need for venture capital to bring the companies into testing and scaling. In other countries this phase of the development is covered by the larger venture funds.

The Norwegian government recently presented a road map to support growth in Norwegian health industry. The role of capital is addressed – and in in the follow-up of this political document, the government should use investment funds, such as Investinor, to invest in private ventures. This will also encourage even further private investment by enhancing the overall risk-reward profile.

The future potential of a Nordic impact

The Nordic countries have a combined population of 27 million people and exceedingly robust health registry data. Nordic cooperation is therefor particularly relevant for clinical studies and the application of health data.

One model could be to let Investinor invest in regional Nordic specialist funds, who in turn invest in Norwegian companies. This ensures risk reduction, increased industrial competence and more success cases in the long run.”

One way of bringing the Norwegian pipeline to the next step in quality and maturity could be to bring more Nordic and international specialist investors to the Norwegian scene. One model could be to let Investinor invest in regional Nordic specialist funds, who in turn invest in Norwegian companies. This ensures risk reduction, increased industrial competence and more success cases in the long run.

If both private and public funds decide to invest in Norway’s life science future, it may bring scientific progress, successful companies, and economic growth not only within the country’s borders, but throughout the Nordic region.

 

Sveinung Hole, CEO, Sarsia (Photo: Melanie Burford) and Hanne Mette Dyrlie Kristensen, CEO, The Life Science Cluster

 

This column was originally written by Hanne Mette Dyrlie Kristensen, CEO, The Life Science Cluster, and Sveinung Hole, CEO, Sarsia, for NLS magazine N0 03 2023, out September 2023

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