Switzerland’s 150-year-old chemical and pharmaceutical industry is the country’s largest export sector. This branch of industry employs approximately 70,000 people in Switzerland, who in 2006 produced added value worth 270,000 Swiss francs per capita – 2.5 times higher than the average of the entire Swiss economy.
In 2007, the companies in this branch exported products worth 68.8 billion euros. This is equivalent to 33.4 per cent of total Swiss exports.
As can be seen from the average increase in yearly exports of 26 per cent since 1980, the chemical and pharmaceutical sector is pursuing a dynamic development. While the whole Swiss industry produced an average yearly growth of 3.7 per cent between 1995 and 2007, the chemical and pharmaceutical branch by itself kept growing by a considerable 15.3 per cent year after year. The companies in this sector were able to deliver that performance, because they have increasingly specialized over the past 30 years. Originally widely diversified, today they concentrate on pharmaceuticals, chemical substances, vitamins, aromas and fragrances, pesticides, pigments, paints and varnishes. The strategy of specialization is one of the keys to the success of the Swiss industry.
Swiss chemical and pharmaceutical companies have achieved a worldwide presence, often even market leadership, with their high-quality specialized products. Recent years have witnessed a clear structural shift towards life sciences. While the pharmaceutical branch represented 40 per cent of the exports by the chemical and pharmaceutical sector in 1980, nowadays its portion reaches 70 per cent.
Staying competitive through innovation
Without the ability to innovate, however, economic growth cannot be made durable. Currently, the chemical and pharmaceutical industry is indeed in a state of flux within the global economy. Not only the unexpectedly fast opening of the Eastern European and Far Eastern markets, but also the continuous technological revolution in biotechnology and genetic engineering as well as information technology and telecommunication are creating a whole new global economic environment.
That particular fact is also causing Swiss companies to adapt continuously, to maintain and secure competitive advantages, and to increase their innovative ability.
In a high-salary country, investments in research and development for innovative products is the way to go.
The pharmaceutical industry, for example, invests a respectable 18 per cent of its turnover in research and development. To make this even clearer: One third of worldwide investments made in research and development by the chemical and pharmaceutical branch come from Swiss companies, although they represent barely two per cent of the global market.
The success is obvious: Numerous Swiss companies have gained global market leadership status for individual products, such as Syngenta in agribusiness; Firmenich and Givaudan in the field of scents and aromas; Roche, Novartis and Merck Serono for a number of pharmaceuticals; Lonza for chemical substances; Clariant, Ciba and Sika in the field of specialized chemistry. This list is by far not exhaustive.
Examples of scientific and technical areas where Swiss chemical and pharmaceutical companies are successful include the diagnosis and treatment of AIDS through the development of the medication Fuzeon by Roche; the treatment of breast cancer through the development of the aromatase inhibitor Femara by Novartis; or the development of high-performance pigments for optical information storage by Ciba. 
Serious about sustainability
The branch is equally innovative in matters of sustainability. In the area of energy efficiency, energy consumption was lowered significantly. Despite productivity increases of 200 per cent between 1993 and 2006, the companies managed to lower their energy consumption by ten per cent. Energy efficiency has, thus, risen by more than 330 per cent. In the same period, CO2 emissions could be reduced by 13.5 per cent. Nowadays, less than three per cent of the Swiss CO2 emissions come from the chemical and pharmaceutical industry. By 2010, the branch intends to reduce emissions by 17 per cent of the 1990 values – and this despite an expected increase in production of 170 per cent.
Emissions of volatile organic compounds (VOCs) could also be reduced by 70 per cent during that period, which takes them to less than one per cent of the quantity of VOCs utilized. Switzerland’s chemical and pharmaceutical industry is capable of presenting similar positive figures when it comes to the consumption of cooling water and untreated water. The Swiss chemical and pharmaceutical industry is proving it: Environmental protection and conservation of resources are not a noble cause, but rather an important concern of the industry. For the Swiss climate policy to reach the best possible results, the structural conditions are crucial.
The industry depends on clear and reliable structural conditions, which set realistic objectives while leaving the means to achieve those objectives up to the industry. Production increases must remain possible without being sanctioned by the government. SGCI Chemie Pharma Schweiz, Switzerland’s national association of chemical and pharmacological industries, and its 250 members is committed to achieving innovation-friendly structural conditions, the lifting of trade restrictions as well as the acceptance of successes in re-search and development.
The author (born 1959) is president of SGCI Chemie Pharma Schweiz. Previously held posts include legal consultant at Sandoz International AG and chief legal consultant at Novartis International AG. In 1999, he became manager of the legal & public affairs department there. Since November 2000, he is member of the managing board at Syngenta International AG.
