Christoph Mäder: Meeting the international competition with strong innovation performance

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.

Roche-pharmakokinetischer-Test-mit-Arzneimittelkandidaten

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. Novartis-Forschung-am-NIBR

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.

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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.

Christoph_Maeder_Portrait1The 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.