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The myth of the devastating blow: the healthy growth of the Stockholm-Uppsala life science industry

The important impact of the media in the ‘city of methods’

I wrote the following piece for the recent Royal Society report on research clusters, republished here under a creative commons license. The full report has eight case studies (see my previous posts on Pittsburgh and Israel). Individually, they tell the story of how the actions of leaders, businesses, universities and communities have affected the development of different places with different contexts and histories. Combined, patterns and trends begin to emerge. The story of Uppsala in Sweden is one of a long history of industry and academia working closely together.

The life science industry in the Stockholm-Uppsala region began to attract international headlines in the early 2000s. A special section in Nature lauded the ‘world class scientific and business environment’.1 The Economist described Uppsala alongside Cambridge in the UK as one of the most biotech-dense cities in the world.2

The region is Sweden’s largest life science cluster, home to just over half of the country’s life science industry (over 20,000 employees), five universities and 650 life science companies.3 Over the past decade, 15 to 20 new life science companies were formed in the region each year.4 Stockholm-Uppsala usually ranks in top ten European biopharma clusters, and the sector was recognised as a national priority with the establishment of an Office for Life Sciences in 2019.5

Despite the concentration of academic and industry activity, opinions differ on whether the cluster should be defined as an ‘Uppsala cluster’ or as part of the wider Stockholm-Uppsala region. We will refer to the Uppsala cluster, whilst recognising that activity spans different spatial dimensions: from informal networking and labour market dynamics at a regional level, to business and academic relationships that span the globe.6 Uppsala itself is just 70km from Stockholm and activities often bridge the two. With an international reputation as ‘the city of methods’ due to a traditional focus on the production of biotech research tools, Uppsala has a long history of industry and academia working closely together.7

The cluster builds on Sweden’s solid foundation for life sciences research. The country has a good environment for conducting clinical trials, and has invested in electronic patient records and similar databases. Intellectual property rules allow researchers to retain patent rights in their work – seen by some as encouraging entrepreneurship, but by others as blocking technology transfer. And the country ranks fifth in Europe for the number of products in its clinical development pipeline.8 Upon this foundation, but with roots stretching back to the 1920s and periods of growth and uncertainty, the Uppsala cluster emerged.

Development

The Uppsala life sciences cluster has much in common with the development of other notable clusters: a strong university research base, a proliferation of innovative firms, and key individuals who mobilise and attract funding and garner wider interest in their work. It also has a popular origin story of a cluster born out of adversity – when in reality the life sciences activity in the region today is the product of decades of work (Pittsburgh has a similar narrative).

However, the literature on Uppsala has a pronounced focus on three elements in particular: institutional changes and restructuring over time, the impact of the media, and the role of cluster initiative bodies. The story of Sweden’s largest life sciences cluster will be told through these areas of focus.

The roots of the cluster can be traced to biotech research conducted at Uppsala University during the 1920s and 1930s. However, larger-scale industrial activity was sparked by the Swedish pharmaceutical company Pharmacia relocating from Stockholm to Uppsala in the 1950s. A major reason for the move was a history of collaboration between Pharmacia and a research unit at Uppsala University built on the contribution of two Swedish Nobel Laureates in chemistry: Theodor Svedberg and Arne Tiselius.9

In 1995 Pharmacia, then one of the largest pharmaceutical companies in Europe, merged with the US company Upjohn, leading to protracted restructuring and relocating – including the move of some R&D and marketing activities to the US.10 Product and research focus shifted to match those of the new owners. The company adopted an American business culture: ‘competence originated at the top of the company and filtered down through the organisation’ – at odds with the Scandinavian culture of delegated decision-making.11 Around 200 research and managerial positions were moved out of Uppsala; the move was initially seen as striking a huge blow to the region.12

The merger was the culmination of a series of spin-offs, reorganisations and sales, significantly changing the life science landscape of the region. As Pharmacia withdrew, a new narrative began to emerge. Former Pharmacia researchers and managers, it was perceived, were freed from their corporate shackles and channelled their energy into new enterprises; the vacuum left by company’s withdrawal led to a frenzy of entrepreneurial start-ups and innovative ideas.13 Soon after, there was an influx of new capital to the cluster, further boosting the growth of life science research and enterprise in the region.

The reality is slightly more complex. As subsequent research has found, the capital was not sourced locally, but from foreign investors and venture capital firms in the greater Stockholm region attracted by the technologies developed at Pharmacia.14 And, in a detailed deconstruction of the popular narrative, Alexandra Waluszewski has shown how the emergence of the Uppsala cluster is not simply the result of (or the aftermath of) a single critical event, but the interaction of ‘stable and healthy’ industrial and academic units over at least 70 years.15 She concludes that:

a closer look at the ‘‘new’’ life science/biotech companies’ population in the Uppsala region reveals that most of them have a long history. The majority have their resource roots in projects initiated long before the restructuring of Pharmacia. Many of them have existed for decades, sometimes as visible companies, sometimes hidden as projects within different parts of the universities or companies. The small company Medical Products Octagon is an illustrative example. The company was established in 1971 but existed as a project in the early 1960s. As one of the initiators, Professor Uno Erikson, explains: ‘‘We were many researchers with our daily work at the University hospital, within such disciplines as anaesthesia, physiology, radiology, cardiology, etc., and continually experienced technological problems connected to available equipment and material. It was this displeasure, and particularly all the negative effects we saw on the patients, that triggered us to use our medical knowledge for the development of new technological solutions. However, for decades we were forced to handle this work—development of new solutions, patents and licenses—in secrecy. For a professor at Uppsala University running a business was regarded as very suspect’’.16

As such, several key organisations including Uppsala University and its research hospital, the University of Agriculture, the biotech instrument producer GE Healthcare, and Phadia (blood test systems) have acted as ‘anchor’ institutions, and have had an important role in the formation of many new companies.17 This includes through spin-outs, knowledge generation and dissemination, and access to research labs, but also customer and supplier connections, sharing of prototyping expertise and production facilities, and business support and advice. Growth has also been stimulated by governmental agencies located in Uppsala, including the National Veterinary Institute and the Medical Products Agency.18

However, this does not diminish the importance of Pharmacia in shaping Uppsala’s life sciences cluster. Both GE Healthcare and Phadia have their roots in Pharmacia’s restructuring (and interactions with Uppsala University’s Department of Biochemistry); Pharmacia itself is now part of Pfizer and retains a presence in the region. Indeed, seven of the ten largest companies have some form of Pharmacia heritage.19 A second legacy is the significant local knowledge pool in several biotech areas; the development of specialised methods, instruments, and research tools is considered the traditional core of the cluster and underpins Uppsala’s reputation as a ‘city of methods’, whilst differentiating it from national competitors.20

The role of the media is a second, and related, theme in discussions of Uppsala’s cluster development. Initial media coverage portrayed the 1995 Pharmacia merger as a crisis and a devastating blow for the region, asking questions of the trustworthiness and strategy of company directors. By 1998 stories reflected a narrative of a community united and collaborating to shape the future: that Pharmacia relocating was ‘the best thing that could have happened to Uppsala’, and ‘laid-off researchers in Uppsala have turned local developments around’.21

Regardless of whether this ‘catalytic event’ narrative reflected the reality, it had an impact. The expanding biotech sector in Uppsala became a hot topic. It affected how government actors engaged in regional development and infrastructure planning in Uppsala. It influenced how customers, suppliers, venture capitalists and potential employees viewed the cluster.22 As such, the media helped to construct a ‘perceived regional advantage’, providing the necessary channels to ‘promote investment opportunities and attract new capital’.23 Several bodies, including STUNS (the Foundation for Collaboration between the Universities in Uppsala, Business and the Public Sector) and the Chambers of Commerce, have been linked to commissioning media articles on the region’s biotech resurgence during this period.24

A third factor is the part played by cluster initiatives: collaborations between public and private sector bodies, including government agencies, universities and companies, to improve the competitiveness of clusters. Uppsala BIO was created in 2003 by local representatives from government, industry, and academia.25 Cluster initiatives raise the awareness of the work within a cluster, provide platforms for dialogue and decision-making (especially around the business environment), and perform the important intermediary activities of brokerage, facilitation and promotion.26 A study of Swedish cluster initiatives found successful bodies struck a balance between being relevant for members and being open to new perspectives; Uppsala BIO offers training and networking for Uppsala’s life science industry, but also ‘open house’ networking and knowledge-exchange activities.27 Promotion and marketing has been an important thread in Uppsala’s life sciences cluster development, and Uppsala BIO is part of this continued effort. But this cluster initiative also reinforces the foundation upon which the cluster has grown: a long history of universities and industry working together.

Outcomes

There have been notable outcomes throughout the history of the Uppsala cluster. Swedish academics have found that the cluster played an important role in national economic restructuring from the 1970s, and was the engine of national life science growth.28 Specifically, academic and industry collaboration led to the discovery of Sephadex, a gel filtration medium, in 1959, and immunoglobulin E, used to diagnose and treat allergies, in 1967. And this collaboration more generally led to the growth of Pharmacia as one of Europe’s largest pharmaceutical companies, an important actor in the economic growth of the region, and a convenor of talented researchers and managers. As such, Pharmacia has been described as ‘the third University’ in Uppsala (together with Uppsala University and the Swedish Agricultural University).29

The result today is a mature ecosystem. There are several markers of this. First, the growth of specialised services firms in and around the cluster, including in business development, patenting and legal advice, recruitment and marketing.30 Specialised consultancy firms also help to fill gaps within biotechnology start-ups.31 A second marker is the growth of informal contact between industry and academia, built over time on the foundations of formal relationships. The result of this physical and social proximity is the rapid circulation and spillover of knowledge and ideas within the cluster, well-developed social networks, and easy access to global contacts and channels. Individuals can easily switch firms and move from industry to academia and vice versa, transferring knowledge and further strengthening relationships.32

Despite strong collaboration and professional mobility within the cluster, there are differences between public and private sector organisations, and – as one might expect – differing views on the priorities and strengths of the cluster. Their interactions differ too, perhaps to the overall benefit of the cluster. Public sector organisations tend to interact more with biotech companies at a national level than their private sector counterparts, whereas private sector companies interact more often with biotech companies at an international level. Both, however, rank the cluster’s work in developing methods and tools for discovery as the greatest strength, followed by diagnostic work.33

Looking forward

The Uppsala cluster is closely intertwined with inward investment efforts from Invest Stockholm and other bodies, in targeted areas such as applying artificial intelligence and machine learning to life sciences, and health tech.34 This builds on Stockholm-Uppsala Life Science (SULS), a joint effort between Uppsala BIO and Stockholm city to actively market the region’s life science outside of Sweden which began in 2007.35

Previous analyses have found that the venture capital sector in Uppsala is heavily underdeveloped in terms of the number of local actors.36 However, this is perhaps symptomatic of the country as a whole, rather than an issue of local provision: an earlier study found that 84 percent of venture capital invested in Swedish drug discovery firms was in the Stockholm-Uppsala region.37

Finally, and despite high quality R&D, Sweden faces challenges that may affect the cluster. These include the level of patenting, and small companies facing a choice between licensing products to ‘big pharma’ or being acquired. This has led to fears of stunted company growth, inhibiting the development of a thriving, home-grown sector.38

(Photos from Unsplash: archway, train, buildings)

  1. Nature October 2001, p.6 in Waluszewski, A., 2004. A competing or co-operating cluster or seven decades of combinatory resources? What’s behind a prospering biotech valley?. Scandinavian Journal of Management, 20(1-2), pp.125-150.
  2. The Economist, 2003 in Waxell, A., 2016. Writing up the region: anchor firm dismantling and the construction of a perceived regional advantage in Swedish news media. European Planning Studies, 24(4), pp.742-761.
  3. https://ssci.se/en/news/facts-about-stockholm-uppsala-life-science-cluster; https://www.uppsalabio.com/facts-figures/stockholm-uppsala-region/.
  4. https://www.investstockholm.com/investment_opportunities/lifescience/.
  5. https://www.biospace.com/article/ranking-the-top-10-biotech-clusters-in-europe/; https://www.lifesciencesweden.se/article/view/646365/meet_the_governmental_life_science_office.
  6. Waxell, A. and Malmberg, A., 2007. What is global and what is local in knowledge-generating interaction? The case of the biotech cluster in Uppsala, Sweden. Entrepreneurship and Regional Development, 19(2), pp.137-159.
  7. Teigland, R. and Lindqvist, G., 2007. Seeing eye-to-eye: how do public and private sector views of a biotech cluster and its cluster initiative differ?. European Planning Studies, 15(6), pp.767-786.
  8. https://sciencebusiness.net/report/leading-life-sciences-clusters-europe.
  9. Waxell, A. and Malmberg, A., 2007. What is global and what is local in knowledge-generating interaction? The case of the biotech cluster in Uppsala, Sweden. Entrepreneurship and Regional Development, 19(2), pp.137-159. Many more recent initiatives have their roots in notable research units built around key individuals. For example, ‘the technology on which Pyrosequencing [a company formed in 1997] is built is derived from research carried out under the leadership of Professor Mathias Uhlén at KTH, and in its early stage was related to a group of researchers within Amersham Biosciences [which became GE Healthcare following a takeover in 2003]’. Waluszewski, A., 2004. A competing or co-operating cluster or seven decades of combinatory resources? What’s behind a prospering biotech valley?. Scandinavian Journal of Management, 20(1-2), p.139.
  10. Waxell, A., 2016. Writing up the region: anchor firm dismantling and the construction of a perceived regional advantage in Swedish news media. European Planning Studies, 24(4), pp.742-761.
  11. Waluszewski, A., 2004. A competing or co-operating cluster or seven decades of combinatory resources? What’s behind a prospering biotech valley?. Scandinavian Journal of Management, 20(1-2), pp.125-150.
  12. Waxell, A. and Malmberg, A., 2007. What is global and what is local in knowledge-generating interaction? The case of the biotech cluster in Uppsala, Sweden. Entrepreneurship and Regional Development, 19(2), pp.137-159.
  13. Waluszewski, A., 2004. A competing or co-operating cluster or seven decades of combinatory resources? What’s behind a prospering biotech valley?. Scandinavian Journal of Management, 20(1-2), pp.125-150.
  14. Eliasson and Eliasson (2006), in 5 (or 9). The flow of venture capital increased from 1995 due to new legal arrangements for investors managing governmental funds: Waluszewski, A., 2004. A competing or co-operating cluster or seven decades of combinatory resources? What’s behind a prospering biotech valley?. Scandinavian Journal of Management, 20(1-2), pp.125-150.
  15. Waluszewski, A., 2004. A competing or co-operating cluster or seven decades of combinatory resources? What’s behind a prospering biotech valley?. Scandinavian Journal of Management, 20(1-2), p.138.
  16. Waluszewski, A., 2004. A competing or co-operating cluster or seven decades of combinatory resources? What’s behind a prospering biotech valley?. Scandinavian Journal of Management, 20(1-2), p.136.
  17. Waxell, A., 2009. Guilty by association: a cross-industrial approach to sourcing complementary knowledge in the Uppsala biotechnology cluster. European Planning Studies, 17(11), pp.1605-1624. Waluszewski describes these organisations as ‘nodes’ that combine and recombine resources. The cluster is therefore one ‘where almost all of the emerging companies in one way or another have some kind of kinship with the above mentioned established units’. Waluszewski, A., 2004. A competing or co-operating cluster or seven decades of combinatory resources? What’s behind a prospering biotech valley?. Scandinavian Journal of Management, 20(1-2), p.137.
  18. Waxell, A. and Malmberg, A., 2007. What is global and what is local in knowledge-generating interaction? The case of the biotech cluster in Uppsala, Sweden. Entrepreneurship and Regional Development, 19(2), pp.137-159.
  19. https://uppsalabio.com/wp-content/uploads/2017/05/14993_stockholm-uppsala_life_science_facts_and_figures_2014.pdf.
  20. Waxell, A. and Malmberg, A., 2007. What is global and what is local in knowledge-generating interaction? The case of the biotech cluster in Uppsala, Sweden. Entrepreneurship and Regional Development, 19(2), pp.137-159.
  21. Waxell, A., 2016. Writing up the region: anchor firm dismantling and the construction of a perceived regional advantage in Swedish news media. European Planning Studies, 24(4), pp.742-761. Note the close similarities with the narratives surrounding Pittsburgh in chapter X.
  22. Waluszewski, A., 2004. A competing or co-operating cluster or seven decades of combinatory resources? What’s behind a prospering biotech valley?. Scandinavian Journal of Management, 20(1-2), pp.125-150. Waluszewski notes similarities in this respect to Silicon Valley, quoting Kenney (2000): ‘Industrial developments in the Santa Clara Valley became known to the general public only when the region was named’.
  23. Waxell, A., 2016. Writing up the region: anchor firm dismantling and the construction of a perceived regional advantage in Swedish news media. European Planning Studies, 24(4), p. 756.
  24. Waluszewski, A., 2004. A competing or co-operating cluster or seven decades of combinatory resources? What’s behind a prospering biotech valley?. Scandinavian Journal of Management, 20(1-2), pp.125-150; Waxell, A., 2016. Writing up the region: anchor firm dismantling and the construction of a perceived regional advantage in Swedish news media. European Planning Studies, 24(4), pp.742-761. Furthermore, the city was first presented to the public as a ‘Region of Biotechnology’ at Biotech Forum, a life science expo held in October 2000. STUNS remains active in the region: https://www.stuns.se/en/in-english/.
  25. Teigland, R., Hallencreutz, D. and Lundequist, P., 2005. Uppsala BIO-the Life Science Initiative: Experiences of and Reflections on Starting a Regional Competitiveness Initiative. Uppsala universitet; https://www.uppsalabio.com/about-uppsalabio/. The aforementioned STUNS foundation is a key player in sustaining Uppsala BIO: Laur, I., Klofsten, M. and Bienkowska, D., 2012. Catching regional development dreams: A study of cluster initiatives as intermediaries. European Planning Studies, 20(11), pp.1909-1921.
  26. Laur, I., Klofsten, M. and Bienkowska, D., 2012. Catching regional development dreams: A study of cluster initiatives as intermediaries. European Planning Studies, 20(11), pp.1909-1921.
  27. Laur, I., Klofsten, M. and Bienkowska, D., 2012. Catching regional development dreams: A study of cluster initiatives as intermediaries. European Planning Studies, 20(11), pp.1909-1921.
  28. Moodysson, J., Coenen, L. and Asheim, B., 2009. Clusters in time and space: Understanding the growth and transformation of life science in Scania (Vol. 2008, p. 4). CIRCLE Electronic Working Papers.
  29. Waxell, A. and Malmberg, A., 2007. What is global and what is local in knowledge-generating interaction? The case of the biotech cluster in Uppsala, Sweden. Entrepreneurship and Regional Development, 19(2), pp.137-159.
  30. Teigland, R. and Lindqvist, G., 2007. Seeing eye-to-eye: how do public and private sector views of a biotech cluster and its cluster initiative differ?. European Planning Studies, 15(6), pp.767-786.
  31. Waxell, A., 2009. Guilty by association: a cross-industrial approach to sourcing complementary knowledge in the Uppsala biotechnology cluster. European Planning Studies, 17(11), pp.1605-1624.
  32. Waxell, A. and Malmberg, A., 2007. What is global and what is local in knowledge-generating interaction? The case of the biotech cluster in Uppsala, Sweden. Entrepreneurship and Regional Development, 19(2), pp.137-159; Waxell, A., 2009. Guilty by association: a cross-industrial approach to sourcing complementary knowledge in the Uppsala biotechnology cluster. European Planning Studies, 17(11), pp.1605-1624.
  33. Teigland, R. and Lindqvist, G., 2007. Seeing eye-to-eye: how do public and private sector views of a biotech cluster and its cluster initiative differ?. European Planning Studies, 15(6), pp.767-786.
  34. https://www.investstockholm.com/globalassets/invest/reports/stockholm-ai-report.pdf; https://uppsalabio.com/wp-content/uploads/2017/05/health_tech_2017.pdf.
  35. https://www.uppsalabio.com/about-uppsalabio/history/.
  36. Waxell, A., 2009. Guilty by association: a cross-industrial approach to sourcing complementary knowledge in the Uppsala biotechnology cluster. European Planning Studies, 17(11), pp.1605-1624.
  37. Over the period 1997-2004. Valentin, F., Jensen, R.L. and Dahlgren, H., 2008. How venture capital shapes emerging bio-clusters—a cross-country comparison. European Planning Studies, 16(3), pp.441-463.
  38. https://sciencebusiness.net/report/leading-life-sciences-clusters-europe.

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