Víctor Infante talks about: ASEBIO Report 2016

QUESTION: In terms of KPIs, the report points out that companies in which biotechnology is its core activity has led the growth ranking during 2015. Has Bionaturis been involved in this growth? If so, in what way?

ANSWER: Bionaturis group is showing a growing trend at both organic and inorganic levels. For example, in the period 2012-15 our recurring net sales grew at 24.1% CAGR and in the year ended 2016 we have grown again 24.9% YoY. In terms of inorganic growth, we fully acquired Biobide in 2014- the world leader CRO in the use of zebrafish as an animal- and ZIP Solutions -former Era Biotech- in 2016 being triggered by the signing of an exclusive worldwide license agreement of ZIP´s Splittera system to a multinational sector. Thus, our high value portfolio of premium assets is growing at a steady pace and now our strategic purpose is to optimize as much as possible their ROI in the coming years.

QUESTION: The report says that the biotechnology sector has not been able yet to recover itself for the sharp drop back in 2013. However, in 2015 the economic impact of the biotech companies has reached 8.6% of Spanish GDP coming from a 10.35% figure for 2014. Shall we expect to see a positive uptrend or is it dependent on perspective?

ANSWER: As always, the data have to be analyzed from many angles and perspectives. The overall figure is positive because it could be that we are seeing a new upward trend that will have to be confirmed in the following years. For me it is more important not only to compare it in isolation on the overall impact on Spanish GDP but how we are at a relative level compared to other major economies of the OECD, using the same measurement parameters. I would venture to say that we are below what would correspond to us in comparison with pair economies and therefore there is room for improvement in that sense. At a global level it is commonly accepted that this indicator is linked to a greater well-being and wealth society. In my opinion, the size of biotech companies in Spain would be one of the points to be strategically dealt with in order to be able to capture more value within the P&L of the companies from the rich biotech assets the Spanish biotech companies generate.

QUESTION: According to the annual Report, the best rated facilitating factor is, once again, the training level of the workers, while we can find at the bottom of the ranking the Public Administration Support. As CEO of Bionaturis Group, does it match your particular vision?

ANSWER: I think that the Spanish Government has been doing a good job, at least comparable to our environment, in the commitment to the value creation in the form of biotechnological assets. However, in terms of promoting the proper ecosystem needed to capture most of the value of these assets, there is still a long way to go. More concrete and ambitious measures that favor business consolidation, taxation policies in general for both companies and investors, stability in the regulatory framework, uniformity of policies throughout the State, simplicity in bureaucracy, etc. We should think more about the medium-term return on investment of the assets that are generated, which are many and of great quality by the way. Strategies to improve this indicator I think are necessary. We are witnessing how economies in our environment get a higher ROI of their biotech assets, no matter where they are generated, and have more advanced ecosystems to deal with the higher part of the value chain.

QUESTION: In 2015 the number of jobs generated by biotech companies was 130,453. In this last report the figure has risen to a total of 182,156 jobs. Do you think we are facing a real recovery or only a tiny improvement?

ANSWER: Once again I re-emphasize that to confirm macro trends it is necessary to strengthen the foundations. If the upward trend is mainly a consequence of the increase of self-employment, the data could be positive in the short term but with difficult to maintain in the medium-long term. It is well known that laying on self-employment leads to a smaller capacity to face the market endeavors. Generally speaking, the Spanish economy needs to have bigger SMEs in size and the biotech industry is no an exception. At this respect, Bionaturis group have grown lately and we are already close to the barrier of 50 direct employees.

QUESTION: In relation to the publication of patents, the report is clear: the number has fallen 11% with respect to 2015. Do you think this is representative? How tangible is this in Bionaturis?

ANSWER: This is another indicator that is always under debate. From my point of view it makes more sense to look not only at the number of patents issued but at the number of patents licensed and that are generating or can eventually generate return on investment. It is a question of quality rather than quantity. In Bionaturis group, we now have five international patent families which cover the vast part of our main assets. Possibly the most relevant right now are those that protect the Splittera system which, as I said before, has been the subject of a worldwide exclusive license to a leading multinational company in industrial bioprocesses.

QUESTION: According to the data collected in the surveys, the ASEBIO report concludes that the internationalization of companies, although essential, is no longer a priority but has been the launch of products to the market instead. Are you surprised by this data? Does Bionaturis work on the ASEBIO report line?

ANSWER: Well, I do not think that it has ceased to be a priority because a biotechnology company since its inception has an international DNA, but I understand that there are other aspects that can be considered as more priority in the current situation. Internationalization itself is an expensive process in all aspects and is addressed much better with a critical size. When a biotech company launches a new product, it is always thinking about an international market, which can be approach through different channels and where the strategy planning is key. Bionaturis group is now physically present on three continents but our products have global coverage by the corresponding international license agreements.

QUESTION: According to the report, Andalusia is the second region with more biotechnological companies of Spain. Do you think that it is a data in accordance with the potential of the region or on the contrary thinks that there is still a long way to go?

ANSWER: As in general in Spain, my previous answers have their application at the regional level, perhaps accentuated in some aspects. Likewise, the Andalusian Government is making a lot of effort to promote the base of the pyramid – assets creation – but a greater number of strategic measures are missing in the upper part of the same – value capture -, and also that these policies should be consistent with each other. For example, although the Andalusian administration is a large consumer of biotechnological assets, the different public procurement programs of innovative technology/products are hardly accessible to Andalusian start-ups, whose creation is encouraged. Other leading biotechnology economies have specific plans aiming to a greater effectiveness in promoting the consolidation of their SMEs. Constructively, I believe that a strategic analysis of the relocation of incentive policies towards other areas and indicators is necessary. We have gone from the time when the “big fish eats the small one” to the “fast fish eats the slow one”. In this regard I believe that other Spanish regions have taking the lead and are able to make the most of the measures coming from Brussels faster and better.