In biotech, Britain is one of Europe's heavy hitters. Although the United Kingdom and Germany are in close competition, and continually leapfrog each other to take the lead in the sector, the country in third place, France, falls a long way behind. In 2001, it was the United Kingdom's turn to lead the pack, identified by the European Community's European Competitiveness Report as the country with the most companies in both biotechnology and bioscience-related applications. There are approximately 250 British companies, representing a quarter of Europe's biotechnology small or medium-sized enterprises and 75% of the listed European companies.

But behind the glittering numbers lies a critical question: "Is the U.K. biotechnology community now sustainable?" So wonders Chris Lowe, director of the University of Cambridge Institute of Biotechnology.

The success of British biotechnology stems from many of the United Kingdom's key strengths. It is a world leader in bioscience and medical research, especially in terms of toxicology testing and clinical trials. Lowe points out that Britain benefits from good education and training structures and, consequently, highly skilled personnel. The business infrastructure is also in place, with companies well supported by attorneys and management consultants, the best venture-capital market in Europe, and a strong partnership among the government, industry, and the financial community.

But the biotechnology market is currently rather volatile and is replicating the losses of the other high-tech markets. "In Europe, between '97 and '98, lots of biotech companies were founded," says Lowe, "but we do not know whether they are sustainable, and there is a possibility they are not." The service sector, especially computer, information technology (IT), and consumer services, is the fastest growing set of companies nowadays. "The growth is all in nonmanufacturing companies, except for health care--that is in between--and this is a concern," he adds.

One potential problem is that U.K. biotechnology companies tend to be small. "These are not the large companies that you see in the U.S.," comments Lowe. However, some of the disadvantages of lack of size can be overcome by "clustering," one reason that concentrations of biotech companies are to be found in the areas surrounding London, Cambridge, Oxford, Glasgow, and Edinburgh. Being in a cluster allows companies to network and collaborate, create purchasing consortia for better deals, and have a common strategy for lobbying, promotion, information, and training.

"We need many factors to create a good regional cluster," Lowe explains. "In Cambridge, we have a typical set of conditions for a reasonably sized cluster"--that is, a very strong science base, an entrepreneurial environment, the contribution of domestic and multinational pharmaceutical companies, adequate premises and infrastructure, finance, a business support service, and supportive regulatory policies. "Cambridge is a good reflection of the U.K. as a whole" and even shows off with an annual growth rate of 7%, whereas the national average stands at 1.7%. But not all clusters are the same, says Lowe. The Cambridge area is "very R&D intensive," for example, whereas "if you want manufacturing, you have to move to Peterborough."

But even though the United Kingdom is doing well relative to Europe, the picture is not all rosy. "When you look at the U.S. in relation to the average of Europe, we are losing out," says Lowe. "We need a very strong R&D base to get stronger," he adds, pointing out that "R&D intensity and sales growth rate are related." Unfortunately, though, Europe shows a widening gross domestic product gap with the United States, as well as lower productivity in manufacturing, lower exports, and fewer patents and citations. And the unbalanced relation between the United States and Europe only makes matters worse. The 2001 Europe Competitiveness Report concluded that "European companies rely partially on American research while, worryingly, US firms do not seem to consider European research equally attractive." In the words of Lowe, "it costs time and effort and money to have alliances with the U.S., but we have to [do it]."

Increased collaboration within Europe is also deemed crucial. "The European research system is too fragmented, with insufficient interconnections," Lowe warns. In addition, Europe needs to recognise the importance of small firms and tackle the cultural problems that inhibit academic research from forming links with business.

Another factor that Europe cannot afford to ignore is the public perception of biotechnology. "There is a public hostility to biotech advances, and this affects investment," explains Lowe. The support given by Prime Minister Tony Blair a month ago in his speech to the Royal Society was certainly welcomed by the industry.

Perhaps not enough mileage is made of biotech's low-tech origins--people have been brewing and baking for thousands of years, after all--or that a major driving force for the industry is a growing and ageing world population and its burgeoning need for food, health care, and energy supplies. Global economics is also a factor driving demand for biotechnology applications. "The Third World countries are advancing rapidly," adds Lowe. The European Association for Bioindustries estimates that by 2005, biotechnology-derived products will account for some £100 billion of worldwide sales.

So, is heading for biotech a good career move? According to Lowe, "there are good opportunities" for those who persevere, but "so many pull out because biotech is so complex." His advice is like everything else in life: Be bold and persistent. "You need to take risks," he says. "When I started, I had to put my house up for a loan and was in danger of losing it for a day or so, but now we are employing 200 people. If you have good ideas, you will get somewhere."

Meanwhile, there was some good news a couple of weeks ago for Britain, from a study published by the Economist Intelligence Unit. "This study shows how entrepreneurial countries are," explains Lowe. Sixty countries were surveyed, with the United Kingdom coming out in joint second position with Denmark, behind the Netherlands at number one, and "both being superior to the U.S.," which came fourth. Maybe biotech in the United Kingdom is sustainable after all.

Chris Lowe was talking to the Cambridge-based network BiologyInBusiness.

Elisabeth Pain is contributing editor for Europe.