Belgium: Will its enviable geographic position continue to ensure success in pharma?

Sep 01, 2009
Volume 21, Issue 9

Guy Vanderelst/Getty Images
Occupying an enviable position both physically and politically in the heart of Europe, Belgium has benefitted extensively from its location in recent years, and the development of the EU has also provided considerable impetus for growth. The headquarters of the EC and home of the European Parliament and NATO, Belgium's capital, Brussels, is the centre of European politics. With the recent enlargement of the EU, the country is also at the centre of a market of 0.5 billion consumers. A well-developed infrastructure combined with world-class education and technical expertise, as well as a physical proximity to the markets and capitals of Western Europe, lends local firms many advantages and has made the country a highly attractive base for international companies to conduct business in Europe.

Measuring only 30500 km2 with a population of just 10446000, Belgium is one the smallest countries in the EU, and yet enjoys a GDP of €288.09 billion and a position among the world's ten largest trading nations. With the population divided between the Flemish speaking Flanders region in the north, French speaking Walloon region in the south and a German-speaking region in the west, Belgium occupies a unique cultural position at the crossroads between Germanic and Latin Europe. With French, Flemish and German as official languages and English widely spoken, the linguistic and cultural diversity is a key advantage for conducting international business in the country.

The Belgian pharma sector: an international heavyweight

As well as its worldwide reputation for Moules Frites, chocolate and beer, Belgium is also an internationally renowned centre of pharmaceutical expertise. With the second highest number of pharmaceutical exports per capita, processing and distributing 100–150 tonnes of pharmaceutical products per month, the country is one of the biggest centres in the world for pharmaceutical distribution. It is also home to the European headquarters and main distribution centres of many international pharma companies, while Baxter, Schering Plough, Pfizer, Sanofi-Aventis, Roche, Abbott and GlaxoSmithKline (GSK) have all made significant investments in the country. With London, Paris, Amsterdam and Frankfurt less than 200 miles from Brussels, and 140 million consumers within 300 miles, Belgium offers excellent access to European markets. A well-developed infrastructure and the major port of Antwerp facilitate importation and distribution, while a skilled local labour force enables high quality, high volume manufacturing output.

As well as attracting foreign companies, the country has also produced its own international heavyweights — most notably Janssen, UCB and Solvay. In addition, Belgium is home to a plethora of innovative small and medium enterprises including many cutting edge biotechnology companies and a highly developed service sector.

One industry's decline is another's gain

Luc De Langhe MD, C.E.L.forpharma
Equally important to the country's pharma success are the local and regional governments, which have played roles in supporting, promoting and developing the industry. A favourable corporate tax system, cheap rent, the establishment of bio-clusters and additional subsidies have attracted pharma companies to the region and helped ensure their continued presence. With the decline of Belgium's traditional heavy industries — specifically mining and steel — the government has invested heavily in developing the country into a knowledge-based economy.

Two key tax incentives, unique to the country, have been particularly important for the pharma industry: a 65% tax deductibility on the remuneration of all staff working in R&D and an additional 80% deduction from all future earnings from the ensuing patents. As Yves Verschuren, Managing Director of chemicals and life sciences umbrella organization Essenscia, observed: "When Belgian companies deduct these charges, it allows them to attract top talent, which is usually expensive."

With one in every four employees in the Belgian pharma industry working in R&D, the scheme has helped make the country a leading centre for pharmaceutical R&D activities.

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