Switzerland's pharmaceutical industry generates 5% of the nation's total GDP and accounts for roughly 50% of the annual exports — more than the Swiss chocolate, cheese and watches export industries combined, making it a significant economic industry for the nation. It’s no surprise with Switzerland’s forward-thinking and innovative endeavours that two of the world’s leading pharmaceutical companies, Novartis and Roche, are companies born out of Switzerland.
Other famous corporations in pharmaceuticals also employ heavily in Switzerland, bringing the total number of employees to an impressive 47,010 in 2020. As pharma goes from strength to strength, this bolsters the performance of the wider life sciences market, giving rise to more start-up companies than ever before. This success has caused it to be crowned Switzerland's growth engine.
So why have these pharmaceutical giants chosen Switzerland as an attractive location to set base and how is it significant to their success? Let’s consider the pharmaceutical industry in Switzerland and why it’s such a key player in the global market.
Focus on specialismDespite Switzerland’s lack of natural resources, it still hosts a successful export industry due to its focus on low-volume, specialty chemicals. This makes the small nation the perfect spot for pharma giants and SMEs alike. In fact, the total value of exports of all chemicals and pharma products has grown by 13% each year for the past 20 years. Switzerland is known for providing bespoke pharmaceutical solutions through its access to and funding for intensive research and development of these fine chemicals. The global demand for these specialty chemicals is always increasing, which makes Switzerland’s assets valuable.
Switzerland has seen many success stories and inventions in the pharmaceutical industry. Roche is credited with inventing Invirase, the world’s first HIV proteinase inhibitor drug in 1995 and later, co-created Funzeon, which stops the HIV virus from entering human cells. In addition, Novartis has been widely recognised for their work on cancer treatment through their aromatase blocker letrozole (Femara) which is used in the treatment of early-stage breast cancer.
The Swiss pharmaceutical industry now offers more than 30,000 products and is well-positioned to make significant contributions to healthcare, both in Switzerland and worldwide.
In-depth research and developmentFrom as early as 1896, the region of Basel became the centre of 19th-century pharmaceutical industries since Switzerland had no patent laws. This was in direct contrast with the surrounding European countries and led to a migration of researchers to Switzerland who wished to work without restrictions. In 2020, 90% of Switzerland's gross added value (GAV) from the pharma industry can be linked back to the Basel Region. Though patent laws have changed since the 1890s, Switzerland still hosts a supportive regulatory environment through its fair patent and pricing regulations.
In addition, Switzerland’s current proximity to research institutions and a sophisticated healthcare system provides an ideal environment for the intensive research of highly specialised products and the ability to test drugs to be sent to market.
There is also greater access to highly qualified scientists from these globally ranking universities and their research teams. Novartis hired 23,000 science professionals including scientists and doctors to work on over 200 projects in clinical development worldwide, just as Roche employed 22,000 people to work in research and development. Switzerland hosts an outstanding scientific and technological workforce with in-demand skills.
In addition, there is a lot of financial support from pharmaceutical companies who have invested almost 16.8 billion Swiss francs into research and development in Switzerland.
Supportive framework conditionsSwitzerland has free trade agreements with 43 partners, including innovative key giants such as China and Japan which provide access to essential export markets. After Germany and China, Switzerland has the third most populated network of bilateral investment protection agreements.
Switzerland’s pharmaceutical industry is supported by its global reputation for high-quality production standards, for being a strategic test marketer and being able to introduce new medical products at an early stage. This recognition of quality control saves Switzerland’s pharmaceutical industry between 130-300 million Swiss francs yearly when trading with the EU, the EFTA States and Canada.
In addition, a single central authority, the Federal Coordination Centre for Biotechnology governs all biotech and gene tech licensing applications which leads to a minimalistic and streamlined bureaucracy procedure.
Switzerland continues to rank number one on the Global Innovation Index due to its access to expert workforces, supportive governmental laws and its relation to the global trading market. Switzerland remains an attractive place to live and work, especially in such an important industry to Switzerland’s nationality and GDP as the pharmaceutical industry.
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