Wallonia presses home life sciences advantage

The government of the Belgian region of Wallonia has funded 45 R&D programmes in the life sciences industry to the tune of €145m since 2006, under a public-private partnership model.

Wallonia is a mostly French-speaking region that accounts for more than half of the Belgian nation geographically and has 3.58 million inhabitants, about one-third of the total population. It is only 16,800 square kilometres in size and most companies in the life sciences cluster are only one hour’s drive from one another.

A life science leader

In the past 15 years, life sciences has become one of the most important business sectors in Wallonia. It is now the main driver behind the region’s economic growth, and has created up to 17,000 direct jobs and 33,000 indirect jobs. The number of people employed in the sector is expanding by 7% annually and the quantity of SMEs in the industry has tripled since 2006, to now employ more than 4500 people directly. Between 2005 and 2016, the total private capital raised by SMEs in the industry was €1.15bn.

“Wallonia is attractive to life sciences for a number of reasons,” says Sylvie Ponchaut, director-general and scientific director in the R&D department of Biowin, the regional health cluster. “The region contains five excellent universities; three of them are large and have very good international rankings. They produce a lot of local talent. Wallonia has been home to some big life science companies, such as GSK and Baxter, for a long time. They have led to many spin-off companies being created. There are now seven global leaders in their respective fields based here.

“Furthermore, as the ecosystem has developed, logistics services companies specialised in life sciences have emerged. Some very specialist life science companies have been set up in the fields of immunology, cell therapy, radio pharmacy, and medical devices and instruments, as well.”

She adds that Wallonia is a small region, making intense interaction between all these companies possible and leading to a creative environment. The regional government is also very accessible – for example, it takes only two weeks or so for clinical trials to be approved.

Well spread

As well as GSK Vaccines and Baxter, other global leading firms in life sciences located in Wallonia include UCB, a biopharmaceutical company with a focus on neurology and immunology; IBA, a producer of integrated systems in the field of cancer diagnostics and treatment; Eurogentec, a biomolecule producer; the Institute for Radioelements, a radio chemical and radio pharmaceutical producer; and Zoetis, a global animal health company.

Charleroi – Wallonia’s biggest city with a population of 200,000 people – is a crucial hub for TNT Express, a logistics company that has pumped €100m into its site since the year 2000.

The region has 20,000 hospital beds and is an EU leader in clinical trials. It has 11,000 researchers in total. The main institutions of higher education are the Catholic University of Louvain, the Free University of Brussels, the University of Liege, the University of Mons, and the University of Namur. These have a total of 400 research units.

The Biowin cluster has several research centres, including Immune Health (immunology); Cetic (ICT); Centexbel (textiles); Sirris (engineering); Cer Groupe (virology); Cenaero (aeronautics) and Multitel (telecommunications).

Government action

“There has been a strong political will on the part of the regional government to develop the life sciences cluster,” says Bruno Lucidi, a life sciences expert at Invest in Wallonia, the region’s export investment agency. “There is considerable access to funding from the public and private sectors. The regional government can provide loans for projects and can act as a venture capitalist.

“Wallonia has a great location within Europe and is an important logistics hub, meaning that biotech products can easily be distributed to the rest of Europe. Three factors in particular make it attractive to foreign investors: favourable corporate tax rates; comparatively low labour costs; and a large pool of talented life sciences specialists.” 

Wallonia’s proximity to Belgian capital Brussels is also significant, helping to create an international environment. International schools are within a short distance of the region. As part of the greater Brussels area, Wallonia put in a strong bid to become the new home of the European Medicines Agency but the EU decided it should be based in Amsterdam (London is the current headquarters but a change of location is necessary as the UK prepares to leave the EU).  

Wallonia has an unemployment rate of 9.8%, compared to 15% in the Brussels region and 4.4% in the Flemish region.

Tax incentives

Belgium has improved its attractiveness as a prime location for companies involved in R&D and in the exploitation of patents by offering a full range of tax incentives. For qualifying patent income, a reduced corporate income tax rate of a maximum of 6.8% applies (20% of income taxable at the nominal corporate income tax rate of 33.99%).

Costs for research can be deducted immediately as a business cost, while for development costs (including salary costs) there is the option to record an intangible fixed asset that can be depreciated over a period of at least three years.

An additional deduction from taxable income or a tax credit is available on top of the normal depreciation cost for R&D-related assets. For R&D investments made in the 2017 assessment year, the rate of the deduction is a one-off 13.5% of the investment value or 20.5% of the annual depreciation on the assets.

Costs of this report were underwritten by the Wallonia Export & Investment Agency. Writing and editing were carried out independently by fDi Magazine.