When it comes to Denmark’s flourishing local biotech scene, the country is again clearly punching far above its weight. The EU member state has already managed to muster world-class expertise in areas like peptide chemistry and metabolic disorders, anchored by the success stories of homegrown entities that made it big including Zealand Pharma, Genmab, and Novo Nordisk, and currently no fewer than eight of the companies in the ‘Copenhagen 25’ stock market index constitute life science outfits.
Such success can partly be attributed to Denmark’s highly sophisticated, multifaceted, and well-rounded enabling ecosystem. “Denmark offers a unique and cohesive environment for innovation, built upon a high level of trust among stakeholders, a unified public healthcare system, as well as a compact scale that renders the country a perfect living laboratory for budding life science players to test, refine, and adapt new health solutions in a system that is at once both responsive and collaborative,” thinks Diana Arsovic Nielsen, Director of the Danish Life Science Cluster, a 2020 national initiative comprising hubs in Copenhagen, Aarhus, Odense and Aalborg that strives to catalyse innovation, connect partners, and foster knowledge environments.
Jewel in the crown of that enabling landscape sits the so-called ‘Medicon Valley,’ one of Europe’s most dynamic life science hubs, which manages to unite a well-forged industrial base with the world-class academic research and clinical capabilities of University College Copenhagen and Rigshospitalet respectively, while simultaneously incorporating a transnational dimension by stretching into the south-western part of neighbouring Sweden.
“The fortitude of Medicon Valley lies in what we call the ‘triple helix’ collaboration between hospitals, private companies, and academia. This model is rare and sets us apart from other major life sciences hubs in Europe. While other regions may excel in one or two areas, the combination of these three strong pillars is truly our unique selling point,” insists Anette Steenberg, CEO of the Medicon Valley Alliance.
Support Levers
Also impactful has been the Danish state’s increasingly proactive efforts to support fledgling biotechs. “Political awareness of biotechnology’s importance has increased substantially, with successive governments recognising the intrinsic importance of university spin offs and start-ups to upping the country’s life science innovation intensity,” perceives Hans Schambye, Chairman of the biotech trade association, DANSK BIOTEK, and CEO of Galecto, which develops small molecules for the treatment of cancer and severe liver disease.
“For instance, the establishment of a dedicated BioInnovation Institute (BII) in 2021 as a spin-off from the Novo Nordisk Foundation has served to dramatically simplify company formation and early-stage development compared to when I started out on my first entrepreneurial ventures,” he recalls, noting “that the institute provides entrepreneurial training, and access to expertise that would otherwise be extremely difficult to obtain independently.”
Certainly, the levers of support available to young and upcoming Danish biotechs have never been greater and more numerous. One major focus of the BII has been the development of physical infrastructure to support the growing pipeline of start-ups, with the identification of dedicated laboratory and scale-up spaces in Copenhagen providing a concrete response to the need for specialised facilities. Promising life science start-ups can therefore benefit from the use of fully equipped laboratory facilities, enabling them to incubate and scale their operations within a collaborative ecosystem.
Concurrently, the Finance Ministry has committed to reforming tax policies that had unintentionally penalised entrepreneurs by taxing unrealised gains before start-ups had secured external investment. Meanwhile, a patent voucher scheme, which provides subsidies to SMEs for the costs associated with a patenting process, is set to be further strengthened.
“Our focus is very much upon improving the rate at which that knowledge becomes innovation,” confirms Jens Nielsen, the CEO of BII. “One of our key performance indicators is the number of start-ups created relative to the volume of academic publications, a metric that allows us to benchmark ourselves against leading ecosystems such as Boston, Switzerland, and the UK’s so-called Golden Triangle, which comprises the universities and biotech clusters around Oxford, Cambridge, and London. This helps us assess how effectively we are bridging the gap between research and entrepreneurship,” he details.
Nor should anyone overlook the myriad of other active contributions iconic Danish homegrown champions are making via their foundations to nurture and sustain early-stage innovation. “Denmark’s ultimate aspiration is to fashion an innovation cluster comparable to Boston’s Kendall Square and already we can see this beginning to take shape. With strong backing from foundations such as the Lundbeck Foundation and the Novo Nordisk Foundation, this vision includes fostering an open collaboration environment that cultivates academic spinouts, venture capital, and industrial growth,” posits Charl van Zyl, CEO of Lundbeck.
“One notable example of this in action has been the formation of a partnership with NVIDIA to establish a quantum and AI-powered computing platform aimed at tackling complex areas of drug discovery, particularly where traditional methods have proven insufficient,” he adds.
Financing Conundrum
Yet, although Denmark can legitimately claim both a world-class academic research base and well-rounded pharmaceutical and health tech industry, the journey from discovery to commercialisation undertaken by homespun biotechs continues to prove highly challenging due to an obvious lack of breadth and depth in the local capital markets.
“Capital is often the defining hurdle for early-stage life science Danish start-ups, not at the point of formation where the ecosystem is robust, but when companies reach the stage where significant financing is required to scale,” acknowledges the BII’s Jens Nielsen. “We recognised early on that our impact would be limited unless our portfolio companies could successfully raise follow-on investment so trying to remedy this gap continues to be a centrepiece of our approach,” he says.
“Where Denmark, and Europe more broadly, falls short is in the lack of firepower within the funding ecosystem. The science may be there, but the capital base remains thin, especially from institutional investors. Too few pension funds, insurance groups, or sovereign vehicles allocate meaningful capital to venture, and even less to life sciences. Allocations as low as one percent are still common,” muses Rémi Droller, Managing Partner at the specialist healthcare orientated Paris-headquartered venture capital group, Kurma Partners.
“As a consequence, Danish life science entrepreneurs remain overly reliant on US crossover investors for later-stage financing, and many promising companies are pushed to list on Nasdaq to access growth capital and visibility,” he observes.
Droller, whose group is recognised for having been instrumental in co-leading the Series B investment in Danish success story Zealand Pharma in 2006, gives the salutary lesson of another once highly touted local player, Orphazyme, that had been developing treatments for rare neurological diseases.
“While their lead compound, arimoclomol, was eventually approved in the US as Miplyffa for Niemann-Pick type C in 2024, they sadly proved unable to scale and generate financial returns despite delivering real therapeutic value to patients,” he recalls, demonstrating how the lack of available funding can compromise even highly scientifically sound ventures.
“With the exception of the Nasdaq in the United States, few exchanges offer the depth, sophistication, or consistency needed to support biotech companies over time,” Droller believes. “Too often, European life science start-ups, Danish biotech included, go public prematurely on local exchanges where retail investors dominate and where there is limited understanding of biotech fundamentals. This can lead to severe volatility and misalignment, as investor expectations are shaped by metrics like EBITDA, wholly irrelevant in the context of pre-commercial science-driven companies,” he affirms.
Ian Laquian, CEO of Kariya Pharmaceuticals, a biotechnology company supported by the BII and Innovation Fund Denmark dedicated to developing innovative disease modifying agents to treat neurodegenerative diseases, agrees that the prevailing funding ecosystem is often just not fit for purpose anymore. “The local venture capital landscape has evolved toward platform companies and substantial capital deployments, so when we were discussing funding requirements of EUR 5-10 million, many tier-one venture capitalists indicated minimum deployment thresholds of EUR 20 million or more which would have created a fundamental mismatch for the capabilities of single-asset entity like us,” he remembers. “Personally, I would love now to see the pendulum swing back our way, with greater recognition and support for the little guys,” he adds.
Conscious of these frailties, there has been a concerted effort within Denmark to try and smooth the path to commercialization through the provision of more appropriate financing vehicles. The BII, for instance, has been setting up structures designed to guide fledgling biotechs to a stage where they can successfully start to attract external venture capital. “We have started to provide initial financing in the form of convertible debt, an approach that avoids setting premature valuations at this nascent stage. Once companies raise their first external funding round, our investment converts into equity based on the valuation established by third-party investors,” details Nielsen.
To date, they have supported 120 start-ups, with approximately two-thirds focused on therapeutics and health tech solutions. “Much of our portfolio lies within the traditional domain of red biotechnology, including companies developing new pharmaceutical candidates across oncology, central nervous system (CNS) disorders, metabolic diseases, and obesity. Through this work, we aim to unlock the commercial and clinical potential of cutting-edge science and build a foundation for the next generation of innovation-led ventures,” he confirms.
Without a doubt, the BII has successfully managed to elicit the creation of a centralised, credible entry point for early-stage investment within Denmark. This has helped attract significantly greater international capital, with companies supported by BII collectively raising over EUR 850 million to date, close to 90 percent of which has come from external sources.
Kurma, for their part, have launched the Kurma Growth Opportunities Fund. This fund invests across both verticals, targeting companies that have reached key inflection points, typically clinical proof of concept (Phase 1B or 2A) for biopharma, or commercial readiness in diagnostics and digital health. “It also serves as a crossover vehicle, with the flexibility to participate in IPOs, and is designed to reinvest in companies already backed by our earlier funds, enabling us to accompany entrepreneurs over the full arc of their growth,” explains Droller.
Many market insiders believe, however, that far more support will be required to make a real difference in outlook for Denmark’s next generation of innovative drug and medical device discoveries. “Everyone tends to talk about the fabulous regulatory frameworks and business conditions in places like Boston, but the truth of the matter is that the primary American advantage is simply capital access,” insists Galecto’s Hans Schambye. “In my strong opinion, America does not necessarily represent a vastly more efficient business environment; it simply provides superior financing access, and that is the real and unshakable difference between their scenario and ours,” he contends.
Reality Bites
Peter Halling, CEO and President of the iconic Danish allergy speciality company ALK remains philosophical about Danish biotech’s future trajectory. “While a handful of homegrown players like Zealand Pharma and Genmab have defied the odds by evolving into integrated global players, one has to accept that this remains the exception rather than the norm,” he argues.
“In reality, biotech continues to function as the innovation engine of the pharmaceutical industry, with most value creation occurring through asset progression to late clinical stages and subsequent partnering or M&A. Under the prevailing conditions, innovation, once proven, will logically migrate into the portfolios of large US or Swiss pharmaceutical players and , while this might be seen as regrettable in terms of scaling local champions, it simply reflects the dominant structure of our industry,” he evaluates.
Likewise, Jens Nielsen urges stakeholders to reconsider the dynamics at play. “Relocation, in my opinon, is not necessarily the drawback that many people seem to think it is,” he argues. “it’s often a strategic necessity, especially when entering global markets like the US. What matters is that many of these companies maintain a Danish footprint while expanding their international presence. In the therapeutic space, it is common for early-stage biotechs to be acquired during Phase I or II of clinical development, providing both investors with a return and larger companies with the pipeline innovation they increasingly depend on. This model works, and while it may not lead to fully integrated Danish pharma companies selling products independently, it can trigger a broader dynamic: one in which international firms begin to anchor R&D capabilities in Denmark following strategic acquisitions,” he conjectures.
Orbis Medicines which is positioned to become the definitive orally available macrocycle platform, enabling pharmaceutical partners to develop oral biologics across diverse therapeutic areas provides a good example of a Danish entity that has followed a hybrid approach of seeking American capital but continued to anchor its R&D operations within its home market.
“In our experience, we found that long-term scaling necessitated a dual-footprint strategy. Presently, most Danish biotechnology companies require US capital market access for later-stage financing and eventual public market listing, as NASDAQ remains the primary global biotechnology capital market. Our strategic approach has therefore involved conducting substantial R&D in Denmark while establishing US subsidiary operations to access capital markets and pharmaceutical industry networks. This model enables us to leverage Denmark’s research excellence while securing full access to global capital and commercial opportunities,” reasons the company’s CEO ,Morten Graugaard.
Where next, then, for Denmarks budding biotech scene? “I’m extremely optimistic for a bright future for Danish biotech, but I do think it helps to be pragmatic,” asserts Lundbeck’s Charl van Zyl. “With a population of six million, Denmark cannot operate in isolation. I believe we need a coordinated, pan-European approach to life sciences development. Instead of each country attempting to build its own version of Kendall Square, we should concentrate resources in recognised hubs of excellence, whether in Copenhagen, Zurich, Cambridge, or Munich. Europe must compete not through duplication, but through collaboration, scale, and strategic specialisation,” he argues.
Jens Nielsen, very much mirrors this sentiment. “Our future lies in playing to our strengths,” he agrees. “Although Denmark sees strong activity in oncology, we would not claim it as a national stronghold compared to regions with more established clinical or research depth in the field. There are, however, segments – such as enzymes, CNS research or metabolic disease – where our country is really at the pioneering vanguard and leading the way. A differentiated, strengths-based model, grounded in complementarity rather than duplication, will enable us to harness our full potential,” he concludes.
