Biotechnology Development
Biotechnology Development
Business Model Description
Build and operate production plants and laboratories in the relevant areas, such as bio-manufacturing, bioeconomy (biotechnology plus biomanufacturing), clinical trials, personalised medicines (diagnostics and prognostics), artificial intelligence in medical development and health care, and secondary data usage for research and development (R&D) and similar. Biotechnology products can be produced from the areas such as regenerative medicine, cell and gene therapy, advanced healthcare through genome sequencing, rapid and precise development and manufacturing of medicine and vaccines. The business model is based on strong Government cooperation with private sector to create a world-class regulatory environment for development of knowledge-based industries. Serbia changed dozens of laws on various topics, including e-commerce, immigration, intellectual property protection, corporate law and introducing a new law on digital assets. Serbia also introduced a wide range of very generous tax incentives, including so called IP Box, accelerated R&D deduction, lower tax and social contributions for employing repatriates and foreigners, for people employed in R&D and for employing young people, as well as tax credit for investing in a startup, which the private sector can take advantage of.
Expected Impact
Support development of life-saving drugs and therapies and medical research advancements, as well as create job opportunities and economic growth.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Serbia: Belgrade Region
- Serbia: Vojvodina Autonomous Province
Sector Classification
Health Care
Development need
The average age of the population of Serbia is 43.5 years. The largest share of the population is the population aged 65 to 69 (7.8%) (1). An increased representation of old, chronically ill and functionally dependent persons is expected in the future. In Serbia, there is a lack of focus on disease prevention and promotion of a healthy life.
Policy priority
The Republic of Serbia adopted the Public Health Strategy 2018–2026. The Strategy's mission is to develop and implement a system of knowledge, skills and activities aimed at improving health, preventing and suppressing diseases, prolonging and improving the quality of life through organized measures of society (6).
Gender inequalities and marginalization issues
Women in Serbia face challenges in accessing healthcare services due to various factors such as geographical location, socioeconomic status, and cultural beliefs. Rural women, women living in poverty, and women from marginalized communities are more likely to experience barriers to healthcare access (5).
Investment opportunities introduction
Total budget expenditure on healthcare during COVID in 2021 was 0.78 billion USD, which is 2.2 times more than in 2019 (12). Planned budget for 2023 is 0.84 billion USD, which shows significant growth but is not enough for further development (17). Policies are focused to the development of health prevention and control, including early detection (6).
Critical bottlenecks introduction
Providing required funding for the healthcare system is a very challenging issue. In 2019, 37.04% of total spending in Healthcare was an out-of-pocket expenditure (11). The sector's overall expenditure in 2021 does not exceed 4.69% of GDP and its general budget barely reaches 4.32% of the state budget, whereby WHO recommends 10% (12, 13, 14).
Biotechnology and Pharmaceuticals
Development need
Serbia ranked first in Europe in mortality from lung cancer (2), while diseases of the heart and blood vessels with a share of 47.3%, in all causes of death, are the leading cause of death in Serbia (15). A potential solution to these diseases can be found in biotechnology (16).
Policy priority
One of the policy priorities is to focus on the development of new and innovative therapies that can effectively treat various diseases, such as cancer, genetic disorders, and infectious diseases. This entails supporting research and development efforts to explore new treatment options and improve existing therapies (6).
Gender inequalities and marginalization issues
About 400,000 farmers in Serbia do not have a health card due to debts to the Pension Fund, which reached 2 billion USD in 2022 (7).
Investment opportunities introduction
The local pharmaceutical industry generated revenue of USD 0.7 billion in 2021, with the total current market being close to USD 1.4 billion. There is potential for further investment in numerous directions, such as drug development, gene therapy, and medical devices (9, 21).
Key bottlenecks introduction
Pharmaceutical companies aim to sell drugs on the market, but researching new drugs is a costly and time-consuming process. Investors seek quick returns on their investments, so any delay in releasing medicines to the Serbian market can be problematic (7).
Biotechnology and Pharmaceuticals
Pipeline Opportunity
Biotechnology Development
Build and operate production plants and laboratories in the relevant areas, such as bio-manufacturing, bioeconomy (biotechnology plus biomanufacturing), clinical trials, personalised medicines (diagnostics and prognostics), artificial intelligence in medical development and health care, and secondary data usage for research and development (R&D) and similar. Biotechnology products can be produced from the areas such as regenerative medicine, cell and gene therapy, advanced healthcare through genome sequencing, rapid and precise development and manufacturing of medicine and vaccines. The business model is based on strong Government cooperation with private sector to create a world-class regulatory environment for development of knowledge-based industries. Serbia changed dozens of laws on various topics, including e-commerce, immigration, intellectual property protection, corporate law and introducing a new law on digital assets. Serbia also introduced a wide range of very generous tax incentives, including so called IP Box, accelerated R&D deduction, lower tax and social contributions for employing repatriates and foreigners, for people employed in R&D and for employing young people, as well as tax credit for investing in a startup, which the private sector can take advantage of.
Business Case
Market Size and Environment
USD 100 million - USD 1 billion
10% - 15%
The CAGR for biotechnology production is approximated on the global level for the period 2022-2030 to 13.9% (24). Its market size in Serbia is approximated to 118-177 million USD based on semi-structured conversations with relevant stakeholders (51).
The World Economic Forum predicts that starting in 2023, the total amount of medical knowledge will double every 73 days and that the global biotechnology market will grow from USD 448 billion in 2019 to USD 833 billion in 2027. Globally, the application of artificial intelligence is predicted for the healthcare services market to reach USD 31.3 billion in 2025 (21).
Indicative Return
> 25%
Approximated ROI for biotechnology development in Serbia is close to 20%, based on semi-structured conversations with relevant stakeholders (51). However, the return profile varies based on technology development, competition, regulatory environment, and company success.
Investment Timeframe
Medium Term (5–10 years)
Based on the approximated ROI, the investment timeframe for biotechnology development is medium-term and approximately five years (51).
Ticket Size
USD 1 million - USD 10 million
Market Risks & Scale Obstacles
Market - Highly Regulated
Capital - CapEx Intensive
Market - High Level of Competition
Market - Intellectual Property Risk
Impact Case
Sustainable Development Need
The healthcare system of Serbia is currently focused on curative medicine, which treats illnesses and diseases after they have already developed, rather than preventive medicine, which aims to prevent illnesses and diseases from developing in the first place (37).
It was identified that refunds made in Serbia are significantly lower concerning the number of innovative pharmaceutical products since 2007 compared to other European countries. As a result, the number of registered medicines on the market in 2013 Serbia was 2,386, of which 347 were generic, and only 28 were innovative (37).
It was identified that refunds made in Serbia are significantly lower concerning the number of innovative pharmaceutical products since 2007 compared to other European countries. As a result, the number of registered medicines on the market in 2013 Serbia was 2,386, of which 347 were generic, and only 28 were innovative (37).
Gender & Marginalisation
Even though publicly provided healthcare services are universally accessible through the system, disparities in primary care access persist. Specific populations, including the uninsured and Roma community, often face challenges in receiving adequate healthcare, especially preventive (22).
Women constitute the majority of employees in the high-risk healthcare sector (77% in 2022), facing the highest risks of infection, challenging working conditions, and extreme workloads (44).
Expected Development Outcome
Biotechnology development supports a shift from the production of pharmacological drugs to biological, cellular, and genetic therapies of personalized medicine; there is room for geneticists, molecular biologists, microbiologists, pharmacists, and academic and scientific institutions to give their total contribution to the global development of advanced therapy medical products (40).
Biotechnology development supports the national program for research and development in public health, which will be defined and adopted, with the cooperation of institutions in the field of education, institutes and institutes for public health, other institutions outside the health care system, and citizens' associations (40).
Biotechnology development leads to high-quality cooperation with relevant international companies, both pharmaceutical and biotechnological, in order for them to develop their new therapies and medical devices from Serbia and enhance job opportunities (40).
It also results in the improvement of cooperation in research work in priority areas of public health between public health institutes, and academic institutions within and outside the health sector (40).
Gender & Marginalisation
Biotechnology development improves the health of Roma men and women with equal access to quality health services and enable the full realization of the right to health, without discrimination, especially in crises, in the healthcare system of the Republic of Serbia (22).
As the majority of employees in the health sector, women can benefit from new employment opportunities within biotechnology development. Better disease treatment reduces the burden on the healthcare system and on women who, due to gender roles, are primarily responsible for caring for sick family members at home.
Primary SDGs addressed
3.c.1 Health worker density and distribution
3.b.2 Total net official development assistance to medical research and basic health sectors
In 2020, about 105,200 health workers were employed in the healthcare system. Therefore, the number of doctors per 100,000 inhabitants in the Republic of Serbia was 291 (52).
In the Republic of Serbia, the total net official development assistance to medical research and the primary health sector was valued at USD 11 million in 2020. Comparing it with 2010, it showed a relative change of +322% (36).
N/A
N/A
9.5.1 Research and development expenditure as a proportion of GDP
9.5.2 Researchers (in full-time equivalent) per million inhabitants
In 2021, total investment in Research and Development in Serbia as a proportion of GDP was 0.99%, with a growth trend from 2013 (35).
In 2021, 120,500 people in the Republic of Serbia were employed in science and technology-sector healthcare, predominantly in and around Belgrade (51%) and Novi Sad (18%). 2,850 of them are used as researchers (34).
N/A
N/A
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Indirectly impacted stakeholders
People
Public sector
Outcome Risks
The risks associated with biotech development can include ethical concerns, potentially harmful effects on the environment, and unforeseen consequences of altering genetic material. In addition, Biotech also carries the risk of creating unintended consequences such as new diseases, resistant pathogens, or environmental harm (50, 51).
Biotech products can have unintended economic impacts, such as reducing demand for traditional products or affecting the livelihoods of people who rely on those products (51).
Impact Risks
Biotechnology R&D uses advanced technology and scientific research, but uncertainties and challenges exist. For example, it may not perform as expected and findings may not be reliable (30), hence limiting its impact.
The lack of diversity in the biotech industry may result in neglecting specific health needs and issues affecting marginalized groups (31).
Impact Classification
What
Biotechnology development positively impacts the overall health of the population, as well as prevention and economic growth, job creation and higher tax revenue.
Risk
While the biotechnology development business model is proven, uncertainties and challenges related to the advanced technology and scientific research as well as a potential neglect of specific health needs require attention.
Impact Thesis
Support development of life-saving drugs and therapies and medical research advancements, as well as create job opportunities and economic growth.
Enabling Environment
Policy Environment
Strategy for the Continuous Improvement of the Health Care Quality and Patient Safety, 2021, indicates the initiative for improvement in inefficient use of health technologies, procurement of medical equipment and further investments (55).
Strategy of Scientific and Technological Development, 2020 ("The Power of Knowledge") establishes a focus on R&D in health to answer to the growing needs of society in the 21st century (54).
National Assembly, 2022, Program of the Government of the Republic of Serbia candidate for Prime Minister Ana Brnabić, indicates significant future investments in science, research and development, biotechnology, clinical trials, and innovative medicines (40).
Strategy for the development of Artificial Intelligence in Serbia for the Period 2022-2025, Official Gazette No. 96/2019 from the 31 December, 2019. The strategy sets the goals for the development of Artificial Intelligence which implementation should result in economic growth, improvement of public services, improvement of scientific personnel skills and development of skills for the jobs of the future. Also, the strategy for the implementation of measures should ensure that artificial intelligence in the Republic of Serbia is developed and applied in a safe manner and in accordance with internationally recognized ethical principles in order to use the potential of this technology to improve the quality of life of each individual and society as a whole, as well as to achieve the Sustainable Development Goals. (56)
Financial Environment
Financial incentives: There are numerous available grants for R&D projects in biotechnology and gene therapy and potential for gene therapies to be added on RFZO List of Medicines. Over 63.8 milliob USD have been invested in innovative activities by the Serbia Innovation Fund in last 11 years (45, 46).
Fiscal incentives: Serbia offers various tax incentives, including R&D deduction, IP Box regime, and Tax Credits for newly founded innovation companies, which are not limited to the IT sector and can benefit biotechnology development (47).
Other incentives: R&D companies are exempted from the obligation to pay 70% of the income tax of persons who are directly engaged in research and development activities as well as recognition of research and development costs in a double amount in the tax balance (48).
Regulatory Environment
The Law on Medicines, 2017, prohibits the sale of any pharmaceuticals, including OTC, outside the pharmacies. Customs-free access to markets such as Russia, former Yugoslav countries, and the EU provides many opportunities for both medicines and medical devices (53).
The Law on the prevention and diagnosis of genetic diseases, genetically conditioned anomalies and rare diseases, 2017.
Marketplace Participants
Private Sector
Vincula Biotech Group, BioTechnology, Genetics d.o.o., Life Biotech.
Government
Ministry of Health, Ministry of Science, Technological Development and Innovation, Office for Information Technologies and Electronic Administration, various public healthcare providers, National Health Care Fund.
Multilaterals
World Health Organisation (WHO), WSA, United Nations Development Programme (UNDP), World Bank.
Non-Profit
USAID, Medicines Optimisation Working Group (MOWG), Doctors Without Borders, National Institutes of Health, National Alliance for Local Economic Development (NALED).
Target Locations
Serbia: Belgrade Region
Serbia: Vojvodina Autonomous Province
References
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