Do we know and harness the innovation potential of smaller Danish biotech companies?

Danish life science is doing very well. According to an analysis by the Ministry of Industry, Business and Financial Affairs (the economic footprint of the life science industry, published in March 2025), Danish life science companies within pharmaceuticals and biotechnology had a total turnover of DKK 289 billion in 2022, with exports from Denmark exceeding DKK 150 billion. On top of that comes the export from companies’ production abroad.

Since Leo Pharma, Lundbeck, and Novo Nordisk (according to their annual reports) had a combined turnover of over DKK 200 billion in 2022, it must be assumed that these three companies accounted for the majority of the total turnover and export in pharmaceuticals and biotechnology. The credit for the success of Danish life science—measured by turnover and exports—can thus largely be attributed to just three companies.

But what about the other Danish life science companies—do we know their potential, and are we good enough at utilizing it?

According to the analysis from the Ministry, there were a total of 815 companies within pharmaceuticals and biotechnology in 2022, of which only 13 had more than 250 full-time employees. In fact, about 75% of the companies had fewer than 10 employees.

The point is that the majority of Danish life science companies within pharmaceuticals and biotechnology are small businesses that currently do not significantly contribute to total turnover or Danish exports. But these companies possess an innovation potential that is hard to quantify.

The Ministry’s report highlights that Denmark had 44 viable life science start-ups per million inhabitants between 2015 and 2020 (with viability defined as having reached Series B funding or existing for more than three years). This figure might serve as a comparison with other countries, but it does not necessarily say much about the overall health or societal value of the undergrowth of smaller Danish biotech companies.

Another success criterion, beyond viability, is whether start-up companies succeed in being acquired or going public, which in a U.S. survey happened to 13% and 10% respectively of life science spin-outs from American universities. Given the current climate for IPOs in Denmark, the latter criterion is not particularly useful, and acquisitions can result in a loss of knowledge and innovation to foreign companies.

So how can we assess the innovation potential—and thus the societal value—of the many small Danish biotech companies?

Venture capital invested may reflect investors’ belief in return on investment and willingness to take risks more than it reflects a company’s innovation potential.

The number of patents and/or clinical trials may indicate research and development activity, but not necessarily value-creating activity.

And employment figures or personal tax contributions from the many small companies in pharmaceuticals and biotech probably say little about their innovation potential.

The battle to attract development capital is often a process of elimination, and many smaller Danish biotech companies are at risk of being left behind despite having high innovation potential. We have a solid foundation in Denmark with a life science acceleration and incubation environment focused on nurturing and fostering new start-ups—but perhaps we should also focus more on harnessing the value of already established companies.

Inspired by SPRIN-D (The Federal Agency for Disruptive Innovation) in Germany, one could envision a supplement to the Independent Research Fund Denmark, focused on original ideas and initiatives in Danish biotech companies—especially in areas that do not fit the traditional valuation and venture capital model.

Of course, this would come with high demands on companies’ capacity for innovation—but it could introduce alternative parameters and criteria for business success and create more opportunities for truly exceptional ideas and projects at risk of being shut down or overlooked by established systems. And perhaps that is what it takes to create new growth stories on par with Novo Nordisk.