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Skills3 workshop report Thinking in scenarios: The future of Life Sciences in the Euregio and the impact on the labour market June 9, 2011 | 08.00 – 19.00 hrs | Maastricht On the 9th of June, an enthusiast team of life sciences experts, invited by Skills³, came together to think about the future of Life Sciences in the Euregio and the impact on the labour market. For this exercise we asked HIT Foundation, innovation platform for labour and migration, to take the lead. Scenario planning expert Kees van der Heijden (Shell and Strathclyde University) acted as a guest lecturer. This report presents the four scenarios constructed by the four scenario teams during the workshop. The question is, are you prepared if either one of these scenarios becomes reality?

Using the Nightingale axes as a jump start Going through a full scenario planning process requires at least three days. Therefore we decided to make use of the Nightingale scenarios (an elaborated exercise held to get a grip on the future labour market) to determine the key uncertainties on which to build the life sciences scenarios. First key uncertainty is the question whether we continue to operate as separate nations or if we are heading for a unified Europe. Secondly we questioned whether we will find alignment in the life sciences activities or if we remain fragmented. The picture beneath shows the two axes and the four quadrants formed. Each quadrant is the start for building a scenario.

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LITTLE KINGDOM In Little Kingdom European borders remain formidable barriers and national protectionism increases. Countries defend their own economy, labour markets and knowledge base. The focus is internal. In 2012, the financial system experiences another collapse due to national debt failure. The EU loses its credibility and becomes largely ineffective, both at the economic and political levels. As a result national protectionism accelerates. Due to the failure of the economy a scarcity of resources is experienced at all levels: funding (private & public) is in short supply, and so is talent and knowledge. Innovation stagnates for a number of years and then recovers somewhat, but on a smaller scale. International competition is severe. Countries try to shift problems to their neighbours as much as they can. Little Kingdom evolves into a “survival of the fittest” approach to the economy. A multitude of new regulatory bodies and regulations mushroom in the various countries in Europe. This makes cross-border trade increasingly difficult. A salutary effect is that it is now easier to get approval of new medical entities. In 2020 Little Kingdom has developed an economy based on SME‟s with smaller manufacturing facilities. In the biomedical and biotechnical industry SME‟s produce local products for local markets. Nations defend their own economy and labour markets from extraneous influences and national societies become increasingly mono-cultural. This provides a platform for small-scale collaboration on a local basis (same language, same culture). A local focus and smaller scale decreases transportation costs and environmental impact. Closed borders lead to a reduction in exchange of talent. Home-grown top-talent see their opportunities for selfdevelopment reduce significantly. Many decide to migrate to more interesting research opportunities beyond Europe. A new brain drain sets in. On the other hand top-talent from other countries are hard to attract. The European knowledge base is under pressure. Skilled technicians find employment in local SME‟s. But lower skilled workers find it difficult to find employment in the lifetec sector. Many have to find work in other industries. The new brain drain adversely affects the quality of education, and education degrees become more mediocre. All this leads to a decrease of quality of the European life science and health care professionals. The downward spiral is felt across the continent. The new national fragmentation makes it difficult to check and reverse this trend.

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COCOON In Cocoon the European community takes responsibility: it decides to act. This leads to opening up of the entire European market to the forces of competition, a strongly imposed level playing field based on centrally coordinated regulatory bodies and EU funding, fierce competition and a “winner takes all” approach. Collaboration is suspect and frowned upon. However, in the long run competition-based fragmentation cannot survive, and at the end of the scenario cross industry cooperation inevitably returns. Europe is starting to realise that its lifetec industry is falling behind in the worldwide competition with the new players from the fast-developing BRIC countries. The solution to the problem is sought in freeing up the forces of competition in what is after all a very large European market. A level playing field is imposed across the continent. Winners and losers become visible. The Cocoon Europe scenario remains profitable for the most efficient players as long as it is market driven. The less effective companies are allowed to fail and disappear or are taken over. Profitability within successful companies initially allows investment in talent and products. Three mega-trends develop over the scenario period:  The open EU-market puts a lot of pressure on EUcompetitors. Competition rises, leading to exits, as many companies will not be able to survive.  Blockbuster patens will expire in 2 years time, so the intellectual property (IP) value decreases and so does the value of the life science companies. As a consequence, sales will drop, creating an urgent need to look for new products and markets.  A shakeout takes place in the industry. Some wellknown major pharma companies who are not successful in renewing their IP will be downsizing. Many small idea-driven biotec companies will grow. But protection of IP rights against the onslaught of the Indian and Chinese industry is a major issue. Near the end of the scenario period the merits and demerits of the free-market approach are becoming clear. While overall the effectiveness and short-term profitability of the industry has improved, the situation around long term development based on investments in very long life cycle product innovation is less favourable. Open borders and the integrated European market create more innovation, mergers & acquisitions, but also drive home the need for collaboration and the sharing of intellectual property across sectors and industries. Reform and alignment become a must to survive in this region.

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GALAPAGOS Galapagos, a cutting edge, self-supporting island; isolated, but a safe place, as long as invaders are kept at a distance. The world of Galapagos is predictable. People have learned how the lifetec industry works. They are moving from one success to another confirming the feeling that “we are on top of it“. Because of this risks are perceived as relatively low and manageable. This is attractive to investors. In Galapagos there is an abundance of funding and entrepreneurial spirit. Governments see a key role for themselves in steering the industry towards areas of high potential. They believe they will recognise good ideas when they see them and are willing to reinforce these beliefs by supporting appropriate initiatives that emerge from the bottom-up, if necessary financially. In this way entrepreneurs are stimulated to innovate. Over time a self-fulfilling prophecy is gradually created, which creates companies, ideas and new products that are considered “excellent“ all round, feeding the image of success of the industry. This in turn will increase the availability of funding. With increasing belief within the industry that “we know how this works” companies are increasingly involved in determining and providing appropriate education for the next generation of workers and entrepreneurs. Students will be well equipped for the predictable market place on the „island‟. Graduates stay in the region because of good job opportunities. This creates specialised professionals with lots of creativity and intellectual freedom. Unemployment will be low. Government plays a key role in all of this by confirming and reinforcing the “mental models” in the industry. But with the increasing perception of “excellent corporate performance” the need for explicit EU-wide regulation becomes less urgent. Instead the government are involved with the industry in “picking winners” that will create the future excellent performers. There will be a whole new lifetec environment for labs, manufacturing, distribution and marketing; a wonderful place to live and work in the life sciences industry. However, if a nasty invader strikes – a germ the industry is not resistant to – this scenario will become a disaster. The rigid “predict and control” microclimate where everything is set in stone will be easily disturbed, leading to dislocation, protectionism and closing of borders. The house of cards will collapse into a scene of fragmentation where individual players will be fighting it out for survival. People will flee or be kicked out. Meanwhile evolutionary more robust actors from other regions in the world will be ready to step in and divide the spoils. A disaster waiting to happen?

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SWARM In Swarm we have moved to an open innovation system. Faster innovation is based on speed and collaboration within an attractive life science cluster. The region where this takes place is attractive, visible and competitive, both for business and as a place to live. The Swarm approach to the lifetec business is based on mobility, fast and effective communication and decisionmaking, an attractive education offer for professionals, transparent and accessible labour markets, simple and easily accessible legislation and stimulation of innovation and entrepreneurship, including access to cross-border funding. The system is characterized by confidence in the future, based on mental energy and never-ending curiosity. Sharing knowledge is a key driving force in this scenario, between education centres and companies, between industries and across borders. The swarm goes out, discusses, interacts and collaborates. Students and entrepreneurs feed on each other, leading to new start-ups. Others find work in existing companies. Both large and small companies have a multicultural workforce. In this fast society, continuous learning is even more important than it is today. The successful industry experiences a shortage of local labour. Consequently HR needs to focus on retention and importing labour from other areas, requiring new media and new recruitment methods. The Swarm way of life proves a robust system that can stand up to considerable outside pressure. Important is that it is an open system that evolves with the changing state of its environment. In this process there is no one in charge, the system adjusts itself in a self-reinforcing way. An example is the way in which the ownership of IP is arranged and protected. As an open system the Swarm has felt the pressure of lack of control in the external world. In response it has redefined the European Patent Office remit and this organisation has now become a key ingredient in the protection of IP rights. The European manufacturing system continues to feel the pressure of the relatively high standard of living in this part of the world. Under this competitive pressure individual productivity has been a focus of attention for the innovative powers of the Swarm. As part of this process activities have been interchanged with other parts of the world, and the Swarm, as an open system, does not consider this particularly problematic. What continues in Europe is those activities where the continent has specific distinctive competencies. At the end of the scenario period people have come to realise that the secret of success of the Swarm has been its ability to balance forces of design and control with the free and open forces of competition between individual players. This has been a balancing act between the extremes of unfettered competition, with all attention focused on the short-term, and a centrally controlled system in which people follow centrally designed instructions. The reason the Swarm has been able to stay away from these dangers must be ascribed to the free reign given by the Swarm to the “wisdom of the crowd�.

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Impact on the labour market What do these scenarios implicate for the labour market in life sciences? A brief summary of what the scenario teams came up with in a 15 minute brainstorm.

LITTLE KINGDOM In a closed economy with closed boundaries, closed education and so on: 1. Real top-talent is hard to gain (from other countries); own grown top-talent is hard to retain (they flee abroad to follow their scientific drive) 2. Highly technical skilled profiles find employed in high level SME‟s; but profiles narrow due to limited markets and demand 3. Low skilled professionals are unemployment. Some can upgrade to lower lab technicians, maintenance and so on, but many will have to move to other industries. 4. More entrepreneurs who will produce for local products and markets 5. Limited education offer will lead to a decrease in the quality of education and undermines the quality of health care professionals.

COCOON Good times for HR and good times for employers and employees. 1. Flexibility as a prerequisite for employment; people will work in “ventures” (versus in companies); in the long run there will also be collaboration between companies and knowledge institutes 2. People will be working in different locations, requiring creativity both from employers and employees. 3. Some things will have to change and need work a. Cross border legislation (good regulation is still lacking, we have to make an agenda) b. Re-discuss with government the extra-legal advantage (for those who are flexible). As employers we have to make sure to validate the concept of the independent expert; bring in knowledge and expertise to our companies for the time and expertise that is needed.

GALAPAGOS Living on the island. We still have a nation, the national borders remain intact, there is a closed market. 1. No brain drain: the industry trains students and gives them the package they need to be successful 2. Creates specialised people with a lot of creativity and intellectual freedom, both for students and employees 3. Unemployment is very low

SWARM 1. The labour market becomes more international. Companies (not only big pharmaceuticals, but als SME‟s) will have a lot more nationalities. This requires new ways of recruitment, using new media, the local newspaper no longer works 2. Fast innovation increases the need for continuous learning; this becomes even more important than it is today 3. Lack of local labour resources. Requires new strategies for the import of labour and new retention plans.

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Thinking in scenarios: The future of Life Sciences in the Euregio  
Thinking in scenarios: The future of Life Sciences in the Euregio  

On the 9th of June, an enthusiast team of life sciences experts, invited by Skills³, came together to think about the future of Life Science...