Science & Technology in Denmark - April 2005

1.1 DENMARK'S INTERNATIONAL POSITION
1.2 SOME GENERAL CHARACTERISTICS
1.3 KEY SECTORS

• Life sciences
• Nanotech
• ICT (particularly wireless and photonics)
• Sustainable energy (particularly hydrogen and wind energy)
• Food research (functional and organic food)

2.1) GOVERNMENT'S COMMITMENT
2.2) SOLID RESEARCH AND TECHNOLOGY INFRASTRUCTURE
2.3) GOOD CONDITIONS TO START UP NEW FIRMS

3.1) LIMITED PUBLIC AND PRIVATE COLLABORATION
3.2) RELATIVELY MODEST R&D INVESTMENT
3.3) HUMAN RESOURCES / EDUCATION SYSTEM
3.4) FINANCING

4.1) AREAS OF POTENTIAL COLLABORATION
4.2) EXAMPLES OF EXISTING OR RECENT DANISH-CANADIAN COLLABORATION

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1. Overview

1.1) Denmark's international position

Denmark has the potential to do well in global knowledge economy. Indeed, in terms of research, education, innovation and IT development Denmark measures up to the best countries in the OEDC. Furthermore, with state-of-the-art research platforms, Denmark has gained international stature in niche areas and has an S&T system integrating within regional (Nordics) and European networks.

The Global Competitiveness Report, an annual study undertaken by the World Economic Forum, ranked Denmark fifth on the overall 102 countries analysed according to their capacity to take advantage of information and communication technology networks for the year 2004-2005. In another study, the IMD World Competitiveness Yearbook 2004 which features sixty national and regional economies and examines 323 different criteria grouped by four competitiveness factors: economic performance, government efficiency, business efficiency and infrastructure, Denmark ranked second in Europe and seventh in global competitiveness.

In terms of R&D spending, although above the EU average, Denmark ranks behind Finland, Iceland and Sweden within the Nordic region, with approximately 2.5 per cent of GDP spent on R&D and the goal to reach 3 per cent by 2010 (Canada: 1.85 per cent in 2003).

1.2) Some general characteristics

Denmark, physically the smallest of the Scandinavian countries (when excluding Greenland and the Faroe Islands), occupies a peninsula north of Germany that is bordered by the Baltic and North Seas. With a population of 5.4 million and an annual per-capita incomes approaching $43,000, the Danes enjoy one of the highest standards of living in the world. Although member of the European Community since 1973 and adhering to most EU economic policies, Denmark decided to not participate in the single currency market.

For the 1993-2003 period, with a GDP growth of 2.5 per cent, Denmark was just above the EU15 (2.1 per cent). Forecasts expect a growth of 2.5% for 2005.

By international standards, Denmark is a country of small and medium sized enterprises (SMEs) with only a few large firms. The specialization pattern is dominated, with a couple of notable exceptions (bio-pharma, ICT, and energy) by sectors with low or medium R&D intensity - a situation very much comparable to Canada. In fact, many innovations take the form of incremental change in products and processes, and are not necessarily the result from R&D.

1.3) Key sectors

Denmark has a strong presence in both trade and research aspects of different sectors. However, significant industrial power and investment by organisations in the following sectors help Denmark maintain a strong competitive advantage.

Life sciences

Life science research and development is a thriving sector of the Danish S&T framework as 30 per cent of the country's patent activity come from this business area. Medicon Valley which covers the region of Copenhagen on the Danish side and Skåne on the Swedish side is a major centre for biotechnological and pharmaceutical activities, and considered the third largest biotech cluster in Europe featuring cross-border partnerships between industry, universities, hospitals and investors. Stem cells and system biotechnology are two specific fields where Denmark plays a leading role in research and development. Strong holds also exist in diabetes, immunology, neurosciences, and Cancer research.

Nanotech

Danish research in nanotechnology has developed rapidly in recent years, many projects originating in physic and chemistry laboratories of universities and sector research institutions, such as the national research centre for advanced microtechnologies (MIC) at DTU, the Nano-Science Centre, at Copenhagen U, and the Interdisciplinary Nanoscience Centre at the University of Aarhus, coupled with a cluster of companies related primarily to the optical of health area. Denmark has been one of the first European countries to invest unequivocally in nano science and its technological applications.

ICT (particularly wireless and photonics)

Denmark's strength in the ICT industry is based on a natural ability to make technology and content blend seamlessly together. Among the areas where Denmark offers a strong international position in the ICT sector, one counts the wireless and photonic sectors. Two clusters, one centered around Aalborg in northern Jutland and another in the Øresund region, regroup most companies and service partners of the Danish ICT industry.

Sustainable energy (particularly hydrogen and wind energy)

Denmark leads the way in the wind energy industry. With a combined turnover of 3 billion Euro for the manufacturers, and companies with a 40 per cent share of the world market, Denmark plays a central role in the development of the wind energy industry. Apart from its established successes in wind energy, Denmark has also strong research activities in future technologies such as hydrogen and fuel cell, with leading edge research programs at Risø and the Danish Technical University (DTU).

Food research (functional and organic food)

The Danish agri-food and fisheries industries constitute the country's largest export groups. Denmark is a net exporter of food and has one of the world's most-advanced food processing sectors. Changes in demographics and consumer preferences for healthier and higher-quality food progressively transform the Danish food market. Increased health awareness is reflected in new preferences for functional, low-fat and organic foods. The demand for convenient, high-energy beverages and snacks is also growing.

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2. Key strengths

2.1) Government's commitment

Through recent years, perhaps inspired by policy moves in close neighbouring countries, the Danish Government has engaged itself more significantly in the S&T sector.

To begin with, Denmark has increased the autonomy of universities and removed obstacles to their co-operation with industry. Legislations have also been implemented to facilitate technology transfer to industry and make innovation an explicit mission of universities.

Many reforms and reorganization of the S&T system have been initiated to strengthen Denmark's position as a leading knowledge society. Those go along with the Government's whitepaper "Knowledge in Growth" submitted in January 2003.

More investment in R&D has also been deployed. In early 2004, the government set-up a $ 3.6 billion fund over eight years, to be invested in Biotech, Nanotech and ICT R&D. The new government agenda released on 18 February 2005, "A New Goal", also puts research and innovation in the very top priority of the government. Accordingly, $ 2.2 billion of additional incremental public money will be injected in Denmark's innovation system over the next five years.

2.2) Solid research and technology infrastructure

Denmark features a solid research and technology infrastructure base, especially in the close-to-commercial applications. With state-of-the-art research platforms, such as DTU Bio-Centrum in bio-informatics, and flag institutions such as Medicon Valley, Denmark have gained a strong presence in various niche sectors.

One of the striking elements of the S&T environment in the integrating Øresund region is the science parks. They should, in fact, really be called "innovation parks" as they provide the whole range of services along the innovation spectrum, from the identification and qualification of commercially viable research ideas, incubation of start-up companies, entrepreneurship support, mentoring, financing, branding, and marketing, up to the stages of significant business growth. Similar S&T environment models are used across all Scandinavia.

Eight incubators, all of which are located inside Science Parks, play a crucial part in the Danish innovation system. The incubators, distributed regionally, work in close co-operation with universities or science/research parks, and support the development of innovative ideas. They transform innovative ideas into commercial projects by acting as a link between the research environment and the venture capital funds.

A list of Danish research and innovation organisations including the different science parks, universities, research institutions and state-authorized research and technology contract organisations (GTS- Advanced Technology Group) can be found in Appendix 1.

2.3) Good conditions to start up new firms

As for providing early stage venture capital, Denmark is doing quite well. Not only is Denmark placed above the EU-average; it also appears that Denmark is moving ahead. Two group of publicly funded organisations, the Growth Fund (VækstFonden) - one of he largest VC players -, and regional Technology Incubators (Innovation miljø) have greatly contributed to this development.

Furthermore, according to Christensen et al (2005) the barriers to start up new firms in Denmark are lower than in almost all other countries. However, using the TEA-index (Total Entrepreneurial Activity Index) as indicator, Denmark ranks low compared to other European countries. The high level of personal income taxation might partly explain the low level of entrepreneurship.

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3. Future challenges

3.1) Limited public and private collaboration

As previously mentioned, Denmark is characterised by a large number of small and medium-sized companies. In such a S&T framework, it is crucial that SMEs get access to knowledge from knowledge institutions. However, recent reports show that interaction between business sector and the knowledge institutions, e.g. universities, public sector research institutions and technological service institutes, is less developed in Denmark than in many other national systems of innovation. This was for instance documented in a recent study in which Danish innovation and innovation policy was benchmarked against other OECD countries.

The Government is committed to find out ways to improve the interaction between knowledge institutions, trade and business. In line with this objective, the Danish Government launched in 2003 a strategy through which it provides 150 per cent reduction for University-Industry collaborative projects and funds high-tech networks or clusters in order to encourage more collaboration. Other initiatives have been put forward to make it more attractive for both knowledge institutions and the business and industry sector to meet and collaborate.

3.2) Relatively modest R&D investment

Danish total R&D spending relative to GDP (GERD) has developed significantly over the past recent years. The percentage of GDP spent on R&D passed from 2.27 per cent in 1999 to 2.52 per cent in 2002 (equivalent to $ 7.43 billion). For the same period, the percentage of GDP spent on R&D for the EU-15 went from 1.95 to 1.99 per cent. Denmark thus ranks above the EU-15 but is still below country neighbours such as Finland and Sweden which clearly outstrip Denmark with higher figures throughout the same period and higher rates of growth.

One sees the same picture when looking at the proportion of R&D staff of the total labour force. Denmark with 1.24 per cent is just a little above the EU average on 0.99 per cent but behind Sweden (1.52 per cent) and Finland (2.02 per cent).

On the private side, Danish firms spend less on research than the European average. This may be explained by the small number of big international companies having R&D departments. In the private sector, the Danish system of innovation is characterized by many small and medium sized enterprises (SMEs) which do not have the necessary competencies for performing R&D. Innovation, source of Denmark current competitiveness occurs often incrementally without R&D. Rather flat Danish organizational structures facilitate this process. Naturally, there are significant exceptions from this general picture such as the ICT/telecommunication sectors, food industry and pharmaceutical industry.

A challenge for Denmark for the next years will thus be to increase its total R&D spending in order to meet the Barcelona criterion (3 per cent of GDP by 2010). Most experts believe that with the current R&D push and public policies, this goal will be achieved.

3.3) Human resources / Education system

Another challenge for Denmark is to strengthen the quality and coherence in the educational system, including long life learning, and the interaction between users, recruiters and stakeholders. The content and structure of the education system must more than ever reflect the knowledge society's wide needs for competencies. Unfortunately, different research such as the PISA study (Program for International Student Assessment) has outlined a gap between the market's demand and the supply of highly qualified people. In response to lousy results, the Danish Government has set objectives to review the education system in order to strengthen the quality and economic relevance of the curriculum from low skilled to university graduates, and to improve opportunities for those holding the lowest levels of education.

Denmark spends a high proportion of GDP on education, but the performance of the education system falls behind. Furthermore, the enrolment rate in higher education is relatively low. Although the enrolment rate for the 18-24 age cohorts on higher education is increasing, it is still relatively low when compared with other countries. Many students drop out from university educations. From an international point of view, the drop-out figures for several Danish university educations are high.

Finally, as many other countries, Denmark has to deal with an increasingly ageing population. The low participation rates of workers without professional training and the even lower participation rates for workers with a non-Danish background pose a real dilemma for the future development of the Danish economy and innovation. Consequently, initiatives need to be taken to avoid an eventual short-cut of labour associated with a rapidly ageing population.

3.4) Financing

While the venture capital in Denmark has matured and strengthened, the development of venture capital and public incentives to increase the supply of risk capital still count among the four key issues of current interest in the government's policies.

The Incubators thus play an important role in providing support in the very early stages of new business development where traditional venture capital is limited.

In their analysis of the Danish Innovation System, Christensen et al. (2005) maintains that the access to innovation financing is gradually getting better and slowly reaching the world top three. However, when using averages over a period to get valid data, Danish venture capital market is apparently not as developed as it is in many other European countries.

Business angels exist in Denmark and are willing to invest. However, it seems that the lack of linkages between potential investors and firms seeking finance has limited their use.

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4. Collaborative opportunities

Danes have a strong tradition of international trade and collaboration, and, like Canada, need to find international partners for reaching critical mass in research and for developing global business linkages for their industry.

4.1) Areas of potential collaboration

• Life sciences
• Nanotech
• ICT
• Sustainable energy (wind, hydrogen, bio-fuels, energy efficiency)
• Food research/functional food

4.2) Examples of existing or recent Danish-Canadian collaboration

• Genome Canada and the Danish Government extended their 2002 Memorandum of Understanding (MOU) at a first bi-national Genomic seminar in Copenhagen in May 2005 in order to support a series of initiatives designed to increase scientific and industrial exchanges in the field of Genomics. Industrial enzymes (the two key players, Novozyme and Danisco, hold 60% of the global market), nutrigenomics, neurosciences, cancer, diabetes, and bio-informatics platform collaboration appear to be the most promising areas there;
• The NRC's Industrial Research Assistance Program (IRAP) has also been working with success over the past two years on a project aiming at matching technology interests of Canadian companies with counterparts located on Danish sciences parks. This pilot project is now extended to the other nordic countries;
• Sustainable energy, especially the areas of fuel cells research and wind energy provides complementary expertise. Significant joint interest exists and several joint projects are under development;
• Fresh Water Fish farming is an area where Denmark leads commercially and technologically, and where Canada looks for technology solutions in dealing with nutrition and waste and farm management. Two Canadian technology missions to Denmark took place in 2003.
• Atomistix is a company jointly founded in October 2003 by two McGill researchers and the Copenhagen University nanoscience group. It is currently engaged in the development of leading edge modeling tools for nanotechnology devices.

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Bibliography

Christensen, Jesper Lindgaard et al., The Danish Innovation System, Department of Business Studies, Aalborg University, Denmark, February 2005

Denmark's Official Website
www.denmark.dk

European Commission, European Trend Chart on Innovation - Annual InnovationPolicy Report for Denmark, September 2003- August 2004

Fora, Benchmarking Innovation Policy and Innovation Framework Conditions, January 2004, Ministry of Economics and Business Affairs, Centre for Economic and Business Research

Invest in Denmark
www.investindk.com

Luscombe-Thomsen, Bernadette, Agri-food Sector Profile- Denmark, The Canadian Trade Commissioner Service, May 2004

OECD in Figures, Statistics on the member countries, 2004 Edition, www.oecd.com

OECD Science, Technology and industry outlook 2004, Country response to policy questionnaire - Denmark

Nordic International (London), Working Paper Commissioned by Canadian Embassy in Denmark: "Science and technology in the Nordics"

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Appendix 1: Danish S&T organizations

Department and Agencies

The Ministry of Science, Technology and Innovation
The Danish Research Agency
The National Research Foundation

Universities (including many academic institutes)

University of Aalborg
University of Aarhus
The Danish University of Pharmaceutical Sciences
The Danish University of Education
Technical University of Denmark (DTU)
The Royal Veterinary and Agricultural University (KVL)
Copenhagen Business School
IT University of Copenhagen
University of Copenhagen
Roskilde University
University of Southern Denmark

Sector research

Sector research comprises different public research institutions, placed under nine ministries. The institutions participate in national and international research programmes and carry out research for funds from research councils, foundations and others. In addition, they may accept payment to undertake research, development and advisory assignments for public and private customers.

National Survey and Cadastre
Danish Institute of Border Region Studies
Danish Building and Urban Research
Institute of Local Government Studies
National Institute of Occupational Health
Centre for Regional Tourism Research
Institute for Studies in Research
Centre for International Studies and Human Rights
Centre for Language Technology
Danish Institute for Fisheries Research
Institute for Food and Veterinarian Research
Danish Centre for Agricultural Sciences
Danish Meteorological Institute
National Environmental Research Institute
Geological Survey of Denmark and Greenland
Danish Bilharziasis Laboratory
Danish Polar Centre
Danish Astronautical Society
Risø National Laboratory
The Armed Forces Research Institute (DK)
The Foodstuffs Agency (DK)
Danish Research Institute of Food Economics
Danish Institute of Health Services Research
The John F. Kennedy Institute
Danish National Institute of Social Research
National Institute of Public Health
National Serum Institute (DK)
Danish Pest Infestation Laboratory
National Veterinary Institute of Virus Research
Danish Space Research Institute

GTS- Advanced Technology Group (www.atg.dk)

GTS- Advanced Technology Group is a grouping of eight state-authorized research and technology consultancy organisations, which develop and sell state-of-the-art technological services to private enterprises and public authorities.

Bioneer
Danish Fundamental Metrology
Danish Institute of Fire and Security Technology
Danish Standards Association
Danish Technological Institute
DELTA Danish Electronics, Light & Acoustics
DHI Water and Environment
DTC - Danish Toxicology Centre
FORCE Technology

Science Parks / Innovation Environments

Scion-DTU (Horsholm and Lyngby)
CAT-Symbion (Copenhagen)
NOVI (Aalborg)
SydDansk (in Odense, Esbjerg, Sonderborg)
OstJysk (Aarhus)
HIH (Herning)

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Key contacts

Canadian Embassy in Copenhagen
Kr. Bernikowsgade 1, DK-1105
Copenhagen, Denmark
Tel.: + 45.33.48.32.00
Fax.: +45.33.48.32.20
www.canada.dk

Danish Trade Commission,
151 Bloor Street West, Suite 310
Toronto, Ontario M5S 1S4
Tel. (416) 962-5661 / Fax. (416) 962-3668
E-mail: denmark@tradecomm.com
www.eksportraadet.dk

Délégation Commerciale du Danemark
1010 Rue Sherbrooke Ouest, Bureau 2211
Montréal, Que. H3A 2R7
Tel. (514) 499-2099 / Fax (514) 499-0767
E-mail: Dtcmont@dtcmontreal.ca
www.eksportraadet.dk

Department of International Trade
125 Sussex Drive
Ottawa, On
K1A OG2, Canada
1-800-267-8376 (toll-free in Canada)
(613) 944-4000 (in the National Capital Region and outside Canada) www.itcan-cican.gc.ca

Industry Canada
Enquiry Services
Communications and Marketing Branch
Second Floor, West Tower
C.D. Howe Building
235 Queen Street
Ottawa, Ontario
K1A OH5, Canada
Tel.: (613) 947-7466
Fax.: (613) 954-6436
http://www.ic.gc.ca

National Research Council Canada
NRC Corporate Communications
1200 Montreal Road, Bldg, M-58
Ottawa, Ontario
Canada, K1A 0R6
Tel.: (613) 993-9101 or toll-free 1-877-672-2672
TTY number: (613) 952-9907
E-mail: info@nrc-cnrc.gc.ca
http://www.nrc-cnrc.gc.ca

The Industrial Research Assistance Program
Building M55, Montreal Road
Ottawa, Ontario
K1A OR6
Phone: (613) 993-5326
Fax: (613) 952-1086
Public Inquiries e-mail: publicinquiries.irap-pari@nrc-cnrc.gc.ca
http://irap-pari.nrc-cnrc.gc.ca