Basel: Life Sciences als Finanzpfeiler

Life Sciences als Finanzpfeiler – ein Teil des Buches «Basel als internationaler Finanzplatz» von Dr. Alexander Ressos.

Life Sciences as a Financial Pillar

Part G turns from the international institutions of Basel to the industry that pays for much of the city's prosperity. Basel is a financial centre in more than one sense. Its banks, its insurers and the Bank for International Settlements form the visible financial institutions, yet the largest flows of money that pass through the city are generated by the pharmaceutical and life sciences groups whose headquarters stand on both banks of the Rhine. Their profits fund a large share of the tax revenue of Basel-Stadt, while their exports make up a substantial part of the Swiss trade surplus and their wage bill sustains the regional labour market. Their shares, together with those of Nestlé, carry a heavy weight in the Swiss Market Index. Every Swiss pension fund, every Swiss equity fund and most private banking portfolios with Swiss equities therefore hold Roche and Novartis, whose dividends form one of the most reliable income streams of Swiss institutional investors.¹

The life sciences are therefore a financial pillar of Basel in a literal sense. They support the public finances of the canton, the balance sheets of the banks that serve them and the employees who live in the region while shaping the capital markets in which the pension funds invest the savings of the Swiss population. The relationship works in both directions. The industry depends on a tax regime that the canton designs with its needs in mind, on a university and research institutes that the public finances, on banks and capital markets that supply finance and on a legal system that protects its intellectual property. Part D has described how the dye makers of the nineteenth century became the pharmaceutical groups of the twentieth.² Part G examines what these groups are today and how they interact with the financial centre.

The five chapters of Part G follow this relationship from several angles. Chapter I describes the industrial base: the large groups Roche, Novartis, Syngenta and Lonza, the second tier of listed companies and the research institutions around them, as well as the Schweizerhalle disaster of 1986, whose consequences for regulation and liability still shape the industry. Chapter II examines the corporate finance of the pharmaceutical groups, from their bond issues and share buybacks to their mergers, spin-offs and treasury operations. Chapter III turns to taxation, from the cantonal holding and mixed company privileges to the Federal Act on Tax Reform and AHV Financing and the implementation of the OECD minimum tax. Chapter IV examines intellectual property, licensing and the financing of biotechnology start-ups. Chapter V concludes with compliance: anti-bribery rules, sanctions and export control as they apply to globally active life sciences groups.

Notes

On the weight of Roche, Novartis and Nestlé in the SMI and on the capping rule introduced by SIX for the index, see the SIX index rulebook and factsheets for the SMI. Figures to be verified. ↩
See Part D, Chapter II, on the history of Ciba, Geigy, Sandoz and Roche from the dye industry to pharmaceuticals. ↩

About the book

This part belongs to Basel as an International Financial Centre by Dr Alexander Ressos, published here in full, section by section.