An island of stunning scenery with hot springs, lava fields and geysers, Iceland is becoming well known as a tourist destination.  But what of the opportunities for life sciences companies to invest there?  What are the reasons to locate in Iceland?

Iceland is closer than you might think – it’s only 5-7 hours’ flight from North America and 2.5-3 hours from Europe, with 80-100 daily departures. Situated in the North Atlantic, it’s a natural staging post between Europe and North America.  It has a small but growing population of almost 357,000 and covers an area of 103,00 square km. Two-thirds of the population live in the capital, Reykjavík.

Bioinformatics and genetics focus

Biotechnology and health sciences are a fast growing sector in Iceland. The government is welcoming to life sciences companies, offering incentives, favourable patent legislation and a 20% corporate tax rate. There is a highly developed scientific community in the capital, with the heritage of home-grown deCODE Genetics (now owned by US company Amgen) and food and biotech R&D institute Matis. Also in Reykjavík are sleep diagnostics company Nox Medical and major international pharma company Alvogen who are headquartered in Science City, near to the National University Hospital. Other interesting companies include Algalif, Blue Lagoon, Orf Genetics and Össur.

Iceland has access to unique raw materials and a rich and homogenous genome database used for clinical trials, big data, machine learning and drug development. Multinational corporates and research groups are extensively mining this data and Icelandic scientists have a deep knowledge of genetics and biosimilar pharmaceuticals. Unusual and valuable materials for life science companies include extremophiles, heat resistant bacteria found in geothermal areas, fish used by many biotech companies in development of food supplements and medical devices (Zymetech and Kerecis) and seaweed such as that used in cosmetics and industrial products.

Abundant talent in the life sciences sector

MCJ Lemagnen Associates’ recent study ‘Rise of the Unicorns’ demonstrated the importance of skilled and educated talent for both startups and scale ups in tech sectors. Can Iceland really offer this to aspiring Unicorns in the life sciences industry? The short answer is ‘yes’. Iceland’s workforce is highly educated, with young people often studying overseas in Europe and North America.  Consequently, everyone speaks English, and 41% of 25-34 year olds are educated to tertiary level (2016 data). Today, just under 40% of the population is aged under 29. The number of annual higher education student enrolments doubled between 1997-2017 and there has been a big growth in foreign students studying in Iceland. On average there are 3,000-3.500 students enrolled in STEM subjects at Icelandic universities.

The University of Iceland ranks amongst the best Nordic universities and is an international research and teaching institution with a life science specialism. In the Times Higher Education rankings 2019 it ranks in the top 300 worldwide. It offers a degree in Bioinformatics and its key research areas include biology, biomedicine, cell biology, biochemistry, genetics, geosciences and earth sciences.  The University of Iceland collaborates with universities around the world and with companies such as Novartis, GlaxoSmithKline, Merck, Novo Nordisk, Roche, AstraZeneca, Pfizer, Amgen and Johnson & Johnson. It has a number of research institutes, many of which are directly relevant to the life sciences sector such as the Biomatics Group, the Institute of Biomedical and Neural Engineering and the Center for Systems Biology.  Reykjavík University, now ranked in the top 350 universities in the world (Times Higher Education Ranking 2019), also has noteworthy engineering and science activities, with strong links to business.  

World class scientific research: seeing is believing

Did you know that Iceland is the world leading location for ophthalmology research?  In the SCImago SJR global scientific research rankings citations analysis, Iceland is the world leader in several domains, measured by citations per citable document. Whilst they might not produce the sheer quantity as the larger nations, their research is of the very highest quality, having a global reputation and impact. 

SCIMago SJR World Ranking 1996-2017

Biochemistry, genetics and molecular biology - 1st
Genetics, biotechnology and molecular medicine - 1st
Cancer research - 2nd
Clinical biochemistry - 4th
Clinical genetics - 1st
Ophthalmology - 1st
Pulmonary and respiratory medicine - 1st
Cardiology and cardiovascular medicine - 2nd
Gastroenterology - 4th
Haematology - 4th
Internal medicine - 2nd
Oncology - 3rd
Orthopaedics and sport medicine - 3rd
Paediatrics - 3rd
Pharmacology - 2nd
Rheumatology - 4th
Agricultural and biological sciences - 3rd
Computer science as a whole - 14th
Artificial intelligence - 3rd
Signal processing - 4th
Software - 8th
Miscellaneous computer science - 3rd

It is worth noting that 14 of the world’s top scientists are from Iceland (Highly Cited Researchers List, Clarivate Analytics, 2019) and there is a growing number of scientists allied to Icelandic research organisations and companies.  

There is also a Tech Transfer Office (TTO Iceland), a collaboration between all its universities and the major research organisations aiming to help the scientific community with advice on areas such as intellectual property protection, market analysis and patent issues. TTO Iceland also facilitates links between innovative projects and investors.

Underpinned by a robust and modern digital infrastructure 

For life sciences companies needing robust and modern data storage facilities, Iceland is a reliable option.  The country has a very high quality data infrastructure, with one of the world’s most reliable electricity transmission grid and redundant fibre optic connections.  Due to its climate, it’s a perfect environment for data centres, as nature’s cooling is free!  There are currently four companies running six data centre campuses in Iceland: Verne Global, Etix Everywhere, Wintermute and Advania, whose clients include BMW, Datapipe, CCP Games and Opera Software.

Conversely, Icelanders benefit from natural geothermal energy resources, giving clean, sustainable and very competitively priced electricity. What’s more the abundance of hot water, steam, fresh cold water and carbon dioxide from this sustainable source are attractive for algae production, greenhouse cultivation and land-based aquaculture.  

What about market accessibility in terms of red tape and regulations?  What incentives are on offer to set up in Iceland?

Iceland is part of the European Economic Area and it has implemented most of the EU’s business legislation. There are fast track work and residency permits available for foreign (non-EU/EFTA) experts working in Iceland, as well as tax incentives for individuals and companies, to ease the process of setting up there. For instance, foreign experts pay only 75% tax on their personal income for the first three years of employment. 

New direct investors can apply for an investment agreement which gives regional incentives outside the capital region of Reykjavík. These can include a fixed income tax rate ceiling of 15% for 10 years, full depreciation of assets, reduced property taxes and social security charges, exemptions from customs and duties for capital goods and site leasing at reduced rates.  EU regulations apply for general incentives for SMEs, training aid and environmental protection. Research and development incentives are available as tax credits for innovation companies – 20% of the R&D cost with an annual ceiling depending on the type of project.

Finally, Iceland has a Free Trade Agreement with China, which will be of interest to companies looking at the Asian market. In the life sciences sector, this particularly benefits some biotech companies, for example, those selling products manufactured from seaweed.

Contact details

Erna Björnsdóttir
Project Manager
Email: [email protected]
Tel: +354 511 4000
More information: Investing in Iceland

Julia Lemagnen
Co-Founder & Director
Email: [email protected]
Tel: +44 (0)1553 828174

Foreign Direct Investment and the Rise of the Unicorns’ Report
This report is produced by MCJ Lemagnen Associates Ltd and is independent of any government or economic development agency.

©MCJ Lemagnen Associates Ltd 2019

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