Scientific innovation is the basis for the Swiss chemical and pharmaceutical industry's economic success. According to an investigation of the Federal Office of Statistics, the industry invested in the year 2000 about 8.1 bn CHF, or more than 35 million CHF per working day towards innovation.

New results from scientific research have to be transformed by the companies into marketable products. This requires a wide range of entrepreneurial skills. For example, project oriented and interdisciplinary collaboration has to be ensured across existing structures, both inside and outside the company. Furthermore, work processes have to be aligned, manufacturing capacities created or new sales channels have to be found. An early and quick impact on the market is of growing importance. The success of a chemical or pharmaceutical company depends not only on the scientific level of individual top scientists; increasingly it is dependent on the professionalism of the entire workforce.

Nevertheless, scientific and technological progress remains the most important basis for the economic success of our industry, as the following examples illustrate:

<STRONG>Example 1: Diagnosis and treatment of AIDS</STRONG>

As early as the mid 1980's, the basic idea for a completely new AIDS drug was born in the Basle research centre of Roche. The objective was to block the HIV proteinase, a specific enzyme of the virus, as this enzyme cuts individual proteins from a filament to build new viruses. Roche researchers succeeded in producing the (not directly infectious) HIV proteinase by means of genetic engineering, in quantities that enabled the start of the search for suitable proteinase inhibitors in extensive laboratory tests.

In 1989, Roche chemists identified an extremely selective active substance in Ro 31-8959 or Saquinavir. At the end of 1995 INVIRASE was registered by Roche as the world's first drug in the new class of HIV proteinase inhibitors, and it was subsequently introduced in various markets.

Almost simultaneously, the PCR technology - a type of fast-copying process for genes or gene sequences on the basis of molecular biology - has been acquired and developed to full maturity by Roche. This technology has revolutionised the diagnostics of AIDS. With the highly sensitive HIV Amplicor test, the AIDS virus can be detected shortly after infection directly via the genes, at a time when an indirect immunological proof is not yet possible or does not provide sufficient evidence. Above all it is now possible to also measure the quantity of viruses in the blood using the PCR test in the HIV Amplicor monitor kit. As a result, each patient can now be offered an optimal individual therapy with a specificity that was considered impossible, even a few years ago.

Resistance against existing drugs arises as a consequence of virus mutations, calling for new drugs with new mechanisms.

As a first representant of such a new generation of drugs since 7 years Fuzeon has been approved by FDA in the US in March 2003. Fuzeon has been developed by Roche in collaboration with the US company Trimeris. Contrary to all currently known drugs Fuzeon is hindering the virus from entry into the human immune cells: this stops the reproduction of the virus which affects the immune system reaction of HIV infected persons.

Fuzeon is a significant step forward in the fight against HIV infection and AIDS. Besides the medicinal progress, Fuzeon is an important progress in the synthesis of peptides. The modern manufacturing process has been successfully implemented at the Roche site of Boulder, Colorado.

With these innovations in diagnosis and therapy the currently used combination treatment has changed the disease symptoms fundamentally: the deadly AIDS syndrome has been converted to a chronic infectious disease with a long survival period, providing satisfying quality of life for the patients.

<STRONG>Example 2: L-Carnitin - the "energy vitamin"</STRONG>

When the Americans began to investigate the nutrients essential to the diet of astronauts it turned out that, in addition to the 13 known vitamins, L-Carnitine is one of these vital nutrients. L-Carnitine, which is related to the vitamins of the B group, is essential for burning fatty acids and supports optimum performance under conditions of physical and mental stress. In addition, L-Carnitine has been used as a supplement to children's food and nutrient additives for sportsmen for more than 2 decades. Recently a number of "functional food" preparations containing L-Carnitine have become available. Pharmaceutical applications have also been developed: drink ampoules for the heart and the immune system, infusions for intravenous treatment of heart and circulation problems, tablets for the oral treatment of hereditary or induced L-Carnitine deficiency.

Since Lonza 's market entry in 1983, the company has had a decisive influence in building up and shaping the L-Carnitine market. Lonza's success is based on innovations in product forms, production processes as well as in the development and patenting of new applications.

The hygroscopic (water-absorbing) properties of pure L-Carnitine complicated its handling and formulation (tablets, capsules, solid dosage forms). This problem, as well as that of the fishy smell associated with pure L-Carnitine, were solved to the full satisfaction of customers by the development of the two patented products L-Carnitine L-tartrate and L-Carnitine magnesium citrate.

The biotransformation from a natural precursor, a novel, patented technology which guarantees extremely high purity (0.0% D-Carnitine), is an additional success factor. The process causes lower environmental pollution since it produces less waste and does not require solvents for the separation of L-Carnitine from D-Carnitine.

With L-Carnitine Lonza has opened up a number of new markets and has patented various applications including several in the area of animal nutrition (feeding of sows to increase the litter rate, improving health of the hearts of domestic animals and feeding of hens to reduce levels of stress induced death).

<STRONG>Example 3: Femara® - fewer relapses in breast cancer cases</STRONG>

Through the aromatase blocker Femara (Letrozol) Novartis is demonstrating its commitment to helping women suffering from breast cancer. This commitment is necessary, for although great advances in the treatment of breast cancer have been made over the last few decades, a third of women affected still suffer a relapse in the first 15 years after diagnosis. Over half of these relapses occurs 5 years after initial diagnosis, whereby distant metastases in particular are to be feared. One of the goals of breast cancer treatment therefore is to continuously reduce the risk of relapse.

Sex hormones such as oestrogen stimulate cell growth in certain organs and tumours. In the case of hormone sensitive breast cancer, tumour growth and metastasis formation can be stopped or at least retarded by suppressing the hormone effect (anti-hormone treatment). In post-menopausal women oestrogen is no longer formed in the ovaries but rather in other tissues and organs. It is here that the enzyme aromatase is required. By blocking aromatase Letrozol prevents hormone production right from the start.

The enzyme aromatase was discovered in the mid-70's, the aromatase blocker Letrozol at the end of the 80's. In the laboratory Letrozol was about ten times more potent and a hundred times more selective than the previously used substance. After all the clinical development stages had been successfully passed Letrozol was initially introduced to the market in Great Britain in 1996 under the trade name Femara (advanced breast cancer). Since then Femara has demonstrated its superiority in all stages of breast cancer over the respective established standard drugs (megestrol acetate, aminoglutethimide, tamoxifen). In July 2004 Switzerland became the first country in Europe to approve Femara as the only drug for the extended adjuvant treatment (after 5 years tamoxifen therapy) in early stage breast cancer. In the meantime Femara has been approved in more than 75 countries, to some extent even for post-operative treatment of early stage breast cancer. In Switzerland this indication is, at present, still in the process of registration.

<STRONG>Example 4: Omalizumab – a breakthrough in the treatment of allergic asthma</STRONG>

A broad-based Novartis programme to research the therapeutic potential of monoclonal antibodies led to cooperation with Genentech Inc. and Tanox in the field of anti-IgE. The goal was to develop a drug which directly influenced one of the basic causes of asthma, namely the allergic cascade facilitated by IgE.

IgE, a naturally occurring antibody, is produced in large quantities in people suffering from asthma, when they have been sensitised by an allergen, e.g. faeces of house dust mites or scurf of domestic animals and subsequently re-exposed thereto. These antibodies then bind to mast cell receptors, leading to the release of inflammatory mediators like histamine which in turn cause, among others, well-known asthma symptoms – wheezing, tightness of the chest and shortness of breath - by contracting the smooth muscle system in the respiratory tract.

Several asthma drugs, such as the Beta-2 agonists, treat the asthma symptoms directly by relaxing the constricted smooth muscle system of the respiratory tract. Others, such as the inhaled corticosteroids (ICS), attack the basis of the complaint, namely the inflammation in the respiratory tract. ICS are, however, only effective when taken regularly. Poor discipline in patients receiving ICS is a big problem and can lead to a recurrence of asthma attacks.

Omalizumab removes any free IgE from the serum and thus prevents it binding to the mast cells ; consequently the release of inflammatory substances is stopped and the appearance of asthma symptoms prevented. Clinical studies have shown that Omalizumab can prevent asthma attacks and reduce the number of Beta-2 spray applications necessary to control the asthma symptoms. A further important advantage: the reduction in the dose of ICS is highly significant because ICS can cause, especially in children, undesirable side effects such as growth disorders.

In Switzerland Omalizumab is at present in the process of being registered and, once approved, is to be marketed under the trade name Xolair®.

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<STRONG>Example 5: High performance dyes for optical information storage - our contribution to the Digital Revolution</STRONG>

The digitalisation of the world is proceeding at a breakneck pace. Today, Switzerland counts 75 mobile phone sets per 100 of its inhabitants and 50% of the Swiss enjoy regular surfing on the Internet. Besides a gamut of products ranging from photoinitiators for printed wiring boards, special pigments for LCD flat screens and inks for digital ink jet printing, Ciba Speciality Chemicals is also contributing to the digital revolution with its innovative dyes for optical information storage.

Ciba recognised the huge market potential of optical data storage when the concept of recordable CD-ROMs first cropped up in 1990. Since then Ciba has brought several generations of high-performance dyes for use in this area to market under the trade name Ciba® IRGAPHOR®, with great success. Ciba's functional dye, which the manufacturer applies to the polycarbonate disc in a thickness of 100 nanometres, is the CD's actual storage medium. During the recording process, a strong laser beam burns the information as a binary code into this thin dye layer. The process is very demanding in chemical and physical terms. The highest recording speed, which is available today, is the equivalent of 200 kilometres per hour! One of the latest products, IRGAPHOR® Ultragreen MX launched in 1999, matches customers' ever higher expectations regarding photostability, the absorption spectrum and thermal properties. In 2002, more than six billion CD-R's were sold world-wide. Of these, 60 % used Ciba dyes. And the market for CD-R's continues to grow!

Ciba's innovative approach to optical information storage materials is based on the core competencies in dyestuff synthesis, spectroscopy and solid state physics, combined with application tests at a very early stage. This allows Ciba to offer integral solutions to customers. Information technology is in a constant change. Its major trends points towards higher storage capacity. And Ciba's scientists are forging ahead with the next and even the next-but-one generation technologies.

<STRONG>Innovative activities of SMEs</STRONG>

Given the expenditures necessary for research and development of a new drug or plant protection ingredient, the innovative activity of small and medium-sized enterprises in the chemical and pharmaceutical industry has to be concentrated on areas within well defined borderlines. The concentration of several companies involved in leading-edge research in Switzerland (called a cluster in innovation theory) creates favourable conditions for the success of SMEs too. The increasing orientation of the large companies towards highly innovative fields is accompanied by a corresponding outsourcing of research and manufacturing activities. The niches that open up allow a fair number of smaller and medium-sized enterprises to operate as specialised sub-contractors and service providers. Their innovative activity relates to this limited role within the entire industrial network around a research cluster.