By Michaela Schiessl
In 2005 Hettich and Bohlen founded the Dievini consulting firm, which, since then, has identified and managed all of Hopp's biotech investments. In Latvian mythology, Dievini is a term used to refer to minor gods that were considered patrons of the home, but the two biotech experts prefer to see themselves as good spirits -- the good spirits of Dietmar Hopp.
Hettich and Bohlen have studied more than 200 business plans and listened to dozens of presentations in the last two years, but they end up investing in only a fraction of the companies they consider. "If the two of us are not 100 percent convinced, we don't even present it to Hopp."
Although their client isn't exactly known as a gambler, anyone who invests in biotech has to be willing to accept risks. Very few companies survive the years of hard times and the countless tests and approval requirements before a drug or a process is finally ready to be marketed. The average duration of this development period is at least 10 years. A failed experiment or an unexpected side effect can dash all hopes.
Given all these potential pitfalls, why on earth would Hopp invest his money in such a risky industry?
Of course, with his estimated assets of €5.3 billion, Hopp has the necessary cash to survive setbacks relatively unscathed. Besides, like any good investor he prefers to take an anti-cyclical approach, buying when prices are low and hopes high. But most of all Hopp sees the potential to develop something lasting: an industry that could truly end up playing in the big leagues one day.
Germany is a laggard internationally when it comes to the biotech industry. Annual industry sales in Germany of close to 945 million represent barely one-twelfth of the sales of US market leader Amgen alone.
Rescuing an Industry from Obscurity
The Heidelberg biotech trio's dream is to rescue the German biotech industry from obscurity. "What we are doing is called company building," says Bohlen. The group invests exclusively in three areas: cancer treatments, disorders of the central nervous system, like Alzheimer's and Parkinson's, and information-based medicine. The companies in each segment are selected to complement one another. The plan is to turn a profit by selling companies, licensing products to pharmaceutical corporations and taking companies public.
Four of Hopp's picks are already publicly traded. In November 2006, Hopp backed the IPO of Wilex, which is developing a treatment for cancer tumors, by acquiring about 25 percent of the volume of initial shares issued. Cosmo, the Milan company, was taken public in March 2007. Sygnis Pharma, a Heidelberg-based company formed in 2006 through the merger of Lion Bioscience and Axaron, a subsidiary of German chemical and pharmaceutical giant BASF, expects to raise additional capital in the stock market within the next 12 months.
Hopp's hottest candidate is GPC Biotech. The Munich-based company has Satraplatin, a prostate drug, in the pipeline that stands a good chance of gaining approval in the United States this year and in Europe in 2008.
"It was the first time we had gotten such tremendous feedback," says Bohlen. Experts estimate the sales potential for Satraplatin to be at least €500 million a year. Hopp has already earned more than a 50 percent return on his initial investment of €36 million for just under 10 percent of shares.
The Heidelberg entrepreneurs hope this first major venture will attract more investors to biotech. It would be investment that is urgently needed. According to the "German Biotechnology Report" by corporate consulting firm Ernst & Young, only €433 million was invested in biotech in Germany last year, an 11 percent decline over 2005.
Given this reluctance to invest, it is hardly surprising that many companies are trying their luck with Dievini, which receives heaps of business plans in its mailbox on a daily business. But how does it go about finding the right candidates?
"We place great emphasis on the companies pinning their hopes on more than one product," Hettich explains. But even more important, he adds, is gut feeling. "The people have to be convincing." Those who make it past the initial assessment are invited to St. Leon-Rot, the center of Hopp's universe. There, a few kilometers from SAP headquarters in Walldorf, Hopp, a sports fanatic, has fulfilled one of his dreams in the form of a luxury 18-hole golf course. It goes without saying that the multi-billionaire's course is one of Germany's most attractive, a place where the world's golf elite compete.
While the athletes swing their irons on the green, the heads of the selected companies sweat their way through presentations for Hopp in the clubhouse. In most cases he agrees with the suggestions of his house gods, but then the real work begins for Hettich and Bohlen. Unlike run-of-the-mill financiers, they pay close attention to the investments. "We're something on the order of godparents," says Hettich, "we provide the companies with assistance in matters of organization, structure, business development, everything, really." One of the two men always holds a seat on the supervisory board of each of Hopp's investments.
Once every four weeks Hettich and Bohlen report to their investor on the development of his babies, and twice a year Hopp arrives at his own assessment of the companies. This is when the man they call "Vadder" (father) at SAP, because of his thoughtfulness, brings together all the CEOs and CFOs of his biotech empire together for a meeting in St. Leon-Rot.
One of the aims of this semiannual conference is for the executives to get to know each other, brainstorm, think outside the box and plan the impossible -- the same things Hopp and his friends once did. And because achieving the right corporate culture is so important to him, Hopp always puts in an appearance to impart his recipes for success to the youngsters: "As executives, you should behave like team members. Every employee must have the freedom to make mistakes. You should not build walls, engage in intrigues or condone office politics."
These principles are a matter of course for Hopp, who applied them to build SAP into the company it is today. But anyone who reads today's news of corporate scandals, corruption and intrigues can be easily exposed to temptation. That's why, says Hopp, "it's important to tell young people what the most important attributes are in business: decency and honesty."
Of course, one should also never underestimate the importance of proper appearance, a principle Hopp seems to take to heart when he sprints from the conference room up to his apartment and exchanges his orange polo shirt for a business shirt, tie and jacket -- for his photo in this magazine. Heaven forbid that someone might think that Hopp doesn't mean business.
Translated from the German by Christopher Sultan
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