munich

German companies risk an erosion of their 20 per cent share of the world pharmaceutical market unless they invest more in new technology, according to a new report.

The report — commissioned by the federal research ministry from six independent institutes for economic and innovation research — concludes that companies need to increase their investment in biochemistry, bioinformatics and combinatorial chemistry.

It also reveals that public and private funding of research in Germany is only now beginning to recover from large cuts made in the first half of the decade.

Support for research and development fell from around 3 per cent of gross domestic product (GDP) in 1990 to 2.3 per cent in 1996. Although public funding has remained relatively flat, industry has increased R&D investment by 10 pper cent between 1995 and 1997. Research funding is now 2.4 per cent of GDP, compared with 3.6 per cent in Sweden, 2.8 per cent in Korea and Finland, 2.7 per cent in Switzerland and 2.6 per cent in the United States.

The report, Germany'sTechnological Capacity and Efficiency, identifies the country'sstrengths as being in solid-state physics, semiconductors, material science, polymer research, measurement technology and astrophysics. But it still lags behind Britain, Japan and the United States in key technologies such as software development and biotechnology.