In a remote geothermal region in northern Iceland, a biotechnology company is building an industry that barely existed in the country a decade ago.
Mýsköpun, an Icelandic microalgae biotechnology company based near Lake Mývatn, is using geothermal energy, clean water and locally cultivated algae to produce high-value nutraceutical ingredients for global markets. The company’s growth reflects a broader lesson for smaller economies: competing globally is often less about scale and more about finding specialized industries where natural advantages create long-term competitive value.
“We are basically creating a new industry here in rural northern Iceland,” said Ingólfur Bragi Gunnarsson, CEO of Mýsköpun, during an interview with GMI POST.
Founded in 2013, Mýsköpun originally focused on researching microalgae species naturally found in Lake Mývatn, one of Iceland’s most unique geothermal ecosystems. Over time, the company shifted from lower-value algae production toward specialized, high-value compounds used in nutraceutical and health supplement products.
That strategic pivot became a turning point for the company.
“Since I started here at the company, we shifted the focus much closer to producing high-value compounds,” Gunnarsson said.
The move reflects a challenge many smaller countries face when developing advanced industries. Iceland cannot compete with larger manufacturing economies on volume alone. Instead, companies often focus on specialized products with higher margins and stronger technology requirements.
“We know we can’t really compete with larger countries on scale,” Gunnarsson said, explaining that Icelandic companies often need to focus on technology, innovation and premium-quality production.
Today, Mýsköpun is developing a new large-scale production facility focused on astaxanthin, a naturally occurring antioxidant derived from microalgae that is widely used in dietary supplements, skin health products and nutraceutical applications. Research has shown growing global demand for astaxanthin as consumers increasingly seek natural health and wellness products.
The company is planning approximately €30 million in total investment for the project and expects production capacity to increase by as much as 800 times compared to its current operations.
“We are going to be increasing our production capacity 800 times,” Gunnarsson said.
The project is also expected to create at least 40 new jobs in the surrounding region.
Another lesson from Mýsköpun’s growth strategy is how geography can become an industrial advantage.
While Iceland’s location can create logistical challenges, Gunnarsson argues that the country’s renewable energy resources, cold climate and abundant freshwater provide strong advantages for algae cultivation.
Growing microalgae indoors requires large amounts of electricity for lighting, significant water resources and cooling systems to manage heat generated during production. Iceland’s geothermal and hydroelectric infrastructure helps reduce those costs while supporting year-round production.
“Cheap and sustainable energy, colder climate and very clean water sources are three important strengths for building an industry like this in Iceland,” Gunnarsson said.
Mýsköpun is currently working with an Icelandic power company to develop a new production facility directly connected to a geothermal power plant. The company says the facility will use renewable geothermal energy, clean water and captured carbon dioxide to support algae cultivation.
The sustainability angle has also become part of the company’s commercial strategy.
Gunnarsson believes Iceland’s reputation for clean energy and environmental stewardship gives local biotech companies a competitive advantage when selling into international markets.
“I might not be able to demand a higher price, but I can give customers a strong story about how the product was produced using geothermal energy, clean water and a pristine environment,” Gunnarsson said.
That positioning aligns with broader global trends. According to industry forecasts, the algae biotechnology and nutraceutical sectors continue to grow at double-digit annual rates as consumers increasingly prioritize sustainability, health and ingredient traceability.
Gunnarsson said nearly all of Mýsköpun’s future production is expected to be exported, with major opportunities across North America, Europe and Asia.
For Iceland, Mýsköpun highlights a broader economic development lesson. Smaller economies do not always need large domestic markets to build globally relevant industries. By combining renewable energy, scientific expertise and natural resources, rural regions can create specialized industries capable of competing internationally.
“Iceland is tiny,” Gunnarsson said. “But we are gaining a lot of market share globally in these high-value compounds.”
As Mýsköpun moves forward with its planned expansion, the company is betting that biotechnology, sustainability and premium-quality production can help turn northern Iceland into one of the country’s next major growth industries.
