With the proposed Biotech Act, the European Commission (EC) is aiming to boost the EU biotech industry’s competitivity in the face of major rivals like the US and China. Tackling the EU bloc’s regulatory complexity and its barriers to funding is not an easy task, but biotech stakeholders eye the new legislation, set for this year, as a much-needed shot in the arm.
Hurdles for European Biotech
When the EC laid out its biotech development strategy plans, “Boosting Biotechnology and Biomanufacturing in the EU,” in March, the Commission began a huge undertaking: transforming European biotech into a strategic tool for leveraging industrial competitiveness in the EU. Building on the region’s scientific expertise and cutting-edge life sciences research, the plans set out to strengthen Europe’s biotech sector by resolving some of the major challenges it comes up against.
Despite its importance, qualified by EuropeBio, the region’s largest biotechnology industry group, as having a higher growth rate than the total economy and contributing an estimated EUR 38.1 billion in Gross Added Value (GVA) in 2022, the sector faces stiff competition. Biotech powerhouses like the US and China are two of European biotech’s major competitors and the industry’s ability to contend with them is complicated by a number of issues.
Above all, biotech has to contend with the regulatory complexity across the EU where each member state has its own regulatory authority. While the European Medicines Agency (EMA) does allow for the centralised approvals at the EU level, individual member states still have the ability to control market access, pricing and reimbursement policies, making for a very fragmented regulatory landscape.
The availability of capital in Europe is another major difficulty, particularly for smaller biotechs. Securing financing for clinical phases I and II, when profitability is still hard to evaluate, is especially challenging. By comparison, just 30 percent of financing in Europe goes to phase I, while in the US it adds up to 56 percent.
Towards an EU Biotech Act
The EC’s plans, a sorely needed update from the previous biotech strategy dating back to 2002, recognised the obstacles to the sector’s growth — a fragmented and complex regulatory framework, the inability to bring strong R&D efforts to market, and a not always investment friendly environment.
The “Boosting Biotechnology and Biomanufacturing in the EU” plan also established a few initial steps and set the stage for the development of the new Biotech Act announced in July by von der Leyen’s in her political guidelines for her new term as EC president.
As a first step, the Commission created the EU Biotech Hub. Intended as a way to help biotech start-ups navigate EU funding and regulations and transition from research to commercial applications, the information hub was launched in January. Well received, if cautiously, it has been seen as “a first symbolic act to create a spirit of optimism in the European biotech sector.”
Beyond the Biotech Hub, the EC has initiated a study of the regulatory framework governing biotech. The findings, expected sometime this year, should inform the development of the new Biotech Act.
Meanwhile, former European Central Bank president Mario Draghi was tasked by the Commission with creating a report on European competitiveness with specific recommendations to boost the bloc’s competitive horsepower. The report is also expected to feed into the policy priorities of the new mandate, including the Biotech Act.
An Opportunity
Sector stakeholders see the new legislation, which is part of a broader life sciences strategy, as an opportunity to advance European biotech. “It is vital that biotech is recognised at a high policy level, and a strong Biotech Act sends a global signal that our innovation and capacity will support healthy citizens, competitive sectors, and a sustainable future,” said Claire Skentelbery, director general EuropaBio. Other European biotech organisations also demonstrated their support. “The Biotech Act will be an indispensable tool for Europe to secure its future competitiveness,” said Kim Hertegonne of Belgian biotech cluster organisation flanders.bio.
“We look forward to working with EU institutions to deliver a life sciences strategy that can transform Europe’s competitiveness. A thriving European eco-system for research and development will not only help Europe to stay globally competitive but can also drive health and economic resilience and ensure highly skilled jobs stay in the region,” said Nathalie Moll, Director General of the European Federation of Pharmaceutical Industries and Associations (EFPIA).
The investment ecosystem eyes the Biotech Act as a way to enhance support for life sciences innovation in Europe at a time when global biotech looks to be coming back from its slump. “If properly worded and successfully implemented, the Biotech Act could de-risk investments by providing clearer guidelines and incentives for venture capitalists,” Rainer Westermann, chairman of the Life Sciences Acceleration Alliance affirmed. “Additionally, it is meant to facilitate accelerated approval processes, reducing time-to-market for biotech innovations.”
While expected to be established sometime in 2025, no formal timeline has been laid out for the Biotech Act. It remains to be seen how much the EC’s agenda stands to be impacted by tariff wars with the United States. Since US president Donald Trump imposed tariff hikes, the EU has set out to create a united front and is likely to approve countermeasures.
