Vitality of the EU Biotech Sector Depends on a Positive EU Policy Direction

By Nicholas Cosenza, Head of EU Government Affairs

During a time when the world needs more innovation - not less - the biotech sector in the European Union (EU) has the opportunity to continue to grow and emerge stronger than ever. Between 2008 and 2018, the biotechnology industry grew more than twice as fast as the overall economy, making it one of the fastest growing innovative industries in the EU, with healthcare biotechnology responsible for 86% of the total . We must not slow down this momentum. Instead, the EU must pursue a positive policy direction that sustains the competitiveness of medical innovation in the EU. With an environment where the sector thrives, there is potential to push beyond what’s known today and make people’s lives easier, fuller and longer through the transformative power of medicine.

We have experienced this in our own story here at Amgen. Because of the right regulatory conditions, we have invested in Europe since 1989 and have grown to be one of the world’s leading independent biotechnology companies. Amgen’s investment in research and development has yielded a robust pipeline, building on our existing portfolio, to treat cancer, heart disease, osteoporosis, inflammatory and rare diseases. Over the last 35 years, we’ve been able to expand our team across Europe and advance cutting-edge technology. As an example, deCODE genetics, an Amgen subsidiary in Iceland, has been at the forefront of adopting new technologies, such as whole genome sequencing, and implementing them at scale. The team at deCODE is studying the impact of human diversity on disease - ultimately improving drug discovery & development and advancing science that is leading us toward precision medicine.

With the ongoing revision of the General Pharmaceutical Legislation (GPL) and the recent communication on boosting biotechnology and biomanufacturing in the EU, the European Commission has underscored the foundational importance of the biotech sector being competitive on the global stage. This focus presents a much-needed investment, as the EU has been struggling to compete after losing its position as the top global innovation region more than 20 years ago.

Beyond the US, the EU is now facing increasing competition from emerging economies, such as Koreaⁱⁱ. In 2023, China outpaced Europe as the originator of newly launched medicines, with 25 compared to 17 new substances, respectively. Europe ranks third, behind the US and China, for originators of new molecules. We know that where innovation happens matters, as it can impact the time to access and availability of new medicines, as well as supporting the economy. In 2023 the pharmaceutical industry invested an estimated € 50,000 million in R&D in Europe, almost double the 2010 figures. The industry is also a key creator of jobs. Recent studies showed that in some countries, on top of direct job creation, the pharmaceutical industry also generates about three times more indirect employment– upstream and downstream.ⁱⁱⁱ

Despite this, unfortunately, data shows that the measures being proposed in the GPL, such as a reduction in baseline regulatory data protection (RDP) and orphan market exclusivity (OME), would likely have a negative impact on the biotechnology sector. It is predicted to further incentivise investors to continue to move capital outside of the EU and exacerbate the trend of some innovators delaying moving to, or deprioritising, Europe. The data also predict:

A reduction in EU biotechnology startup firms from 19 in 2024 to only 4 companies by 2030^iv.
While measures to increase RDP are provided for in the GPL, meeting the conditions could cost each company around $10 million USD^v, an outlook which would have particularly severe consequences for small and medium-sized enterprises (SMEs), who are much less likely to be able to make these risky investments.
Only around 1 in 10 SME-developed products would be economically viable.^vi
For the sector as a whole, by 2030, it is expected that there would be a $4 billion drop in biotech investments^vii if the current RDP cuts proceed. This would be a severe and concerning reduction to the sector.
The European Commission estimates that over 30% of all current EMA approved therapies will see revenues impacted by 2 fewer years of RDP, representing a loss of around €60 billion in total EU revenue^viii.
For SMEs, whereas SME biotech deals are predicted to halve to roughly €14 billion , whereas they represented €31.5 billion in 2018. That’s money that will no longer slow into EU Member State economies.

These realities contrast starkly to the EU’s ambitions to boost the sector.

The reality of innovation is that around 85% of molecules that enter into clinical trials will not make it to market , and with these proposed changes, innovation in the EU will become too expensive. The duration from the first trial to market is not only risky, but it is also a lengthy process. Reducing protection timelines will exacerbate this challenge for innovators, by shortening the period of certainty, where companies can recoup their investments. This will deter investment in the EU biotech sector.

As such, it is critical that any policies reforming the industry is also risk-friendly to keep competition and R&D a viable option for innovators in the region. We advocate that the EU needs a balanced incentives framework with protections, such as RDP, to create a supportive environment that enables risk taking for the hope of medical advancement and economic prosperity, while maintaining high safety, efficacy, and ethical standards. But the data is clear: The combination of downward pricing pressure from several Member States, as well as proposed reductions in regulatory incentives, disadvantages the EU, accelerating a negative trend in investment in the European life sciences sector, which has long lagged behind countries such as the US in terms of regulatory speed, market access, and investment climate. We urge European policymakers to unite behind a positive policy direction for the competitiveness of the life science sector in Europe.

This article was originally published by the European Confederation of Pharmaceutical Entrepreneurs (EUCOPE).

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