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Commission to double pharmaceutical research spending but more needs to be done


"I would like Europe to become a centre of excellence and a focus for pharmaceutical research once again", stated EU Research Commissioner Philippe Busquin today at the annual assembly of the European pharmaceutical industry (EFPIA) in Bruges. "We need to nurture our research-based industries by reinforcing science and technology in Europe. Europe needs to invest more and in a better, more consistent way: it has to cut red tape and be bold." From 1999 to 2002 the Commission invested around € 1 billion in health-related research. In the next four years, within the new EU research framework programme, at least € 2 billion will be spent in this area, with a particular priority on genomics and biotechnology for health. But this is not enough. In recent years, the competitiveness of EU pharmaceutical industry has decreased. The fact is that the US, with a bigger market for drugs, in particular those based on advances in bio-medicines, has overtaken the EU in total research investment. "The EU has been late in grasping the potential of biotechnology for the development of new drugs," says Commissioner Busquin. "But Europe is catching up: new biotech companies are created every year in the EU. Professional technology transfer and investments in collaborative biotechnology research programmes are on the rise. Our latest Research Programme will foster the competitiveness of the European pharmaceutical industry. But EU funding will only have sufficient leverage if pharmaceutical companies and Member States join us in networking research efforts at EU level."

Commissioner Busquin also refers to the conclusions of the recent Commission Communication on "Biotechnology and Life Sciences": "The Commission and Member States need to work more closely together to develop coherent policies for making the most of biotechnology and life sciences. This will benefit public health and the competitiveness of the European pharmaceutical industry."

"Of course we cannot expect the pharmaceutical industry to invest as much in research as in the US, if the value of the EU market remains at only about half of that of the US, particularly if it does not seem to encourage the introduction of innovative drugs" adds Commissioner Busquin. "Despite this, the EU is only slightly behind the US in terms of biotech patenting activity and in terms of scientific publications we are as good as the US. Indeed, our goal is to attract more investment into EU biotech and pharmaceutical research, whether from EU or US industry, and to make the EU research and innovation system more effective in terms of innovative output".

Action at EU level

The European Union, through its Framework Programmes for Research and Technological Development, has given substantial financial support to research relevant to the pharmaceutical industry. In the 5th Framework programme (1998-2002) the Commission invested close to € 1 billion, mainly in biotechnology, vaccine development, disease understanding, and also in bioinformatics and new drug delivery methods using nanotechnologies. In the new framework programme (2002-2006) with its major focus on "Life Sciences: Genomics and Biotechnology for Health", the Commission is likely to double this amount. The use of new instruments such as networks of excellence and integrated projects will bring together expertise at EU level, as recommended in the G10 High Level Group on Innovation and the Provision of Medicines report(1). This is also in line with the European Research Area strategy and Commissioner Busquin’s proposal to increase research spending to 3% of GDP by 2010, as adopted by the March 2002 European Council in Barcelona.

The situation of pharmaceutical industry in Europe

For most of the past decade, Europe has led in pharmaceutical innovation. In 1997, however, the US overtook Europe for the first time, both in terms of research and development (R&D) investment and output (new drug candidates). In 1990, EU pharmaceutical industry spent 73% of its R&D budget in Europe, but this figure dropped to only 59% in 1999 and the US is now spending €24 billion compared to €17 billion in the EU. Spurred by more open market regulations, the world market share of US pharmaceutical products jumped in the same period from 31% to 43%, while in price-controlled EU the figure dropped from 32% to 22%.

The competitiveness of US industry has also benefited from a more vigorous exploration of new technological opportunities. Increased professional technology transfer from the public research sector and the establishment of a vibrant biotechnology industry is providing innovative products based on new biotechnological developments to the pharmaceutical industry.

On the rise again

The EU is nevertheless catching up. A large number of Member States, including France and Germany, have recently put in place new regulations for the exploitation of publicly funded research, or implemented tax laws favouring research investments similar to the UK. Some Member States are also actively supporting the establishment of professional technology transfer structures. The number of biotech companies in Europe increased dramatically in recent years. In 2001 there were more companies in the EU (1879) than in the US (1457). Although turnover and employment figures in the US industry are double those of the EU, the EU growth rates have consistently outperformed those of the US in recent years, thus starting to close the gap. Interestingly enough, the EU industry was able to reduce its net loss by 16% to US$1.5 billion in 2001, while losses in the US industry, mostly public companies, increased 15% to US$6.9billion.

The availability of private risk capital for biotechnology in the EU, which increased since 1995 by a factor of 8 to reach around €1 billion in the year 2000, has been one of the major success factors for the growth of the biotech industry in Europe. In 2001, despite a worldwide economic downturn, biotech investments in Europe only dropped by 17% from the previous year, compared to a 31% drop in overall high tech investments.

Commission research efforts aim at consolidating the lead of EU companies where they outperform US competitors, and in helping them fill the gap in sectors where they are trailing the US. Pooling together high-level, cutting-edge research know-how and infrastructures will foster a true European Research Area in the pharmaceutical sector.

fabio Fabbi | Europäische Kommission
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