Life Sciences and Biotechnology - the European Commission´s Strategy for Europe

Last month, the European Commission (the "Commission") produced its second report on the implementation of its 2002-2010 Strategy for Europe on Life Sciences and Biotechnology. The 2002-2010 Strategy for Europe set out a road map to 2010, recommending actions from the European Union institutions and well as other public and private stakeholders. The latest report highlights the progress that has been made on the Commission's plan to transform policy into action and indicates those areas where improvement is still necessary in order to strengthen the competitive position of the European biotechnology sector.

Life sciences and biotechnology are amongst the key growth technologies for a more innovative and competitive Europe. Although the performance of small and medium-sized European biotechnology companies is comparable to their US counterparts, there are far fewer medium- sized biotech companies in Europe compared to the US. This is thought to be partly attributable to difficulties with financing in Europe.

Different Member States have adopted different measures in order to address this problem. Some have introduced fiscal benefits, some are encouraging inward investment, while others are promoting technology transfer. Tax breaks and better research conditions are also being introduced in other Member States to encourage "brain gain" by making the European Research Area more attractive for scientists.

Three main areas have been identified for attention by the Commission at national level in order to improve European competitiveness:

• Protecting intellectual property rights;

• Boosting finance, liquidity and capital markets in Europe; and

• Research funding through public/private partnerships.

Of the EU-15 Member States, eight still have not implemented the Biotechnology Patent Directive into their national legal systems. This leaves companies uncertain as to what rights they have in relation to biotechnology research. The Commission feels that this, together with the lack of a Community Patent and a centralised Community Patents Court, discourages both inventors and potential investors from the European market. Member States have been encouraged in the Report to adopt the Community Patent Regulation¹ and to agree on the creation of the centralised Community Patents Court, as well as to implement the Biotechnology Patent Directive.

The biotech industry with its long lead times and high costs is more dependent than most on effective access to investment. As well as encouraging investors by a coherent legal and regulatory regime, the Commission also recommends the establishment of funds to cover the period between venture capital financing and IPOs (Initial Public Offers) to encourage companies to expand. Given the boom in 2000, the European industry has a large number of companies requiring this stage of finance. It is encouraging to see that in October 2003, the European Investment Bank invested E0.5 billion for the European Investment Fund to invest in high technology companies, most of which is expected to benefit the biotechnology sector.

Under the 6th Framework Programme for Research more than E810 million has been allocated to research in the areas of "life sciences, genetics and biotechnology for health" and "food quality and safety". Funding has been concentrated on a few selected priorities so that top researchers are provided with resources and skills in order to stay at the leading edge of scientific and technological research.

The following areas are being promoted:

Genomics research, in particular bioinformatics; Biotechnology for health; Plant genomics and biotechnology; and Industrial biotechnology.

The Commission has highlighted as a priority its presentation of a Communication regarding future research policy initiatives later this month. This is intended to initiate a debate amongst all stakeholders in the biotech industry and is seen as vital in order to maintain momentum towards an effective knowledge-based economy.

The Commission is aware that the public's acceptance of biotechnology is important to strengthen the EU's capacity for innovation. Therefore the Commission is continuing efforts to explain the benefits of biotechnology in all its fields of application, whilst being aware of the public's concern about the possible use of biotechnology in bioweapons and bioterrorism.

The Commission reports that it expects active cooperation from all Member States in ensuring implementation of legislation governing GMOs (genetically modified organisms). To date, only seven Member States have communicated their implementation measures for Directive 2001/18/EC, which provides a more complete authorisation procedure for GMOs. The Commission has referred the other eight Member States to the European Court of Justice.

As well as requiring implementation of GMO legislation, Member States have been asked to exchange information on their approaches and best practices concerning co-existence of GM crops with conventional and organic crops. The Commission for its part aims to enhance its co-ordination role in order to smooth out any potential problems associated with the development of Member States' co-existence strategies. The Commission will also report to the Council and the European Parliament on Member States' experiences of implementation of co-existence measures.

The Commission also looks ahead in its Report to ensure long-term competitiveness in emerging technologies, such as tissue engineering, genetic testing and animal biotechnology. For example, it aims to prepare legislation to harmonise the regulatory framework for marketing products and processes obtained from human tissue engineering. Genetic testing is another field in which the Commission feels the need for a co-ordinated approach. It plans an EU-wide co-ordinated effort to ensure high quality genetic testing throughout the EU and to establish a networking centre to exchange information on certain genetic testing issues. Cloning technology in animals is another recognised emerging field which may raise ethical, social and safety concern. The Commission plans to launch initiatives on the potential benefits and risks and possible new policy issues associated with animal cloning.

Since last year's Report further progress has been made on the implementation of the EU's Strategy on Life Sciences and Biotechnology. However, the Commission recognises that much still needs to be done in order for European competitiveness to improve. A major example is the need for a harmonised regulatory framework. This will only be achieved when all Member States have implemented the Biotechnology Patent Directive and GMO legislation. Greater co-ordination and cooperation between all parties interested in the sector are also vital to ensure that the European biotechnology sector remains competitive. These actions are particularly important given the current anxiety about the apparent inability of European biotechnology companies to achieve global leadership. Unless more is done at a national and European level to encourage growth, European biotechnology firms risk becoming simply the research divisions of US multinationals.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.