The importance of pharmaceutical innovation in Europe cannot be underestimated. The pharma industry is one of Europe’s top-performing high-technology sectors. It contributes around €175B to the EU’s trade balance – a tenfold rise over the last two decades.
Despite what seems like encouraging progress, the more recent trends in Europe should be setting alarm bells ringing at the highest levels of government – be it at the national or European Commission level.
The increasingly attractive R&D and healthcare ecosystem in the United States and in China is leading to a gradual migration of research and/or industrial activities from Europe to these countries. As an example, the United States increasingly reaps the benefit of R&D investment: In 2002, it benefited from €2B more R&D investment than Europe. Today, that figure has increased by 1,000 percent, reaching almost €25B.
Despite what seems like encouraging progress, the more recent trends in Europe should be setting alarm bells ringing at the highest levels of government – be it at the national or European Commission level.
During a time of geopolitical shifts, Europe must take back its leadership. And the stakes could not be higher. Despite the above-mentioned migration, the pharmaceutical sector still spends more than any other sector on R&D, at €44.5B, employs 865,000 people, and provides life-changing therapies to millions of patients.[1]
How do we close the gap and ensure Europe regains its leadership and prosperity?
It starts with the Pharmaceutical Legislation. COVID-19 taught us that a strong research-based ecosystem and resilient supply and manufacturing ensure the resilience and strategic autonomy of a region. Europe was able to lead in providing vaccines. This is largely thanks to the investments and previous research that our industry made in Europe in the last decades.
The EU Pharmaceutical Legislation will shape the future of research, development and manufacturing for decades to come. But unless significant changes are made, the newly proposed legislation by the European Commission will further accelerate the loss of Europe’s research and industrial base to the United States and Asia.
But unless significant changes are made, the newly proposed legislation by the European Commission will further accelerate the loss of Europe’s research and industrial base to the United States and Asia.
There are many actions Europe can take to boost the flow of cutting-edge health technologies:
Strengthen rather than weaken European IP protection
The proposal to cut Europe’s regulatory data protection (RDP) from eight years to six and make recovery of that lost protection contingent on factors outside of a company’s control will make Europe a less competitive and more uncertain place to invest. The EU should instead strengthen European IP protection for research into new treatments and explore new strategies to help address healthcare challenges. Over the coming weeks, we look forward to working with members of the European Parliament and member states to see how, through revising the legislation, we can put Europe and European patients back at the leading edge of advances in treatments.
Incentivize the development of truly world class EU innovation hubs
While global R&D is expected to grow (at 4.2% per year to reach $233B in 2026), R&D is leaving the EU. World-leading hubs like Boston or the UK’s Golden Triangle receive significant policy focus and strategic funding, whereas European research funding is more fragmented and decentralized, hence, dispersing scientific efforts and standing in the way of more collaborative progress.
Attracting Advanced Therapy Medicinal Products (ATMP) investment in Europe
There are 804 next-generation biotherapeutics (including cell, gene therapies and mRNA technology) in a global pipeline of over 8,000 new medicines. The United States has 50% of the world’s ATMP manufacturing facilities. Asia is fast becoming the most competitive region for attracting ATMP clinical trials (255 in 2021). However, Europe is in decline (89 in 2021). If we want Europeans to benefit from these cutting-edge therapies, a comprehensive end-to-end strategy to support ATMP is needed. We can access the latest clinical trials and our economies can reap the benefit of investments in advanced manufacturing rather than depending on the United States or China.
Regulatory agility
Europe must create a robust innovation ecosystem by leveraging both public and private funding. This ecosystem should be designed to accelerate innovation through streamlined regulations, proactive regulatory engagement and exploring agile regulatory avenues. Regulatory agility and a supportive clinical trial environment will positively influence R&D investment.
Boosting EU digital transformation and digital capabilities’ development
An effective digital ecosystem is a major driver of investment for global companies.
The United States is far ahead of Europe in digital infrastructure and interconnectedness. An EU-led effort to increase the interconnectedness of hubs, upskill the scientific workforce in digital technologies and accelerate the digitalization of health systems will boost innovation. If done right, the European Health Data Space will hold huge potential.
Fostering the adoption of sustainable procurement and pricing policies
In 2020, the European Commission recognized that inequal access depends on various factors, “such as national pricing and reimbursement policies, size of the population, the organization of health systems and national administrative procedures”[2]
EFPIA is working with governments and stakeholders to identify and promote pricing approaches that ensure medicines are accessible, the healthcare system is sustainable, and the innovation pipeline is robust and focused on societal needs.
The policy decisions we take today will affect Europe’s attractiveness for investment for decades to come.
Developing longer term European policies and collaborations to attract investment
The policy decisions we take today will affect Europe’s attractiveness for investment for decades to come. Securing the innovation capacity of Europe today means to secure access to the medicines of the future for patients in need.
Whatever the healthcare challenges, the answer often comes from innovation. Sometimes it’s the headline-grabbing breakthroughs that transform the lives of patients, their families and carers, but more often it is the improvement in quality of life or increasing life expectancy that make a difference. Today, thanks to this incremental innovation, many diseases, such as HIV, have become manageable chronic conditions.
We want Europe to be at the forefront of that innovation. Let’s learn from the pandemic and commit to a future-oriented policy that prioritizes the medical benefits of medicines, recognizes the value of incremental innovation and creates knowledge-intensive value creation. This requires policymakers to develop a long-term strategy and policies to regain, retain, sustain and develop life sciences in Europe.
[1] EFPIA, The Pharmaceutical Industry in Figures, 2023: https://www.efpia.eu/media/rm4kzdlx/the-pharmaceutical-industry-in-figures-2023.pdf
[2] Pharmaceutical Strategy for Europe, 2020: https://health.ec.europa.eu/medicinal-products/pharmaceutical-strategy-europe_en
