A Blueprint for Competitiveness: Elevating Europe's Life Science Sector
The introduction
The Life Science sector is among the most valuable and strategically important sectors in the European economy The sector is critical to Europe’s health, wealth, and resilience, where the pharmaceutical sector alone is the biggest contributor to the EU’s trade balance of any sector reaching a value of 538 billion euro in 20221 Europe´s 37.000 med-tech companies2 are securing employment for 10.35 million3 people, across Europe including in rural areas4 . Besides being the second largest R&D-investing sector in the EU, responsible for 19.7% of EU R&D investments in 20225 the European life science industry is creating societal value by driving growth and solving some of the biggest healthcare problems of our generation A strong life science industry is essential for patents’ access to novel treatments and new medicines and an integral part of Europe’s future.
The issue
Geopolitical tensions and increasingly complex challenges have exposed the EU’s vulnerabilities, while technological and demographic trends call for urgent policy adjustments. However, the EU has so far responded insufficiently to the challenges with appropriate supportive and strengthened economic policy framework conditions and to effectively improve the European location for production and research in the long term. Instead, we are currently facing rising production costs, high bureaucratic requirements and a complex regulatory environment (e.g. when implementing new innovations or for clinical trials). Furthermore, R&D investments cannot keep up with global innovation leaders, which is also due to insufficient public R&D funding or a weak venture capital market (the EU’s gross domestic expenditure on R&D is estimated at 2,11% of GDP in 2022, compared with 3.59% in the USA and an OECD average of 2.73%). All of this hampers R&D and innovation and massively rocket location costs and consequently weakens the position of our industry on the global markets, which leads to an outflow of investment from Europe6 .
The EU has been a successful research union and must remain so in future. However, while the international competition is intensifying, Europe’s performance is improving at a lower rate compared to our key global competitors. In 2002, the R&D investments made by pharmaceutical companies in
1 Measuring The Economic Footprint Of The Biotech Industry In Europe (europabio.org)
2 https://www.medtecheurope.org/wp-content/uploads/2024/07/medtech-europes-facts-figures-2024.pdf
3 Life-Science-Attractiveness-2023-October-22-Final.pdf (europabio.org)
4 https://www.medtecheurope.org/about-the-industry/facts-figures/
5 In a EU 1000 sample. The life science industry or the health industrial sector in this report includes biotech, pharmaceutical and other health industries. See The 2023 EU industrial R&D investment scoreboard, the EU Commission.
6 OECD’s Main Science and Technology Indicators database (MSTI database).
the US and Europe differed by 2 billion euros. In 2020, the difference has increased to almost 25 billion euros7 The widening R&D gap has turned into a critical challenge, with long-term negative implications for Europe’s life science sector and EU’s competitiveness.
European life science companies are increasingly looking to regions such as the US and China with more ambitious life science strategies, both in terms of R&D investments, clinical trials, advanced manufacturing, and scientific and academic skills.
As a result, the EU is falling behind its global peers, losing investments, tax revenue, jobs, health benefits and social impact that could support EU’s competitive edge and deliver on the European economic security strategy, and the goals of the European Health Union.
Furthermore, confronted with growing instability, strategic competition and security threats, Europe needs to reduce its strategic dependencies in certain sensitive sectors8 . An essential sector such as health is instrumental in addressing and decreasing our strategic dependencies9 .
The EU has no other choice than to become a radically more attractive place to invest, start and grow businesses in. Without changing the course of action, the long-term competitiveness of the EU is under serious threat challenging the important role of the life science sector in Europe and with that future healthcare innovations for Europe’s people.
The solution
The life science industry as an enabler to underpin Europe’s strategic autonomy, economy and security
Policy actions are needed to enhance Europe’s economic, manufacturing and industrial base, thereby securing the EU’s economic resilience, global competitiveness, and attractiveness as a business location.
Strengthening the competitiveness of the life science sector will make the EU a stronger and more independent region in the world. The life science sector should be recognized as an integral part of EU’s industrial policy – and this should be reflected in the general framework conditions for the industry.
Thus, European business organisations call for a comprehensive Life Science Strategy to close the competitiveness gap with other leading life science regions.
To successfully carry out the European life science strategy, one should include the following goals and each goal’s outlined proposals:
7 CRA (2022). Factors affecting the location of biopharmaceutical investments and implications for European policy priorities. Charles River Associates.
8 20220311-versailles-declaration-en.pdf (europa.eu)
9 20220311-versailles-declaration-en.pdf (europa.eu)
1) Make the EU a global research and innovation hub for life sciences, providing an ecosystem that brings together businesses, researchers, clinicians, and patients to translate research into innovation.
o Build on the EU’s comparative strengths to create life science ecosystems (the life science sector is fostering an ecosystem of small and large biotech industry, university hospitals and academics) Europe has strengths in basic research and development. It is home to 43 percent of the world’s top 100 life sciences universities10 . To implement research results, companies are needed that take them up and transfer them into applied R&D and, if successful, production. In the life science sector in particular, leading companies are essential hubs in the innovative ecosystem and important strategic partners for start-ups, SMEs and science. A strong research-based life science industry is critical for Europe regaining its competitiveness and building economic and health resilience in the face of continued global insecurity and volatility. Accordingly, measures must be taken to strengthen the life science sector along the entire value chain, from early research and applied R&D through to implementation and production.
o Foster competitive European life science clusters - Support selected, specialised clusters of biotech and pharmaceutical excellence by strategic, targeted use of EU funds including Horizon Europe and future framework programs, looking at core enablers in globally successful clusters.
o Necessary measures for attractive framework conditions for the life sciences sector must also aim to make the EU an attractive location for clinical trials.
o EU must fully tap into the potential of our research and development strengths and maximize the opportunities offered by the Single Market to make EU a more attractive place for R&D and innovation. Thus, we support Enrico Letta’s proposal for a ‘fifth freedom’ to enhance research, innovation and education in the Single Market, for which he says, “the healthcare sector stands out prominently”11
o Public R&D spending should be used more efficiently and be distributed on an excellence base with the purpose of underpinning the most competitive life science clusters in Europe. This will help accelerate market uptake and the industrial and commercial scale-up of innovation as stated in the Council’s conclusion12 .
2) Make the EU the most attractive location to invest, start and grow life science businesses, with an internationally competitive regulatory environment and trade relations that ensure open strategic autonomy.
o Commit to predictability and stability A robust and predictable and attractive IP and incentives framework should be seen as a key competitive advantage to Europe. Therefore,it must be strengthened in the long term - particularly in view of the everincreasing global competitive pressure. Adequate incentives, such as data protection
10 McKinsey Global Institute, Securing Europe’s competitiveness, September 2022.
11 Enrico Letta - Much more than a market (April 2024) (europa.eu)
12 Conclusions, Special meeting of the European Council (17 and 18 April 2024)
and market exclusivity, are an essential factor to ensure protection of long-term investments Therefore, EU legislation currently debated (the General Pharmaceutical Legislation and the Patent Package) must not undermine or weaken IP-rights and incentives in the life science sector which would be counterproductive to a more competitive Europe. A reduction of regulatory data protection periods (RDP) for innovative medicines and replace it with a complicated spectrum of incentives that make the investment case for innovative medicines more unpredictable and uncertain. According to a new study reducing the RDP will result in lost R&D investments that exceed the estimated cost of one additional year of RDP and ultimately result in fewer innovative medicines developed for patients13 . Consequently, it is essential to keep the current regulatory data protection and market exclusivity period.
o Regulatory framework conditions should ensure legal certainty and predictability, be better integrated, coherent across policy areas and open to innovative approaches
3) Make EU a leading hub for manufacturing within life science.
o Solid infrastructure is a prerequisite. Structural conditions need to be in place (electricity, water, roads, etc.)
o Approve and implement the European regulation for the creation of a European health data space. Quality and effectiveness of research, competitiveness and processing of health data are closely interrelated issues. The gradual process of implementing the regulation and updating the regulation's technical secondary legislation should be carried out in close cooperation with the life science industry.
o Other important factors include smooth approval/permitting processes, competitive taxes and access to skilled labour.
Thus, we support the EU leaders’ call for a new European Competitiveness Deal and call for a dedicated Life Science Strategy as part of the wider strategy to close the competitiveness gap with other leading life science regions. A life science strategy for a healthier, more resilient and competitive future
