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9-Misc: The European Commission's new biotech policy

------------------------------- GENET-news -------------------------------

TITLE:  The Commission's new Biotech Policy
SOURCE: Günter Verheugen, Vice President of the European Commission
        responsible for Enterprise and Industry, Belgium, SPEECH/05/536
DATE:   22 Sep 2005

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Günter Verheugen
Vice President of the European Commission responsible for Enterprise and

The Commission's new Biotech Policy
Biotechnology Policy Day High Level Roundtable

Brussels, 22 September 2005

Ladies and Gentlemen,

I would like to thank Mr Hans KAST [Chairman of EuropaBio] for his kind
invitation to address EuropaBio's Biotechnology Policy Day.

Biotechnology is of great importance to several of Europe's industrial
sectors and will be a key component to increase our competitiveness.

The new Commission's industrial policy for biotechnology will rely on two
building blocks: the relaunched Lisbon Strategy and the Commission's
strategy and action plan for Life Sciences and Biotechnology.

It is now clear that, although the Lisbon objectives were appropriate,
the programme for achieving them was too ambitious. The new Commission
has looked again at these objectives and developed a clearer and more
realistic plan with a stronger focus and greater ownership of the process
by Member States. What we have adopted is a Partnership for Growth and Jobs.

This was always at the core of Lisbon but now each Member State's role
and responsibility to deliver are more clearly stated. Ensuring this
Partnership is a success is my most important goal as Commissioner for
Enterprise and Industry.

Underpinning this will be a new European industrial policy that aims at
boosting economic growth and job-creation. The policy must be horizontal
in nature to create a better environment for all businesses, regardless
of size or sector. At its heart will be a drive to create the appropriate
framework conditions, in particular through better regulation, to allow
European industry to thrive. To set this out in greater detail we are
currently working on a Communication "Strengthening the policy framework
for EU manufacturing - an industrial policy for Growth and Employment". I
expect that it will be adopted shortly.

This new policy will, of course, have to be adapted to the needs for each
sector. If Europe is to meet the economic competition from the United
States and the growing challenges from China, India and others we must
enhance our traditional strengths, i.e. competitiveness, innovation and
excellence. This, naturally, puts the knowledge-based economy with
biotech as one of its legs, at the forefront of our policy. It is my
objective to ensure that we create the conditions so that Europe, becomes
the natural home for biotechnological innovation.

Firstly, I would like to turn to the critical issue of competitiveness
and innovation. The long-term well-being of the biotech sector depends on
support for the science base. Industry already makes significant
investments in research and development [?6 billion per year], but we
also note that the US spends almost three times that amount.

My objective is very clear: we must ensure to provide adequate support to
innovation but also ensure that new innovations result in applications
that are placed on the market and generate revenues. Only then will we be
able to gain a competitive advantage.

In April this year, the Commission adopted two proposals which are
horizontal in nature but very important for the future of the life
sciences and biotechnology sector: In this context my colleague Janez
Poto_nik will refer to the 7th Research Framework Programme.

Under my responsibility, the Competitiveness and Innovation Programme
will be a new streamlined innovation agenda designed to specifically
benefit SMEs and start-ups. It includes an Entrepreneurship and
Innovation Programme with a substantial budget of ?2.6 billion. Indeed,
SMEs are doing much to develop the new technologies on which the future
of the biotech sector depends. The programme also includes many new
elements including a risk capital instrument for High Growth and
Innovative Companies, an enhanced role for innovation business support
networks and a twinning programme for policy makers. Overall it is
designed to support actions that develop the capacity of enterprise and
industry to innovate.

Ladies and Gentlemen,

We are witnessing a surge in knowledge in biosciences. Already now
biotechnology and life sciences play an ever-increasing role in our daily
life, which will affect almost every field of human activity. Fanciful
biotech applications are not mere promises - they are either reality or
are about to become so. In particular new drugs and therapies prove the
usefulness of biotech.

While biotechnology has had a belated start in Europe, but the situation
has improved. Europe has more than 1900 biotech companies, roughly as
many as the USA, among them many small and medium sized enterprises. We
had 132 start-ups in 2003, compared to 83 in the USA.

But all is not well. The US biotechnology industry employs twice as many
people, spends almost 3 times more on research and development, raises 3
times more venture capital, and has access to 4 times as much debt
finance. US companies also generate twice as much revenues, and will
continue to leap ahead as they place more products on the market and have
more products in the pipeline than European companies.

We must rise to the challenge. Apart from improving the financing of
research and innovation, the Commission recognises that the problem with
the lack of follow-on finance needs to be addressed: many biotech
companies find it hard to raise more capital after 3-5 years, which is
needed for the development and trial phases before a new drug can be
marketed. We need to improve access to private investment in public
equity (PIPE) and debt financing, and raise the willingness among
institutional investors to invest in high-risk equity.

Another disquieting tendency taking place in the pharmaceutical sector,
one of the most promising fields of biotechnology, is the move of
research activities and the production of innovative drugs outside
Europe. We must not underestimate this widening gap. Losing R&D in life
sciences is going to have major social and economic consequences for
Europe, for example:
- delayed access to innovative drugs for the European population,
- an erosion of the general European research base, and a continued
"brain drain" of researchers from Europe to the US and elsewhere,
- a loss of inventions, of entrepreneurial talent, and a decline for the
European biotechnology industry.

To sum up, an overall strategy is needed, and we are in the comfortable
situation that it already exists. The Commission's Biotechnology Strategy
has laid the groundwork for our catch-up efforts in 2002 and was welcomed
by Member States and the European Parliament.

The strategy covers all fields of biotechnology, green, white and red,
and addresses all major issue areas and policy fields, from R&D to the
regulatory framework and access to capital for SMEs. The promotion of
biotechnology is important, but also discussing the societal concerns. An
open and sincere debate about the benefits of biotechnology and the
ethical questions surrounding it, is necessary and the Commission will
launch it in the context of the mid-term review of the Strategy next year.

The debate must, however, remain science-based, and we must take a
balanced view on matters of concern, such as GMOs, and avoid taking
extreme positions. Clarity and knowledge will help to lower emotional
prejudices. The fact that Europeans widely accept medical uses of
biosciences shows that they are not against biotech per se.

This brings me to the controversial area of green biotech which provides
new solutions for sustainable agriculture, better crop yields, better
food and feed quality and renewable resources.

But its benefits are not limited to food and feed. Plant genomics is
useful for fermentation and other industrial processes, that we refer to
as white biotechnology. Genetically modified plants may become a major
source of material for biopharmaceuticals, mainly therapeutic proteins.
They could provide a cost-effective, abundant and safe source of human
antibodies, vaccines, enzymes and other medicines.

However, we all know that public attitudes as well as Member States'
positions hamper the development in this area. The Commission confirmed
in March 2005 its full commitment to the current legislative framework on
the authorisation of GMOs and called for Member States to co-operate and
introduce balanced co-existence measures in order to strengthen Europe's
economic potential. As you know, the Environment Council has recently
taken a divergent position.

Starting from the lime taken in March 2005 we will need to enter into a
discussion with Member States in which direction the train should move
with regard to GMO authorisation. Europe has to make up its mind whether
it wants to use the full potential of green biotech to become competitive
vis-à-vis countries like the USA, Canada, Australia, China and India.

In addition, we, the Commission, public authorities, academia and
industry together, should try to present the usefulness of GMOs to the
public and explain why it matters greatly to us, not only as food and
feed. Industry needs to demonstrate the benefits and the usefulness of
their products.

Ladies and Gentlemen,

to regain our position as a world-leading drug developer, Europe needs to
strengthen its scientific co-operation between large companies, SMEs and
academia. The integration of local clusters of biotechnology companies
and research centres, and increased co-operation between different
regions, are examples of what can be done.

The recent revision of the regulatory framework governing pharmaceuticals
has significantly contributed to a more competitive structure for
industry. Several measures will encourage innovation, in particular
intellectual property rights with long data exclusivity.

Other measures, which are particularly relevant to SMEs, include:
- waivers and deferrals for a number of fees,
- easier access to scientific advice from the Medicines Agency, EMEA,
- special incentives for companies developing orphan drugs, and
- administrative support by establishing a special "SME Office" within
the EMEA.

In the field of innovative pharmaceuticals, we are in the process of
completing our legislation with the long awaited regulation on advanced
therapies and tissue engineered products.

Further discussions related to the pharmaceutical sector will take place
in the Pharmaceutical Forum, a High Level Group I am about to set up
together with my colleague Markos Kyprianou, which will cover the
Commission, Parliamentarians, Member States and Stakeholders.

Ladies and Gentlemen,

Europe is facing a huge healthcare challenge. The Council's Economic
Policy Committee has estimated that, by 2050, there will be only two
working age citizens for each elderly person in the EU instead of the
current four. The increasingly elderly population will need ever greater
support from hard-pressed healthcare systems.

By investing in biotechnology and healthcare now, we can reap rewards in
the years to come through reduced hospital care and other long term
support. For patients, it will mean a better quality of life.

By keeping Europe at the cutting edge of biotechnology research, we will
also contribute to the more general goals of creating more highly-
qualified and well-paid jobs, boost economic growth and improve our

Let's be clear: it will not be an easy task to achieve this. The
Partnership for Growth and Jobs is an essential and adequate tool to do
this, and I am convinced we are able to face the challenge and come out
successful. Let's work together to achieve this.

Thank you.


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