Call for Europe-wide innovation fund
pharmafile | December 3, 2009 | News story | Research and Development | Europe, biotech, finance
A new report on the state of biotech and pharmaceutical R&D in Europe says the sector is suffering from a lack of investment, and has called for a dedicated EU-wide fund to help it thrive.
The in-depth survey conducted on behalf of the European Commission’s Enterprise and Industry directorate says there are three major funding gaps in R&D.
* First funding gap: obtaining funding for platform development and pre-clinical development (early stage)
* Second funding gap: obtaining funding for clinical trials phases I and II (middle stage)
* Third funding gap: obtaining funding for clinical trials phase III, manufacturing and marketing (late stage)
The report warns that if this funding shortage is allowed to continue, it could jeopardise Europe’s status as one of the world’s leading locations for biopharmaceutical R&D, and could hit jobs and the region’s economic success.
The authors have produced a five-point plan which they say can provide a more stable financial base for the sector.
New accelerating tech transfer models
The first recommendation is to identify way to increase the effectiveness of biotech and pharma R&D and commercialisation methods.
This reflects in part the disenchantment of venture capitalists with the sector, with some biotech firms accused of lacking a sound business model and having an inability to develop compelling new drugs and technologies.
The report says new tech transfer models need to be explored by the sector, public authorities and the investor community. It also recommends the Commission make an in-depth analysis of different models used in Europe and elsewhere to establish best practice.
Micro-funds and investments by business angels
Lack of capital is especially difficult for companies in early stages of product development. The report recommends micro-funds and investments by business angels in early-stage companies through public co-investments and tax incentives.
European Biopharmaceutical Innovation Fund
Policy makers should consider making risk capital available to biopharmaceutical companies by setting up a dedicated fund. It says sufficient funds should be provided to uphold the principles of economies of scale and specialisation and to act as highly qualified and professional fund within biopharmaceuticals.
The report recommends that the fund should operate on market conditions to ensure that funding is allocated to biopharmaceutical companies with a substantial market potential.
Public co-investments in the sector
The report says the fund should also increase public co-investments in the European sector. It adds that European and national policy makers will also need to consider the geographical reach of the existing funding mechanisms at European and national level to ensure that global funding opportunities are exploited.
Framework conditions
Finally, the legal and regulatory conditions for both biopharmaceutical companies and the venture capital industry in Europe should be improved to help them develop and compete. It says this could include speeding up the centralised procedure for marketing authorisation (EMEA) and adopt the Young Innovative Companies (YIC) scheme (a tax break regime for start up companies) in European countries.
Report: The financing of biopharmaceutical product development in Europe
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