Editorial: Creating a competitive European life science sector

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ART PUBLICATIONS 1478-565X. J O U R N A L O F C O M M E R C I A L B I O T E C H N O L O G Y . VOL 10. NO 1. 1–4. SEPTEMBER 2003

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Editorial

placing an intolerable burden on financial investors and resulting in stagnating unfunded projects. Of course, not all projects deserve to be financed, but in this environment many viable projects are suffering too from lack of resources. The European Commission provides support principally through its Framework Programme and by attempting to ensure coherent policy initiatives throughout member states – perhaps its greatest challenge. Waldemar Ku¨tt, Etienne Magnien and Mark Cantley outline the priorities of the 6th Framework programme (FWP6) in ‘The role of the European Commission in fostering innovation in the life sciences and biotechnology’ in this issue. It is of note that 15 per cent or A337.5m of the total A2.25bn dedicated to life sciences, genomics and biotechnology for health is set aside for SMEs up until 2006. Also included in this programme are fellowships for SMEs to help stem/reverse the brain drain and facilitate technology transfer to industry in Europe. For the first time, this public funding is also available for early stage clinical development. Providing this can be accessed in an efficient manner and help companies maintain a ‘first in class’ or similar competitive position, this could provide helpful additional support. The European Commission has responded to past criticism from the industry concerning the difficulty in accessing funds by making application conditions more flexible and more meaningful funds available. While commendable, it remains to be seen how successful this programme will be for Europe’s SMEs, when compared for example to the National Institutes of Health’s (NIH) SBIR (Small Business Innovation Research) programme. It is also doubtful that it will have much impact on Europe’s competitive position, given the relative size of the NIH grants (about US$24bn in total for 2002 alone) and the relatively greater SBIR programmes (eg the National Cancer Institute alone awarded US$79.4m to domestic SMEs in 2002).6 Europe could well benefit from a similar institution and grant system for innovation. In addition to EC funding, there have been a number of member state initiatives, most notably the BioRegio competition which kick-started the German sector in 1996. This and similar initiatives helped to promote a more entrepreneurial culture in Europe, but they are partly responsible for the sector crisis we see today. The barriers to entry for SMEs have been virtually non-existent and the sector in Europe has simply grown too fast, while growth of the support industry, including financial backers, has failed to keep pace. But this is too simplistic: there are many other structural challenges faced by the industry, not least the high proportion of one technology, one product, non-viable businesses as alluded to earlier. In this climate of scarce funds, some countries have been hit harder than others, with the average venture capital financing in G