Europe’s Biopharma at a Crossroads: Urgent Reforms Needed to Restore Global Competitiveness

A report prepared by Milena Richter for the European Federation of Pharmaceutical Industries and Associations (EFPIA) paints a picture of urgency for the sector on the continent. The biopharma industry is facing a period of threats to European security within a context of macroeconomic and geoeconomic challenges. Over the last two decades, research and development spending has shifted rapidly to other regions. The European share fell from 37% in 2010 to 32% in 2020. Projections indicate a decline to 21% by 2040 if no countermeasures are taken.

The competitiveness gap in innovation capacity is significant. Between 2010 and 2022, pharmaceutical R&D spending grew by an average of 4.4% annually in the European Union, from €27.8 billion to €46.2 billion. However, in the United States , growth was 5.5%, and in China, it reached 20.7%. This situation “jeopardizes leadership in advanced therapies, the conduct of clinical trials, and European biomanufacturing capacity,” the report states.

The document analyzes the strategies of ten countries using a six-pillar framework that includes R&D intensity, public-private partnerships, clinical trial adoption, regulatory efficiency, funding, and the translational ecosystem. Governments are increasingly orienting their industrial policy around economic and national security. In this respect, the national security dimension is central to the policies of China and the United States .

In the United States, the Food and Drug Administration (FDA) is responsible for approximately 45 to 50 percent of the world’s first approvals of new active substances (NAS). Between 2014 and 2022, the US approved 545 NAS, nearly half of them either exclusively or earlier than in Europe and Japan. Meanwhile, China is emerging as a major driver of global innovation pipelines. The Asia-Pacific region already accounts for between one-third and one-half of the global pipeline of innovative drugs. The Chinese biopharma market alone contributes 2 percent of the total.

The challenge of the single biopharma market

The completion of the single biopharma market is considered a top priority for the European Union. The report underscores that the lower competitiveness compared to other blocs is partly due to the fact that not all member states are working in the same direction. There are areas of underperformance caused by insufficient implementation of current European legislation. Investors point out that faster and more predictable access routes for patients in Europe would influence clinical research location decisions.

The implementation of the Clinical Trials Regulation has been described as incomplete and under-resourced. A uniform implementation is called for to eliminate bottlenecks and duplicated administrative burdens. The aim is to ensure faster reviews through harmonized timelines and an optimized clinical trial information system. Furthermore, the creation of regulatory sandboxes for the use of artificial intelligence in trial design and drug discovery is proposed.

Financing and venture capital

Europe suffers from a structural investment deficit in biopharma and a lower risk appetite than third countries. Although the venture capital market has grown, it suffers from fragmentation and insufficient allocation by large institutional investors. High-potential companies are often lost to acquisitions or IPOs in the US . The European Commission ‘s strategy acknowledges that it only captures five percent of global venture capital, compared to 52% for the US and 40% for China .

To unlock capital in later stages, mobilizing pension and insurance funds is suggested. The use of InvestEU and the new Competitiveness Fund should help attract private capital to biomanufacturing startups and testbeds. The report proposes the creation of a guarantee fund for biopharmaceutical SMEs to minimize losses through lower rates of return and harmonized risk-sharing incentives.

International role models

The study identifies best practices in various countries that could serve as inspiration. South Korea is the world leader in R&D intensity, with R&D spending approaching five percent of its gross domestic product in 2023. The South Korean government uses research budgets to drive strategic industrial transformations, such as vaccine sovereignty and leadership in biosimilars. Its model integrates government agencies, research institutes, and companies into a single ecosystem to accelerate time to market.

Within Europe, Denmark stands out as a highly innovative country. The life sciences sector accounted for 22 percent of its total exports in 2020. Its model is based on public-private platforms such as Trial Nation and the BioInnovation Institute. Denmark maintains one of the highest rates of clinical trials per capita and boasts an advanced health data infrastructure, bolstered by the Gefion supercomputer.

Industrial transformation and biomanufacturing

The ability to translate science into products requires robust translational infrastructures. Countries like France and Denmark can lead the way in clean biomanufacturing in Europe, with energy-efficient plants and greener processes. In France , the Innovation Santé 2030 program has a budget of €7.5 billion to position the country as a European innovation hub. The French plan includes €1.5 billion for industrial scaling and another €800 million for the bioproduction of innovative therapies.

The UK aims to become Europe’s leading life sciences economy by 2030. Its competitive advantage lies in access to longitudinal health data for the entire population through the NHS . The British government has allocated €600 million to the Health Data Research Service to facilitate data-driven research and attract investment. However, the sector in the UK faces barriers such as reimbursement issues for prescription drugs and a shortage of capital in late-stage research.

The role of artificial intelligence in the biopharma sector

The integration of biotechnology with AI and Big Data is a key differentiator in China ‘s strategy . The Asian country uses these technologies to deliver drugs to global markets more quickly and cost-effectively. In 2024, Chinese authorities approved 48 first-class drugs, more than 70 percent of which were developed by domestic companies.

For Europe to succeed at this nexus, it must operationalize the European Health Data Space. Connecting the sector with the European Commission’s AI factory rollout is recommended. Future competitiveness will depend on how ideas move through trials and regulation, and on whether an attractive ecosystem exists for building modern biomanufacturing capacity.

EFPIA concludes that Europe must scale up its own model based on world-class science and talent. This requires cross-border clusters, industrial-grade translation, and credible, rapid routes to market, backed by substantial capital and geopolitical realism. Failure to capitalize on the current momentum will lead to the irreversible shift of innovation to other regions.

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First published in diariofarma. A third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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