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In March 2024, the Commission proposed a series of actions to boost biotechnology and biomanufacturing in the member states. In the Commission communication, existing challenges and barriers are identified in the process of “building the future with nature”; some other measures are visualized coped in line with the EU-wide long-term competitiveness program. These twin-sectors are also having strong links with healthcare and specifically with the pharmaceutical industry.
Background
New advances in life sciences, which are presently supported by digitalisation and artificial intelligence, as well perspective solutions based on biology to solve societal issues, make biotechnology and biomanufacturing one of the most promising technological areas of this century. They can help the EU member states to modernise agriculture, forestry, energy, food and feed sectors and industrial development. Additionally, these technologies can contribute to a more competitive and resilient EU, providing better healthcare to citizens and succeeding in the EU-wide green and digital transitions.
Important enablers for the general national bioeconomy sectors, including biotechnology and biomanufacturing are covering and relying on biological resources, their functions and principles: i.e. eco-systems, animals, plants, micro-organisms and derived biomass, wood and organic waste, etc.
Correspondingly, biotechnology and biomanufacturing sectors depend on the wider bioeconomy for their inputs, and to some extent as an outlet for their products; these sectors are also having strong links with healthcare and specifically with the pharmaceutical industry.
Other countries world-wide, have been recognizing potentials of biotechnology and biomanufacturing: i.e. the US has defined an industrial strategy (in “Bold goals for US biotechnology and biomanufacturing” report) for biotechnology and biomanufacturing, setting goals in five fields: climate, food and agriculture, supply chains, health and cross-cutting. China has also identified biotechnology as a key sector in its Made in China-2025 strategy. India, which is growing robustly in biotechnology, has unveiled a Biotechnology strategy as part of its own “Make in India” campaign; besides, the UK, with its “Life Science Strategy”, intends to give a new push to its biotechnology sector.
Logistical support: the world-wide acceptance of the biotechnology provides additional support for the sector’s importance. Thus, according to the OECD, biotechnology is defined as the application of science and technology to living organisms, as well as parts, products and models of them, to alter living or non-living materials for the production of knowledge, goods and services. Advanced biotechnologies are geared towards various application areas; among the main ones could be mentioned: a) medical and pharmaceutical (“red” biotechnology), b) agri-food (“green” biotechnology), c) industrial and environmental sectors (“white” biotechnology), and d) the marine biotechnology (so-called “blue”), which are all gaining increased attention.
Effective approaches to bio-tech-manufacturing are becoming ever more vital in the member states’ recovery/resilience plans. It is noticeable that the development of bio-products often involves lengthy and complex processes; hence, additional investments before the products reach the market are needed to secure the intellectual property protection and fulfilling some regulatory requirements.
Sectors’ economic potentials
The overall global biotechnology market size was about €720 billion in 2021 with a growth rate of more than 18 percent annually; the US dominates this market by contributing 60 percent of the global value, followed by the EU (12%) and China (11%).
More in: https://www.statista.com/statistics/1246614/top-countries-share-of-global-biotech-value/
The sector is characterized by intense technological competition, with research-innovation’s intensity that is higher than in other connected research spheres, particularly those in the pharmaceuticals’ sectors. The latter is inherently research-driven sector, often involving modern technologies and equipment, as well as adaptive knowledge that require substantial and continuous investments to stay at the forefront of scientific and technological advancements.
Source: https://www.oecd.org/innovation/inno/keybiotechnologyindicators.htm
In 2018, the European biotechnology sector contributed directly €31 billion to the EU’s GDP: the sector has also managed creating over 210.700 jobs in healthcare, industry and agriculture, as well as supporting 625.700 jobs (indirect and induced) in the overall economy. During the last decade, the biotechnology industry grew more than twice as fast as the overall economy, making it one of the fastest EU-wide growing innovative sectors.
The sector’s labour productivity is very high too: the products and solutions that the twin sectors are creating have had significant impact in different areas of application. For example, enzyme technology allows creation of lactose-free and sugar-reduced dairy products while laundry detergents contain enzymes, which break down fats, oils and protein chains; it allows washing clothes at lower temperatures and reducing energy consumption.
Source: “Measuring the economic footprint of the biotechnology industry in Europe” (2020), in: https://www.europabio.org/wp-content/uploads/2021/02/201208_WifOR_EuropaBIO_Economic_Impact_Biotech_FINAL.pdf.
Proposed actions
The Communication proposed in spring-2024 the following set of actions:
= Leveraging research and boosting innovation. This direction will help to identify drivers and bottlenecks of innovation and of technology adoption; the Commission also launched a study to investigate the EU’s position compared to other global leaders in emerging biotechnology generation and in transferring the results to the biomanufacturing industry. Besides, the direction will facilitate a more productive use of existing research infrastructures (both in the member states and the EU-wide) while exploring possible ways of accelerating the development and use of the “Industrial Biotechnology Innovation and Synthetic Biology Accelerator”, the EU IBISBA as a trusted digital repository and service network for the complex sector.
More in Communication on “Building the future with nature: Boosting Biotechnology and Biomanufacturing” (20.3.2024) in: https://research-and-innovation.ec.europa.eu/document/download/47554adc-dffc-411b-8cd6-b52417514cb3_en
= Stimulating market demand. In order to succeed on the market, the bio-based products need to prove their lower environmental impact when compared, for instance, to petrochemical products. Thus, the Commission will review the assessment of fossil-based and bio-based products to ensure equivalence of treatment and incorporate methodologies for carbon storage in construction materials. To accelerate the substitution of fossil feedstock and to stimulate the demand and market uptake of bio-manufactured products, the Commission will conduct an in-depth impact assessment of the feasibility of bio-based content requirements in specific product categories and in public procurement. Furthermore, the Commission will explore how bio-manufactured non-food products could profile themselves better through labeling of bio-based products.
= Streamlining regulatory pathways. In this direction the Commission will assess existing EU-wide legislation and its implementation in order to further reduce any fragmentation, explore potential simplification and shorten the time to market for biotech innovations. Besides, the regulatory obstacles will be analyzed at national legal systems and governance levels which impede an effective single market; the outcomes will lay the foundations for a possible EU Biotech Act. The Commission will also work towards establishing an EU Biotech Hub, an operational tool to be created by the end of 2024, for biotech companies to navigate through the regulatory framework and identify support to scale up; the Commission will further promote the establishment of regulatory drafts that allow to test novel solutions in a controlled environment for a limited amount of time under certain supervision, as a way of bringing more of the final products to the market.
Biotechnology has also been identified as a critical technology from the economic security perspective, given its cross-cutting nature; it is also one of the technologies prioritized in the Strategic Technologies for Europe Platform, STEP regulation.
More on STEP in: Proposal for a Regulation establishing the Strategic Technologies for Europe Platform (‘STEP’); COM/2023/335 final.
= Fostering public and private investments. The EU has a broad range of financing instruments to support biotechnology and biomanufacturing: e.g. Horizon Europe, the Circular Bio-based Europe Joint Undertaking, CBE JU and the Innovative Health Initiative Joint Undertaking, IHI JU; as well as the EU4Health program, the EU Innovation Fund and recently established the Strategic Technologies for Europe Platform, STEP.
To develop and scale up innovations with the potential to create new markets, the Commission will advocate the inclusion of specific challenges on biotech and biomanufacturing in the European Innovation Council’s work program for 2025. In line with the recent Eurogroup statement on Capital Markets Union, the Commission will launch a study by the end of 2024 to identify barriers and ways to support the consolidation of investment funds, stock exchanges and post-trading infrastructure in order to enable the development of the necessary scale, enhance the knowledge base, create deeper pools of liquidity and help lower the cost of financing for high-growth companies.
= Access to finance. This is a key issue for the development of a vibrant biotech industry. In view of the long-term financing needs of biotech companies, and uncertainty surrounding the return on their investments, traditional (i.e. the so-called loan-based bank financing, which is prevalent in the EU) is in most cases not suitable to meet the needs of this industry. Biotech companies need to look to capital markets for the funds they need, and would thus benefit from further progress on the EU-wide Capital Markets Union.
At the earliest stages of development, biotech firms need venture capital financing to implement their ideas: the great uncertainty as to the feasibility and success of novel products means that investments into biotech firms carry high risk as well as long investment horizons. Therefore, the scale-up stage of financing becomes one of the most problematic for biotech firms in the member states. Fragmentation of EU capital markets results in many small-to-medium sized equity funds that invest mostly nationally. Early-stage venture capital at smaller amounts has become more available in the EU-wide, but still lags behind other main economic regions, while access to larger amounts of later-stage venture capital in the growth phase remains a major obstacle. Thus in order to adequately funding later-stage biotech firms, the member states urgently need larger and “deeper” pan-European funds which can facilitate large rounds of private investment. At later stages of their development, biotech companies could seek financing by accessing public stock markets; however, these markets are still dispersed among several EU member states and it leads to fragmented liquidity and consequently higher cost of capital for listing companies.
= Strengthening biotech-related skills. The EU wide “Large-Scale and Regional Skills Partnerships” can play a significant role in providing upskilling and reskilling opportunities on biotech and biomanufacturing. A specific large-scale partnership for the biotech and biomanufacturing could be explored, which can be co-financed through the Blueprint Alliances activity of the Erasmus+ program. The expanding number of dynamic European Universities Alliances, EUAs and Erasmus+ partnerships and alliances for innovation can also strengthen the development of skills required by the biotech sector.
More on EUAs in: https://www.integrin.dk/2023/11/15/university-alliances-ways-to-reform-eu-wide-and-states-education-policies/
= Elaborating and updating standards. The Commission will continue to encourage the elaboration and updating of European standards for biotechnology and biomanufacturing to facilitate market access and innovation.
= Supporting collaboration and synergies. The Commission will encourage the deployment of technologies related to biotechnological processes and biomanufacturing in the EU-27 states and regions through relevant “Regional Innovation Valleys” programs.
= Fostering engagement and international cooperation. The Commission will explore the possibility of launching international biotech and biomanufacturing partnerships with key international partners, such as the US, India, Japan, and South Korea, to collaborate on research and technology transfer, and to explore possibilities for strategic cooperation on regulatory and market access-related topics. Through the Global Gateway and in line with its Global Health Strategy, the Commission will advance existing partnerships with Africa, Latin America and the Caribbean on manufacturing health products aiming to diversify global supply chains, overcome shortages of critical health products and reduce the global burden of disease.
= Using AI and generative search engines. The Commission will support structured exchanges with interested partners to accelerate the uptake of AI (and, particularly GPTs) in biotech and biomanufacturing (in the context of special GenAI4EU program). The Commission will also raise awareness of facilitated access during 2024 to the EuroHPC-type supercomputers for AI startups and the science and innovation community.
= Reviewing the EU-wide bioeconomy strategy. The Commission will review the EU Bioeconomy Strategy by the end of 2025; the review will take into account the current societal, demographic and environmental challenges, reinforcing the bioeconomy’s industrial dimension and its links to biotechnology and biomanufacturing to contribute to a stronger EU economy.
Reforming pharmaceutical legislation
The Commission also proposed a revision of the EU pharmaceutical legislation; the process includes some vital elements to ensure that the EU regulatory system is flexible enough to accommodate new innovative biotechnological medicines that shall be both safe and effective.
More in: https://health.ec.europa.eu/medicinal-products/pharmaceutical-strategy-europe/reform-eu-pharmaceutical-legislation_en.
The legal reform also aims at creating effective regulatory means through which the member states can continue to innovate and be global leaders in pharmaceutical biotechnology, including in Advanced Therapy Medicinal Products, ATMPs by proposing new provisions for clarifications on the interface and interaction with other legislative frameworks to help developers navigate the regulatory requirements, especially for: a) combination products, b) exploring new possibilities for scaling up or scaling out of biomanufacturing capacities; and c) proposing clearer rules on the use of the hospital exemption for ATMPs.
More in: The EU Regulation No 1394/2007 of November 2007 on advanced therapy medicinal products and amending later directive and regulation.
Besides, the hospital exemption allows for the use of an ATMP without a central marketing authorization. The ATMP should be prepared on a non-routine basis according to specific quality standards, and used within the same EU state in a hospital under the exclusive professional responsibility of a medical practitioner, in order to comply with an individual medical prescription for a custom-made product for an individual patient. Swift adoption of the proposals for the reform of the pharmaceutical legislation is therefore vital in facilitating European health biotechnology.
Adding to the support of biomanufacturing in Europe, the Commission is supporting the development of innovative manufacturing technologies through the EU4Health Work Program-2024. In addition, the Commission will launch a study to identify how best to leverage existing assets and infrastructures for health biotechnology, including those developed under so-called joint undertakings, with the aim of boosting the EU-wide biomanufacturing capacities.
In parallel, a study is currently taking stock of the application of the hospital exemption under the ATMP regulatory framework and the practical experiences across the EU states with developing and making available innovative biotech products in the hospital setting.
Source: https://research-and-innovation.ec.europa.eu/document/download/47554adc-dffc-411b-8cd6-b52417514cb3_en
Conclusion
The 2012 EU Bioeconomy strategy, updated in 2018, sets the foundation for a more innovative, resource-efficient and competitive society that reconciles food security with the sustainable use of renewable resources for industrial purposes, while ensuring environmental protection. Given its important role in supporting the green transition, the bioeconomy will continue to be key for ensuring the EU’s competitiveness and resilience.
Therefore, there is a need to adjust the EU policy on bioeconomy taking into account the current societal, demographic and environmental challenges, reinforcing its industrial dimension and its links to biotechnology and biomanufacturing to contribute to a stronger EU economy. In that sense, in 2025, the Commission will complement the EU-wide bioeconomy strategy with a substantial review.
The Commission will explore the possibility of launching international biotech and biomanufacturing partnerships with key international partners, such as the US, India, Japan, and South Korea, to collaborate on research and technology transfer, and to explore possibilities for a strategic cooperation on regulatory and market access-related topics.
Of course, the financial issues will be ever more important in the EU’s future. For example, a decade ago, the Commission in 2014 encouraged companies to raise funds on the stock exchange to make it easier for savers and investors to put “the money to work”. However, one of the main questions still remains: is the role of “non-banks” going to play in the Capital Markets Union, CMU? As soon as insurers, pension funds and investment funds are regulated differently than traditional banks, could the possible changes cut red tape (as part of the CMU reform) provide adequate impact for non-bank regulation (if any?) and effectively support progressive socio-economic development?
Reference to: https://www.politico.eu/event/the-cmu-push-in-the-new-mandate-what-is-the-role-for-non-banks/?utm_source=Marketing-Cloud&utm_medium=Email&utm_campaign=-ROM1_announcement_-_CMU_and_non-banks