Words by Isabel O’Brien
Europe must act urgently to back small and medium-sized enterprises (SMEs) in the biopharmaceutical sector, says the European Federation of Pharmaceutical Industries and Associations (EFPIA). A new report out today highlights the lack of EU-specific funding, pushing innovative SMEs to seek more supportive environments abroad.
Conducted by Charles River Associates, the study echoes a recent call from Ursula von der Leyen, President, European Commission, for stronger support of the life sciences sector. Yet, Europe continues to fall behind. Between 2018 and 2020, only 25% of new biotech companies started in Europe, compared to 65% in the US.
High drug development costs, ranging from 314m (USD) to 6bn (USD) for complex conditions such as Alzheimer’s, make investment critical. Yet European SMEs face hurdles in attracting private and public funds, with pension funds remaining risk-averse and Europe’s stock market, Euronext, offering fewer incentives than the US Nasdaq.
Key recommendations
The EFPIA report suggests three reforms:
- Pension fund reform: Encourage pension funds to invest more in venture capital and SMEs.
- Cost of raising capital index: Develop index comparing raising capital in Euronext versus Nasdaq.
- €1bn guarantee fund: Establish a fund to mitigate risks and boost life sciences investment.
In a press release, Amer Jaber, Chair, SME Working Group, EFPIA, stressed a challenge with the current state of play. “In the EU, we have a situation where researchers can publish a brilliant academic paper but fail to turn the research into entrepreneurial biotech startups because there is not enough support.”
Nathalie Moll, Director General, EFPIA, added why she believes action is urgently needed. “SMEs are critical to the future of European life sciences and patients, as they often carry out research and development in areas of unmet medical needs, or tackle major health crises, including pandemics,” she said.
