Brussels, 15 Apr 2004
According to a recent report by Cap Gemini Ernst & Young, enlargement could, in the long term, strengthen Europe's position in the life sciences sector.
At present, Europe leads the world in pharmaceutical manufacturing, but trails behind when it comes to innovation in life sciences. European success is hindered by a fragmented market, pressure to lower manufacturing as well as research and development (R&D) costs, and a climate that falls short of encouraging or rewarding innovation.
According to the report, this could change with the accession of ten new countries to the EU. Indeed, the future Member States will provide access to a wider pool of skills, a larger reservoir of patients for clinical trials and more cost-effective facilities. The new EU countries are in a prime position to support clinical development activities - potentially accelerating the time to market for new drugs.
'Investment costs, cultural issues and regulatory requirements in Western Europe have traditionally prohibited the EU from becoming the 'location of choice' for conducting clinical trials,' explained Paul Nannetti, global leader for life sciences, at Cap Gemini Ernst & Young. 'Central and Eastern European countries, which offer lower clinical development costs, higher site productivity and fewer local regulations, could relieve some of the current pressures on pharmaceutical firms in Europe.'
'Looking at the market we see that Central and Eastern Europe's highly skilled workforce, multi-lingual skills and low-cost back-office activities such as finance, administration and human resources could also be prime candidates for transitioning to Eastern Europe, and provide a valuable complement to traditional offshore locations,' he added.
Up until now, European countries have developed and produced the majority of new pharmaceuticals. But their share of new launches in the world market has been steadily declining in recent years.
Between 1990 and 2002, R&D investment in the US rose more than fivefold, while in Europe it increased by only 2.5 times its original level. This slow-paced investment in Europe means that the European life sciences sector has suffered a brain drain to the US, where better career opportunities exist.
The complexity of regulatory requirements, on the other hand, makes Europe less attractive than the US for life sciences investment. Unlike the US, which has only one regulatory agency for all states, Europe has 15 individual regulatory authorities within the current EU, and as many as 40 across the whole of Europe. This will not change with EU enlargement.
The large number of ethics committees across Western Europe also has an impact on the EU as a place for rapid drug development. In comparison, a multi-centre study in the US requires just one central ethics committee and, where applicable, local ethics committees for individual centres.
On a more positive note, however, the report shows that between 1997 and 2002 there were 787 foreign investment projects in the European life sciences industry, with the UK and France being the top European recipients. Ireland, Germany, Belgium and Spain followed closely behind.
The report also reveals that the Nordic countries are now well placed to become the hotbed for biotechnology research within the EU, thanks to R&D facilities, a supportive infrastructure, incentives available for start-ups and close links between universities and industry.
Therefore, in addition to these developments, 'EU enlargement [now] brings the opportunity to reduce the 'innovation gap' between the US and Europe. A more attractive and innovative environment that allows European talent to flourish should help to reverse the trend of our workforce seeking careers elsewhere. Lower cost clinical development, an increase in site productivity and a highly educated labour force are all key factors, to which the ten new countries all have the capacity to contribute,' said Roy Lenders, the report's author.
The report warns, however, that in the short term, the new EU entrants will face practical difficulties in trying to adopt EU life sciences legislation. They will need to harmonise their laws on data exclusivity, labelling and advertising of medicines.
The report concludes that Hungary is the best country among the new entrants to invest in research and development, followed by the Czech Republic. Indeed, when assessment of pharmaceutical facilities includes generic drug manufacture, the accession countries score far more highly because of low wage costs, competitive regulation structures and the ease of obtaining permits. These countries, particularly Slovakia and Hungary, also have high education levels.
'We expect that clinical development activities will increasingly move to new EU countries,' ends the report. 'For the European Union as a whole this will increase the EU competitiveness in the pharmaceutical innovation race against the US. In short, the new EU countries may emerge as a global drug development partner.'
For more information on thematic priority on 'Life sciences, genomics and biotechnology for health' in FP6, please visit:
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