Brussels, 16 Mar 2004
Business representatives at the European Business Summit warned that an increasing amount of high added value research and development (R&D) is moving outside the EU, and therefore urged Europe to follow the US model by boosting investment and increasing technological transfer
'The huge paradox in the EU,' said Paul van Grevenstein, Managing Director of STI Management, 'is that we produce high quality knowledge that is not used. We need to unlock the socio-economic value of knowledge.'
Europe needs to energise the transfer from academia to industry and professionalise that activity, he said.
While R&D is the single most important source of wealth in the EU, over the last ten years, many European R&D jobs have been lost to the US. A good example of this is the pharmaceutical industry. In 1992, six out of the top ten medicines were developed in the EU, compared to four in the US. By 2000, the US was radically in the lead, having doubled that figure.
'There is an obvious lack of investment in Europe,' said Didier de Chaffoy, Senior Vice-President of Drug Discovery Europe at Johnson and Johnson. 'There has been too great a shift of investment from the EU to the US. In 1990, 73 per cent of pharmaceutical R&D spending by EU companies was spent in Europe, by 1999 this figure had gone down to 59 per cent, the rest being invested in the US.'
European innovation has become a low risk, low added value environment generating few transformational innovations and hence reducing the European competitive position on the global scene.
If Europe wants to regain its competitive edge, it must aim to make investment more attractive, emphasised business representatives. European companies must shift external costs into internal investments and move from incremental innovation to transformational innovation, as is the case in the US.
To achieve this, companies must link their innovation effort to the creation of economic value. They must innovate within a clear strategic perspective and provide substantial added value to their customers. Last but not least, they must be driven by clear leadership with experience in transforming 'findings' into 'value'.
Furthermore, the right partnership must be built between academia and industry, and both must share the long-term vision, comprising risk and gain.
Publicly funded research organisations also need good governance at senior management, agreed participants. Management should be more accountable, with more business expertise, and should be in direct contact with the demand side - industry.
In parallel, public authorities should reduce taxes related to R&D investment, business investment, personal taxes for scientists, and encourage a move from project-based funding to long-term structural incentives and knowledge creation.