European biotech research, development, and innovation incentives need to ensure greater economic growth
Brussels, 27 March 2014
European governments must remain committed to biotech research, development and innovation (RDI) incentives as the industry faces fresh challenges of upholding its world leading position of innovation, maintains the biennial report published today by EY and EuropaBio: ‘Biotechnology in Europe: The tax, finance and regulatory framework and global policy comparison’. The report was launched today in Brussels, alongside the unveiling of the EuropaBio biotech industry manifesto for the new Commission and Parliament term. The manifesto outlines the industry’s leading companies’ ‘wish list’ of policy incentives needed to retain competitiveness in Europe and ensure that innovative products and services have a pathway to the market.
- EY/EuropaBio report highlights European biotech industry has returned to profitability and outlook is positive
- Government incentives need to promote faster rate of expansion
- European decision making needs to become more science-based, less politicized
The report’s launch also coincides with the European Commission’s release of its 2014 Innovation Scoreboard. The Scoreboard shows Europe is at risk of becoming the world’s research hub while innovative products, processes, and the jobs and growth associated with this development will instead go to competitor regions. Despite an improvement in terms of closing the innovation divide with the rest of the world, the Commission’s Scoreboard indicates Europe still lags behind individual countries such as Japan, South Korea and the US.
EuropaBio Chairman, André Goig, who welcomes the report’s findings, comments:
“National governments need to do more to ensure that RDI in the European biotech sector is universally transformed into new businesses, new products, and additional jobs for both large-scale companies and SMEs. The report, as well as the new biotech industry manifesto, goes some way to outlining to policy officials exactly what needs to be done to make this happen.”
The report provides a comprehensive study of the leading 17 European biotech countries comparing their advantages and disadvantages. It also surveys nine comparable markets across North America, Australasia and emerging regions. It analyses the tax, financial and regulatory incentives these individual jurisdictions provide to investors, entrepreneurs, manufacturers and researchers. It also weighs the financial burdens for SMEs and which benefits are likely to flow from a decision to establish a research facility or start-up in a particular market. Key non-EU global locations for biotechnology were also profiled on the increasingly important topic of RDI incentives.
The report identifies substantial variations in regulatory policy for biotechnology companies across different member states. The differences range from basic policies and regulations which encourage financing for start-ups, to the ability to attract competent managers and entrepreneurs. Some governments have already recognized the importance of policies and programs that foster a strong community of SMEs in biotechnology, including RDI tax credits or low corporation tax, while other governments have not yet capitalized on these incentives. It also details that some governments have refined their regimes governing the treatment of license boxes, so that tax on intellectual property rights can be reduced.
In today’s market, biotech entrepreneurs need to strive early on in the product development cycle to develop a suite of products, not just a single one, so that they can increase their chances of securing backing from an investor and creating a product which reaches the market.
The findings show that governments need to encourage SMEs to take steps which may help them one day to become large firms in their own right. In addition to the appropriate amount of regulation and incentives, what is needed is for governments to foster a climate of innovation and entrepreneurship.
Philip Robinson, EY’s Global Director of Indirect Tax comments:
“Biotechnology remains a cornerstone of Europe's economic competitiveness in terms of research and innovation. A consistent tax and regulatory environment for biotech corporations and SMEs across Europe is essential if the industry is to have sustainable economic growth and remain competitive especially against other key biotech regions around the world. Recent tax policies unveiled by various governments, such as R&D tax credits or low corporation tax, continue to recognize the importance of programs that foster a strong community of large companies and SMEs in biotechnology. National governments, together with the EU, need to ensure that the right policies are in place to make funding more accessible to biotechnology SMEs.”
Tom Saylor, EuropaBio Chair of the SME Platform and CEO of Arecor, states:
"This report offers an opportunity to build upon the previous report undertaken by EuropaBio and EY in 2012 with a growing body of information relevant to decision-making. Like its predecessor, it is expected to become a key reference both to national and international policymakers, as well as, to companies seeking to invest in Europe on the tax, regulatory and financial incentives for biotech SMEs in each member state. New to the 2014 report is a global comparison of how Europe compares with some of our competitors making it particularly timely, noting the recently launched European Commission Innovation Union Scoreboard showing Europe as a region lagging worryingly behind countries such as South Korea and Japan. While member state and EU policies supporting biotechnology have come a long way in recent years it is clear from these reports that a lot more needs to be done for Europe to not only retain its standing as a world class research hub, but to also commercialize European bioscience in Europe bringing more jobs and growth for our economy.”
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EuropaBio is the European Association of BioIndustries. Our members are involved in research, development, testing, manufacturing and commercialisation of biotech products and processes in human and animal healthcare, diagnostics, bioinformatics, chemicals, crop protection, agriculture, food and environmental products and services. EuropaBio also counts a number of National Biotech Associations in its membership who in turn represent more than 1800 biotech SMEs.