The European Council and the European Parliament have recognised the importance of life sciences and biotechnology, and the Commission has put forward an action plan to address the challenges and opportunities involved. This Strategy on Life Sciences and Biotechnology, adopted by the Commission in 2002, proposed a 30 point action plan involving the Commission, the other European Institutions and other stakeholders. It runs until 2010. The implementation of the Strategy is now at its mid point. It is time to evaluate the progress achieved since 2002 and update the Strategy, to reflect new analysis of how this fast-moving sector could contribute to EU policies. This is the purpose of this Communication and the annexed Staff Working Paper.

Life sciences and biotechnology have grown to be central to certain sectors of the EU economy: in healthcare and pharmaceuticals, but also in the fields of industrial processing and primary production/agro-food. Overall, modern biotechnology relates to the generation of about 1.56% EU gross value added (GVA, 2002 values), to which could be added positive impacts of biotechnology such as a healthier population. The recent adoption of an ambitious energy policy for Europe is likely to stimulate the contribution of biotechnology to another sector, alternative energy. Secondly, life sciences and biotechnology make a significant contribution to core EU policy goals such as health, economic growth, job creation, the ageing society and sustainable development.

The annexed Commission Staff Working Paper contains a detailed report on the implementation of the Action Plan. It has been elaborated on the basis of contributions from Commission services, Member State authorities and stakeholders. It is complemented by a summary chart of the main achievements in the implementation of the 30 actions.

The main conclusions of this review exercise are that:

- the Strategy has been successful and is still relevant. The list of achievements, such as research activities and regional integration of clusters, clearly highlights the role that the Strategy has played in terms of integrating the "biotech dimension" in other policy areas, as well as inspiring national biotech plans. The strong support enjoyed by the Strategy from stakeholders is evidence of its success;

- a small number of actions have already been completed. This mainly relates to the adoption of the new legal framework on GMOs, which has been very significantly revised since 2002;

- a few other actions have become obsolete, mainly because of lack of interest by the audience they targeted (e.g. Action aiming at creating networks of biotechnology company managers);

- there is a strong case to continue a majority of the actions, ensuring coherence with other horizontal initiatives (e.g. education, IPR…) and in accordance with the EU's international commitments (e.g. contribution to Multilateral Environmental Agreements);

- some actions need to be refocused and given a special priority, given their importance and biotechnology-specific character.

The original design of the Strategy was consciously wide in scope, to give an initial mapping of the situation and to identify the full range of linked policy areas. With this phase complete, the mid term review offers an opportunity to refocus in order to maximise the impact of the Strategy. This implies pursuing actions which are still relevant according to their original design, reinforcing synergies with other horizontal policies and reviewing priorities which are specific to the sector of biotechnologies. These biotech-specific priorities can be regrouped under five main interdependent themes:

1) Promote research and market development for life sciences and biotechnology applications and the Knowledge Based Bio-Economy (KBBE) . Research remains a precondition for the development of biotechnology and the Action Plan needs to be adapted to the new FP7. Europe's basic biotech research is advanced but Europe does not excel in turning research into commercial applications. The Action Plan should be refocused in order to foster market development for bio-based products and improve the uptake of new technologies;

2) Foster competitiveness, knowledge transfer and innovation from the science base to industry. Europe's dedicated biotech companies are mostly SMEs with limited resources whose growth and economic sustainability are held back by three main constraints: Europe's fragmented patent system, the insufficient supply of risk capital and shortcomings in the cooperation between science and business. The Commission has identified the lack of a clear and coherent legal framework for IPR protection as an obstacle to innovation in Europe14, and will propose concrete steps toward a modern and affordable framework. In addition to this, refocusing the Action Plan can contribute to addressing some framework conditions relating to competitiveness specific to the biotech sector.

3) Encourage informed societal debates on the benefits and risk of life sciences and biotechnology. The uptake of biotechnology is also conditional on its societal and market acceptance. Ethical concerns are also more prevalent than in other forefront technologies. There is a clear prerequisite for actions aiming at associating the public and stakeholders as closely as possible to the decision making process, taking into account the benefits and risks of life sciences and biotechnology, on the basis of harmonised data and statistics, as well as ethical considerations.

4) Ensure a sustainable contribution of modern biotechnology to agriculture. Biotechnology in the field of primary production and agro/food has a huge potential for development, in particular the replacement of chemical processes and fossil fuels. Nonetheless, some of the technologies involved need close scrutiny. The legal framework on GMOs takes into account possible long-term effects on the environment and health, the safety of the food chain and respects other modes of agricultural Production. Nonetheless, in certain cases risk management measures for products which are specifically designed for industrial uses should be further developed.

5) Improve the implementation of the legislation and its impact on competitiveness . The EU has probably the most developed, and sometimes most stringent, legal framework on life sciences and biotechnology. Nonetheless, stringent rules should not hinder competitiveness and innovation.

The way the Commission intends to refocus its implementation of the Strategy in light of the above five priority themes is detailed in the attached "Refocused Life Sciences and Biotechnology Action Plan".

The potential of biotechnology to support EU policies is real and has been proven by numerous practical examples. Consequently, there is a strong need to continue promoting the development of life sciences and biotechnology in the EU, in particular by increasing research and promoting competitiveness. The main EU instrument for this is the Strategy.

Whilst the technology is promising, there is also a call for a reasoned use of some of its applications, in particular in the agro-food area, as well as for closer public scrutiny and forward looking regulatory control. With biotechnology evolving at a rapid pace, there is an absolute necessity for policy makers to maintain a flexible forward looking approach in order to anticipate developments and adapt to new challenges. Recent examples include the potential use of cloned animals or of their offspring in the agro/food sector, or the use of genetically modified chicken for the production of pharmaceutical substances in their eggs.

The original broad scope of the Strategy has offered a full picture; now a refocusing would ensure effective implementation, with more precise goals and enhanced coherence with other policies.

For these reasons, the Commission will:

Continue the implementation of the action plan up to 2010, while putting a specific emphasis on a focused set of biotech specific priority actions;

include biotechnology in the implementation of innovation strategies; in cooperation with Member States and stakeholders; improve the implementation of the Strategy.

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In January 2002, the Commission adopted a Strategy for Europe on Life Sciences and Biotechnology, consisting of two parts – policy orientations and a 30-point plan to transform policy into action. It set out what is needed from the Commission and the other European Institutions, while also recommending actions for other public and private stakeholders.

The Commission reports regularly on the progress made and this Communication is the third report.

In its report to the Spring European Council, the Commission advocated refocusing the Lisbon agenda on actions that promote jobs and growth in a manner that is fully consistent with the objective of sustainable development. The life sciences and biotechnology industry may have an important role to play in this refocused Lisbon strategy and, therefore, could contribute greatly to increasing Europe’s share of the global high-tech marketplace. Life sciences and biotechnology have the potential to be leading areas of science, industry and employment over the coming decades. As well as increasing prosperity with more and better jobs, life sciences and biotechnology may have the potential to improve our quality of life through innovative medical applications and a better environment. As a leading edge technology, life sciences and biotechnology can contribute to the modernisation of Europe’s industrial base.

The Commission has now decided to commence a process of reflection on the role of Life Sciences and Biotechnology in the renewed Lisbon Agenda. Understanding how the adoption of modern biotechnology in the various production sectors can contribute to the objectives of the European policy strategies on economic growth, sustainable development and environmental preservation is a recognised need.

The Commission has therefore undertaken to carry out a study into, and conduct a cost-benefit analysis of, biotechnology and genetic engineering, including genetically modified organisms, in the light of major European policy goals formulated in the Lisbon strategy, Agenda 21, and sustainable development. The purpose of this study is twofold. First of all, an evaluation of the consequences, opportunities and challenges of modern biotechnology for Europe, in terms of economic, social and environmental aspects, is important both for policy-makers and industry. The study would therefore constitute the primary input to the above-mentioned reflection. Secondly, this kind of independent study should help to increase public awareness and understanding of life sciences and biotechnology.

Policy overview and identification of priorities for action:

1) Harvesting the potential

- Competitiveness of European biotechnology sector and related industries:

In general, 2004 seems to have been a year of consolidation rather than growth for European biotechnology. There was no significant change in the number of companies in this field in Europe and in the US. This seems to indicate that both the US and European biotechnology sectors have reached a similar state of stability (or stagnation). Given the emergence of new competitors, particularly in the Asia-Pacific region, some justified concerns exist as to the long-term competitiveness of the European biotech industry, although currently Asian competitors are still less mature than their European counterparts. To address this, the Commission has adopted a proposal for a Competitiveness and Innovation Programme with a total budget of 4.2 billion € for 2007-2013. It is designed to provide instruments to develop and sustain a supportive environment for innovative firms, encouraging clusters, strengthening access to finance. Secondly, within its proposal for the 7 th R&D Framework Programme , the Commission outlined a new financing instrument, the “risk-sharing finance facility”, which could provide loans for larger research and infrastructure projects.

- The Competitiveness in Biotechnology Advisory Group with Industry and Academia (CBAG) was appointed by the Commission in 2003. It gathers representatives from all the various industry segments and from companies at every stage of company development together with entrepreneurial academics and has the role of issuing recommendations to the Commission and contributing to this annual report. It suggests that discussion of the progress reports issued by the Commission at the level of the relevant ministerial Councils would help to ensure that their contents are properly considered and acted upon by Member States but, at the same time, notes that implementation of the strategy has been patchy and there remain some serious concerns.

- Intellectual property protection: The CBAG considers it essential for a simplified, workable and affordable Community patenting system to be introduced as soon as possible. The lack of progress on implementation of Directive 98/44/EC on the protection of biotechnological inventions erects a further barrier to effective innovation.

- The informal network of Member States officials on competitiveness issues, as established in accordance with the Strategy, has continued to operate and has played an effective role in the benchmarking exercise of European Public Biotechnology Policies.

2) Funding research in Europe:

- The 6th Framework Programme for Research is continuing to give a strong impetus to Life Sciences and Biotechnology research in Europe. However, t he CBAG recommends that the proposed 7th Framework Programme should be designed with a streamlined administration system to encourage greater participation, and radically increase the number of participating SMEs. The Commission will establish a network with EU Member States to help coordinate the development and implementation of a European research policy for a knowledge-based bio-economy.

3) Confidence in science-based regulatory oversight

- Review of pharmaceutical legislation: The CBAG indicates that problems remain with the licensing of medicines derived from biotechnology. In particular, some of the registration procedures used by the European Medicines Agency (EMEA) are both complex and expensive and may act as a major disincentive to the introduction of new products by SMEs.

- Genetically Modified Organisms (GMOs) legislation: Although the CBAG welcomes the Commission's lead in recent months in introducing EU legislation on GMOs and approving GMO products, it takes the view that it is for the Member States themselves to implement the comprehensive EU legislation on GMOs adopted by Parliament and Council. The Commission will continue to ensure that the EU regulatory framework on GMOs is fully implemented, finalise its work on the establishment of labelling thresholds for the adventitious or technically unavoidable presence of authorised GM seeds in seeds of both conventional and organic varieties.

4) Newly emerging issues

- Tissue engineering: The CBAG stresses the importance of Europe having clear regulation for human tissue engineered products. Current Member State regulations are not harmonised, are contradictory, are subject to monopolies by state-controlled institutes in certain Member States, and, in general, do not promote innovation in the field.

- Genetic testing, and its scientific, ethical, legal and social implications, have continued to be debated both nationally and internationally. Discussions on the need for new legislation or, in some cases, a review of existing legislation have been initiated across Europe.

- Pharmacogenetics is still in the research and development phase, but its application in drug development and evaluation is expected, and appropriate measures should be prepared in time for this evolution. The potential impact of pharmacogenetics on health care and its ethical, legal and socio-economic implications are still uncertain. The EMEA organised an expert meeting in November 2004, which stressed that no legislative provisions should be made before a wide-ranging consultation process with all the relevant stakeholders has taken place, and highlighted the importance of ensuring high quality and validation methods for pharmacogenetic tests. The research projects funded under the 6 th Framework Programme and the newly established Technology Platform for Innovative Medicines are expected to give incentives to this field and enhance cooperation between all the stakeholders concerned.

- An increasing number of population-based biobanks have been established worldwide. At the same time, this has led to new ethical issues being discussed in ethics committees at national and international levels. New specific laws regarding biobanks have been implemented or are under discussion at national level. The ability to optimise the use of biobanks across Europe is an important basis for ensuring progress in European biomedical science, including in the development of genetic testing and pharmacogenetics. However, effective collaboration is becoming increasingly difficult in a complex world where the principles governing public and private biobanks differ from one country to another.

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