New study urges focus on competitiveness as Europe’s medicines innovators face pressure from US and Asia

IPHA urges Government to heed slide in Europe’s research and development investments and clinical trials activity as policymakers in Brussels weigh legislative changes

Europe could lose out to the US and Asia for new investments in biopharmaceutical research and production, according to a new study by consultants Charles River Associates (CRA) which urges more collaboration between industry and policy leaders to boost competitiveness.

The study, called ‘Factors Affecting the Location of Biopharmaceutical Investments and Implications for European Policy Priorities’, shows the industry’s declining competitiveness in Europe, with the global share of research and development investments, clinical trials and manufacturing output all waning. However, the study, for EFPIA, the representative organisation for Europe’s biopharmaceutical industry, finds that a key driver of most new investments is the location and performance of existing research and development or manufacturing footprint.

IPHA, a member of EFPIA and the representative organisation for Ireland’s biopharmaceutical industry, said recent investments in production sites across the country are based, in part, on an already-established performance culture built over several decades. But IPHA said Ireland should not be complacent about our attractiveness for future investments, with significant global competitive pressures making the outlook uncertain.

The study shows that:

  • In 2002, the US spent $2 billion more than Europe on research and development. Today, that figure is $20 billion – a rise of 1000%. Of the total research and development investments made in the US, Europe, China and Japan, only 31% occurs in Europe. This has declined steadily from 41% in 2001. China has grown its share from 1% to 8%.
  • Clinical trial activity for advanced therapeutic medicinal products (ATMPs), which include cell and gene therapies, is twice as high in the US and almost three times as high in China than in Europe. The number of trials for these breakthrough treatments conducted in the US and Asia-Pacific region grew by 70% and 67%, respectively, between 2014 and 2021 while Europe remained stagnant.
  • Europe accounted for a 19.3% share of global clinical trials activity in 2020, a drop of 6.3%, compared with a 25.6% average over the past 10 years.

IPHA, along with EFPIA, have urged policymakers in Europe to back innovation and supportive intellectual property rights in the current review of the pharmaceutical legislation by the European Commission. That means making Europe more competitive for jobs and investments in biopharmaceuticals, accelerating patients’ access to affordable medicines, investing in research for unmet medical needs and making regulatory pathways more agile and efficient.

The CRA study has several recommendations, including: 

  1. Incentive the development of world-class innovation hubs in the EU

Global research and development is expected to grow at a rate of 4.2% annually to $233 billion in 2026 – but it is moving out of the EU. While world-leading hubs like Boston, San Francisco and the UK’s ‘Golden Triangle’ get significant policy focus and strategic funding, European research funding is more uniform across countries. The countries with the highest EU research spend per population are not the centres of innovation. This is a weak strategy. The European Commission should consider more strategic allocation of resources to foster the growth of world-leading research centres. It should sponsor a review of existing life science and industrial policies across Member States to identify success factors and opportunities for replication.

  1. Rethink supply chain policies to attract ATMP investments in Europe

ATMPs are the therapies of the future, with 804 next-generation biotherapeutics, including cell and gene therapies and mRNA technology, in a global pipeline of over 8,000 new medicines. The US has half the world’s ATMP manufacturing facilities. Asia is fast becoming the most competitive region for attracting ATMP clinical trials (255 in 2021), with Europe in decline (89 in 2021). For Europe to compete more effectively, it must recognise the complexity of these new technologies and build the interconnected ecosystem needed to develop them. IPHA has argued that Ireland should aspire to be a centre for supply chain and production and adopt a national policy for adopting ATMPs affordably and fast in the health system. The EU should take a more proactive role in fostering the growth of emerging ATMP clusters, providing support across the ecosystem of research and development, manufacturing and clinical trials. The old approach of siloed policymaking focused on innovation, manufacturing and healthcare sustainability does not work. 

  1. Support innovation by recognising the link between fast access and competitiveness for new investments

The traditional lifecycle of medicine development is changing. Medicines increasingly need to gain conditional approval to reach patients earlier to generate real-world evidence. Company research investment will increasingly be influenced by regulatory agility and flexibility and a supportive clinical trial environment. The European Commission’s legislative proposals for the industry share some of these goals – supporting innovative trial designs and new methods for data generation and assessment. But policymakers do not take into account the link between fast access to new medicines and the attractiveness of Europe as a location for companies to locate research, clinical trials and manufacturing, particularly for new technologies. IPHA has argued for the closing of the gap between scale and speed – that we can have a major biopharmaceutical investment footprint and faster access to new medicines. By the end of this year, we will share with policymakers proposals aimed at improving the reimbursement process.

Oliver O’Connor, IPHA’s CEO and member of the Steering Group for the CRA study, said it was an important input into evidence-based policymaking.

“In a European context, Ireland has a very strong biopharmaceutical manufacturing footprint, with sites across the country making medicines for the world and generating corporation and payroll taxes which are helping the Government to deal with cost-of-living living challenges. Although our heritage in innovation is helping to attract new investments in biopharmaceutical production, we can’t be complacent about the future. As the study shows, companies often site investments close to their headquarters and where the operating environment for innovation is optimal. 

“Ireland has significant challenges to overcome, especially in giving more patients faster access to new medicines and attracting the next wave of investments in areas like ATMPs. We have ground to make up in data and digitalisation, and in plugging our clusters of higher education institutions into research networks in Europe and beyond.  

 We share the European Commission’s goal of widening access to affordable medicines for all citizens while spurring innovation. But striking this delicate policy balance requires engaged dialogue so that the innovation ecosystem is not undermined and Europe can stay competitive, both in standards of care and in our capacity to keep the jobs we have and attract new ones,” said Mr O’Connor.

 The study is available here.

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