Why the EU must improve competitiveness to build more resilient healthcare systems

We are facing a critical year marked by European elections, and it’s time for the European Union (EU) to make healthcare a strategic priority. Achieving EU health autonomy must be considered at the same level as achieving food, energy or semi-conductors’ autonomy.

Europe faces a ‘competitiveness crisis’ as recent data show that EU productivity has declined 1.2% in the fourth quarter compared to the previous year – while in contrast, US productivity rose 2.6%.

Twenty-five years ago, one in every two medicines was invented or discovered in European laboratories but today, it’s only one in six medicines. This is despite the fact that the raw materials for great research and discovery exist in the EU, with prestigious universities that produce a strong influx of talent in math, data science, engineering, biology and chemistry.

Twenty years ago, 41% of the global R&D spending was in Europe; today it is 31% – and 10-year forecasts indicate that this number could go down to 21%. Similarly, vaccine clinical trials in the EU have decreased by 35% since 2000.

Europe’s health security and global competitiveness is at stake. The biopharma sector is facing continued and significant pressures through global competition, budgetary pressures, and factors such as an ageing demographic and the impact of climate change on healthcare systems. These pressures will only increase the burden of chronic and infectious diseases.

The EU has the potential to be a leader in healthcare innovation but to achieve this, a dedicated European biopharma strategy is needed in the next European Commission mandate, articulated around several strategic areas:

Consider manufacturing in the EU. Over the last 10 years, governments have submitted essential medicines to tender and auction, creating unsustainable conditions as many medicines could be sold at a price lower than the cost of manufacturing them in Europe. This negative incentive led manufacturers to close sites and move to other countries, including China and India.

But as the pandemic demonstrated, supply disruptions, caused by a variety of reasons, can lead to shortages for European patients making it too late for EU-based industry to fill the gap. Building a factory, getting it validated and approved can take several years, so it is not possible to meet real-time demand.

Europe should maintain some basic production of essential medicines. There should be a minimum expectation for a provision of 10-30% of production based on the continent, which would allow increasing output when under pressure, rather than starting from scratch. This provision should go along with a stronger recognition of a “fair price” for essential medicines.

The planned Critical Medicines Alliance is an encouraging first step to strengthen Europe’s industrial capacity in pharmaceuticals, but it is expected to fix short-term structural issues on established medicines.

The ambition of a European industrial strategy in health should be forward looking. The Commission must be given a mandate to secure a diversity of technology platforms in Europe, e.g. mRNA, nanobodies, recombinant, gene and cell therapies, as well as facilitating partnerships and international cooperation on biomanufacturing platforms.

One example would be a consortium for raw materials and components exchange as preparedness for major disruptions, and EU level planning for alternative and new critical raw materials essential for the biomanufacturing of future products in Europe.

We need to increase access to venture capital funding to encourage EU researchers to be pioneering and bold. Researchers need to move on from having a brilliant academic paper published, to becoming entrepreneurial founders of promising biotech startups.

In 2001, venture capital (VC) financing in Europe represented a 28% share of total VC financing across the US, Europe and China. Twenty years later, this share has fallen to 13%. In 2021, biotech companies in Europe raised only $7.9 billion, one-quarter of the $31 billion raised by US companies.

Moreover, if you want to create a thriving biotech ecosystem, you must have access to medicines the biotech inventions. Patient privacy is deeply important but if Europe wants to stay on the cutting edge, it needs to make sure that the European Health Data Space is accessible for companies and startups researching innovative medical technologies.

Fostering innovation clusters in areas such as immunology, where Europe is already a leader and has the critical mass and proximity between research, care and companies, should be central to the next mandate plans.

Health Emergency Preparedness and Response (HERA) could play a more important role in building a strong ecosystem for late-stage development in the EU, planning with a European mindset rather than a national one.

Access to today’s innovative medicines and vaccines is increasingly challenging in Europe. Out of all medicines approved by the European Medicines Agency, almost 50% are not accessible to patients in the member states, coupled with a delay of 517 days on average for availability of innovative medicines in EU countries.

That means that when doctors across Europe prescribe treatments to patients, they unfortunately often prescribe the best available treatment, not always the best invented medicine. Despite being a ‘net positive’ contributor to the economy, the pharma sector is still seen as a cost not as an investment.

However, the industry is a leading creator of jobs and contributor to R&D investment: 865,000 people are employed in the EU with highly skilled /specialized jobs, and an additional 2.5 million are indirectly supported. In 2022, the industry invested €44.5 billion in European R&D, which at 12.9% of net sales, leads all other industries.

Mario Draghi, the former President of the European Central Bank, points out that the EU must enable scale, and that fragmentation is currently holding the EU back. Europe can’t compete unless it’s stronger.

Healthcare leadership at the EU level can help in harmonizing and integrating the health policies and systems of the member states, by developing and implementing a common health strategy, a common health data space and a common health market, and by ensuring the free movement of health professionals, products and services.

A coordinated effort to share data at the EU level in a protected health cloud would allow researchers to make breakthroughs and train algorithms on much bigger data sets. In this new geopolitical era of intense global competitiveness, the right decision in allocating public resources is critical, taking short term fiscal efficiencies and long-term national security and economic competitiveness into consideration.

Looking at massive investments from countries like the US and China, Europe needs not only to fill the gaps in resilience but to pave the way for science and artificial intelligence-based leadership. As Draghi recently stated, at the EU level decision-making and financing were designed for the “world of yesterday”. The time is now to turn to “radical change”.

Europe needs to unite behind a health security and innovation framework encompassing resilience, decarbonization and an environment for competitiveness.