Europe needs a renewed industrial strategy
We are approaching a crucial period for the European Union. As voters begin to tune in to the European elections in May this year, and EU capitals turn their attention to the next European Commission, now is the time to think hard about the future.
Let’s begin by looking back. At this point in the political cycle five years ago, European economies were still feeling the effects of the Global Financial Crisis. Austerity was biting hard and citizens were crying out for jobs, social stability and reasons for optimism. It had been a tough few years.
In hindsight, the EU rose to the occasion then, only to lose momentum in the years that followed. In the context of the Europe 2020 strategy, it stepped up its drive for ‘smart, sustainable and inclusive growth’. For industry, including the pharmaceutical sector, a series of subsequent actions created a sense that a serious industrial strategy with sector- specific initiatives was coming into view.
A hint of optimism
The Commission’s Staff Working Document, ‘Pharmaceutical Industry: A Strategic Sector for the European Economy’, was published in June 2014. It highlighted the contribution of the sector to growth and to Europe’s global competitiveness.
Later that summer, the medicines industry was among five key industries name-checked by Jean-Claude Juncker as he sought the approval of the European Parliament. His subsequent confirmation as Commission President, promised to usher in a period of political support for Europe’s pharmaceutical engine.
It wasn’t to be. The European Commission ultimately moved away from developing a sector specific industrial strategy. Instead, the dominant narrative was that all industries face a shared set of challenges, and policy measures should tackle these in the round. This would, the logic went, improve growth and job creation in all sectors.
Despite the intuitive appeal of this line of thinking, it does not reflect Europe’s reality. Europe has its strengths which include biopharmaceuticals companies. Building on these strengths is the best chance of creating sustainable prosperity. It is always wiser to seek a leadership role in areas of high value and global significance where we already have a solid foundation.
Of course, it hasn’t all been doom and gloom. Europe has notched up some success stories over the past five years. The Horizon 2020 programme has demonstrated Europe’s commitment to innovation, even in the face of an unfavourable budgetary climate. The Innovative Medicines Initiative 2 and the Joint Technology Initiatives have proven the value of large-scale public-private partnerships (PPPs).
Playing to our strengths
At the same time, the industry continued to grow. Pharmaceuticals are a major European industry, notwithstanding considerable global competition. Medicines and vaccines create jobs, drive exports and help to keep our ageing population in good health.
Consider the numbers: With a trade surplus of €79.7 billion in 2017, the EU research-based pharmaceutical sector is considered to be the high-tech sector contributing the most to the EU trade balance. The industry employs 115,000 people in R&D alone and 750,000 in total; pharma companies invested more than €35 billion in R&D across Europe in 2017 and plans to sustain these R&D investment levels in Europe over the next five years.
Europe is also the second largest pharmaceutical market in the world and accounts for 22% of world pharmaceutical sales. Pharma is an area of strategic economic and social value where the EU can truly claim to be a global player. For example, more than 80% of vaccine doses produced by companies leading in research and development are produced in Europe.
Today’s challenges
As Brussels and Strasbourg prepare to welcome a newly-elected group of MEPs and a fresh crop of Commissioners, the world looks very different to the one that welcomed Presidents Juncker, Tusk and Tajani five years ago.
Some of the challenges faced then rising global competition, unfavourable demo- graphics, sluggish growth a still with us. Indeed, Europe has grown a little older while global players, notably China, have become stronger and more assertive. China also has something Europe needs now more than ever: a plan.
There are also new, unforeseen issues such as populism. This has disrupted geopolitics and Member State elections. It may also be a feature of the next European Parliament. This could undermine the EU’s singular role in bringing countries together to make all its members more attractive to investment. However, citizens voting for populists want essentially the same things as everyone else stability, secure jobs, and a sustainable future. A European industry strategy should be a top priority for MEPs of all political stripes.
Responding to megatrends
Whatever the shape of the EU’s new political leadership, they will need to hit the ground running. There is no time to waste. The world is changing fast around us, particularly in fields such as artificial intelligence, digitalisation and big data. This evolution includes the assessment and benchmark of EU Health Systems using patient relevant outcomes, with the support of digital solutions and a European Harmonised distributed health data network.
This in order to improve patient access in Europe by setting up a future European clinical assessment system, in line with the European Commission’s HTA proposal, that accelerates the process through harmonization of clinical data requirements and removal of duplicative assessments.
Some of these are the solutions to the health, social and demographic challenges we face. For example, remote monitoring of diabetes patients using sensor technologies will be essential to coping with the rise of chronic illness; collecting and analysing health outcomes data promises to deliver health system efficiencies, better health and less var- iation; personalised cell therapies will change cancer care; while robotics and the connected factors are reshaping advanced manufacturing.
Not only can these technologies keep us healthy and more productive, they will unlock better value for health spending and provide a source of jobs and growth.
Making it happen
The EU has a hard-earned global reputation for innovation and R&D. It is also one of the best places in the world for clinical research and a leader in the field of PPPs. This is worth protecting. To do this, industry is investing heavily in innovation. For their part, elected decision-makers must ensure that health is a priority for the allocation of public research funds.
Attracting research is about more than funding. Europe’s success to date has relied upon collaborative efforts between public authorities, regulatory bodies, universities, hospitals, research organisations, patient organisations, and industry. By developing the workforce and attracting jobs, this feeds industrial progress and economic growth.
We can do more. By supporting the uptake of innovation by health systems, Europe can be a magnet for investment. And by main-taining and developing its world-class intellectual property system, incentivising R&D in areas of unmet need, and supporting smaller companies, policymakers will ensure Europe retains its seat at the top table of medical innovation.
IP and regulatory excellence can also be important tools in Europe’s trade agenda, helping to raise standards around the world, and solidifying our reputation for leadership.
Industry4Europe
As we look to 2020 and beyond, leadership is essential to Europe’s industrial future. An ambitious industry strategy is needed if the EU is to compete with other regions, including China, India and the US. Our global partners and competitors have already put industry at the very top of their political agenda.
EFPIA has joined a large and unprecedented coalition bringing together 147 European federations from all industrial sectors to sign a Manifesto calling on leaders to put industry at the core of the EU’s future. Industry4Europe believes Europe should remain a hub for smart, innovative and sustainable industry that benefits all Europeans and future generations.
Specifically, we urge the next European Commission to shortlist industry as a top priority of its 5-year Work Programme and appoint a dedicated Vice-President for Industry. We ask heads of State and Government to require the next European Commission to swiftly present an ambitious long-term EU industrial strategy, include clear indicators and governance structures.
Reason to hope
We believe that at this crucial time, there are already signs that EU leaders are prepared to seize the moment. Last December the 6th ministerial conference of the Friends of Industry an initiative backed by 18 Member States published a joint statement with several promising elements that could be widely adopted.
In February this year, Germany announced a renewed industrial strategy, receiving public support from France, while in March the Council Conclusions from the Romanian Presidency invited the Commission to set out a long-term vision for Europe’s industrial future.
However, history reminds us that momentum can be lost. This time, Europe needs a clear and ambitious industrial vision for our future. Failure is not an option.
