# C_2010342EN.01001501.xml

| 16.12.2010 | EN | Official Journal of the European Union | C 342/15 |
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16.12.2010

EN

Official Journal of the European Union

C 342/15

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REPORT

on the annual accounts of the Innovative Medicines Initiative Joint Undertaking for the financial year ended 31 December 2009, together with the replies of the Joint Undertaking

2010/C 342/03

TABLE OF CONTENTS

TABLE OF CONTENTS

| | Paragraph | Page |
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| INTRODUCTION ... | 1-5 | 16 |
| STATEMENT OF ASSURANCE ... | 6-15 | 16 |
| COMMENTS ON BUDGETARY AND FINANCIAL MANAGEMENT ... | 16-19 | 17 |
| OTHER MATTERS ... | 20-25 | 17 |
| Table ... | 18 |
| Replies of the Joint Undertaking ... | 21 |

Paragraph

Paragraph

Page

Page

INTRODUCTION ...

1-5

16

STATEMENT OF ASSURANCE ...

6-15

16

COMMENTS ON BUDGETARY AND FINANCIAL MANAGEMENT ...

16-19

17

OTHER MATTERS ...

20-25

17

Table ...

18

Replies of the Joint Undertaking ...

Replies of the Joint Undertaking

21

INTRODUCTION

INTRODUCTION

| 1. | The European Joint Undertaking for the implementation of the Joint Technology Initiative on Innovative Medicines (IMI Joint Undertaking), located in Brussels, was set up in December 2007 (1) for a period of 10 years. |
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1.

The European Joint Undertaking for the implementation of the Joint Technology Initiative on Innovative Medicines (IMI Joint Undertaking), located in Brussels, was set up in December 2007 (1) for a period of 10 years.

1

| 2. | The founding members of the Joint Undertaking are the European Union represented by the Commission and the European Federation of Pharmaceutical Industries and Associations (EFPIA). |
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2.

The founding members of the Joint Undertaking are the European Union represented by the Commission and the European Federation of Pharmaceutical Industries and Associations (EFPIA).

| 3. | The objective of the IMI Joint Undertaking is to significantly improve the efficiency and effectiveness of the drug development process with the long-term aim that the pharmaceutical sector produce more effective and safer innovative medicines (see Table). |
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3.

The objective of the IMI Joint Undertaking is to significantly improve the efficiency and effectiveness of the drug development process with the long-term aim that the pharmaceutical sector produce more effective and safer innovative medicines (see Table).

Table

| 4. | The maximum EU contribution to the IMI Joint Undertaking to cover running costs and research activities is one billion euro to be paid from the budget of the Seventh Research Framework Programme. The EU and EFPIA, as founding members, are to contribute equally to the running costs, each of them with an amount not exceeding 4 % of the total EU contribution. Other members are to contribute to running costs in proportion to their contribution to research activities. The research companies which are members of EFPIA are to contribute to the funding of research activities through in-kind contributions at least equal to the EU financial contribution. New members should also provide funding for research activities. |
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4.

The maximum EU contribution to the IMI Joint Undertaking to cover running costs and research activities is one billion euro to be paid from the budget of the Seventh Research Framework Programme. The EU and EFPIA, as founding members, are to contribute equally to the running costs, each of them with an amount not exceeding 4 % of the total EU contribution. Other members are to contribute to running costs in proportion to their contribution to research activities. The research companies which are members of EFPIA are to contribute to the funding of research activities through in-kind contributions at least equal to the EU financial contribution. New members should also provide funding for research activities.

| 5. | The Joint Undertaking started to work autonomously on 16 November 2009. |
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5.

The Joint Undertaking started to work autonomously on 16 November 2009.

15.

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| 15. | The comments which follow do not call the Court’s opinions into question. |
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The comments which follow do not call the Court’s opinions into question.

COMMENTS ON BUDGETARY AND FINANCIAL MANAGEMENT

COMMENTS ON BUDGETARY AND FINANCIAL MANAGEMENT

Implementation of the budget

Implementation of the budget

| 16. | The final budget included commitment appropriations of 82 million euro and payment appropriations of 82 million euro. As few project activities had started by the end of 2009, the budget for payments proved to be 97 %, the rate for payment appropriations was only 1 %. |
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16.

The final budget included commitment appropriations of 82 million euro and payment appropriations of 82 million euro. As few project activities had started by the end of 2009, the budget for payments proved to be 97 %, the rate for payment appropriations was only 1 %.

Presentation of the accounts: members’ contributions

Presentation of the accounts: members’ contributions

| 17. | The Court notes that the activities of the EU Joint Undertakings are funded by contributions from their members, and that the Joint Undertakings have no capital as such. The Court recommended that this specific feature of the Joint Undertakings is clearly disclosed in the accounts. |
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17.

The Court notes that the activities of the EU Joint Undertakings are funded by contributions from their members, and that the Joint Undertakings have no capital as such. The Court recommended that this specific feature of the Joint Undertakings is clearly disclosed in the accounts.

| 18. | The Court therefore welcomes the fact that, in accordance with EU Accounting Rule 1 (Group Accounting), the contributions from members are presented under Net Assets in the Balance Sheets of the Joint Undertakings, and that further information on the nature of the contributions is provided in the Notes to the Accounts. |
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18.

The Court therefore welcomes the fact that, in accordance with EU Accounting Rule 1 (Group Accounting), the contributions from members are presented under Net Assets in the Balance Sheets of the Joint Undertakings, and that further information on the nature of the contributions is provided in the Notes to the Accounts.

| 19. | The Court considers that the presentation of members’ contributions in the accounts of the Joint Undertakings should be harmonised as far as possible and notes the intention of the Commission to issue detailed guidance in this respect to the Joint Undertakings. |
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19.

The Court considers that the presentation of members’ contributions in the accounts of the Joint Undertakings should be harmonised as far as possible and notes the intention of the Commission to issue detailed guidance in this respect to the Joint Undertakings.

OTHER MATTERS

OTHER MATTERS

Internal control systems

Internal control systems

| 20. | The Joint Undertaking is in a start-up phase and has not completely implemented its internal controls and financial information systems during 2009. At the end of the year, the underlying business processes had not yet been formalised and had not been validated by the Accounting Officer as required by the Financial Rules of the Joint Undertaking. |
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20.

The Joint Undertaking is in a start-up phase and has not completely implemented its internal controls and financial information systems during 2009. At the end of the year, the underlying business processes had not yet been formalised and had not been validated by the Accounting Officer as required by the Financial Rules of the Joint Undertaking.

| 21. | In particular, further work is needed in the documentation of IT processes and activities, and the mapping of IT risks. The Joint Undertaking had also not developed a Business Continuity Plan nor a data protection policy in 2009. |
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21.

In particular, further work is needed in the documentation of IT processes and activities, and the mapping of IT risks. The Joint Undertaking had also not developed a Business Continuity Plan nor a data protection policy in 2009.

Lack of host State agreement

Lack of host State agreement

| 22. | According to the Council Regulation setting up the IMI Joint Undertaking, a host agreement is to be concluded between the IMI Joint Undertaking and Belgium concerning office accommodation, privileges and immunities and other support to be provided by Belgium to the Joint Undertaking. However, by the end of 2009, no such agreement had been made. |
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22.

According to the Council Regulation setting up the IMI Joint Undertaking, a host agreement is to be concluded between the IMI Joint Undertaking and Belgium concerning office accommodation, privileges and immunities and other support to be provided by Belgium to the Joint Undertaking. However, by the end of 2009, no such agreement had been made.

Internal Audit Function and Commission Internal Audit Service

Internal Audit Function and Commission Internal Audit Service

| 23. | Article 73 of the Financial Rules of the Joint Undertaking stipulates that the Joint Undertaking should have an internal auditing function which must comply with relevant international standards. However, at the end of 2009, this important element of the internal control system had not been set up. |
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23.

Article 73 of the Financial Rules of the Joint Undertaking stipulates that the Joint Undertaking should have an internal auditing function which must comply with relevant international standards. However, at the end of 2009, this important element of the internal control system had not been set up.

| 24. | In line with the views expressed in its Opinions No 4/2008 on the Financial Regulation of the Fusion for Energy Joint Undertaking and No 2/2010 on the Financial Regulation of SESAR Joint Undertaking, the Court considers that the current provision in the Statutes of the Joint Undertaking on the role of the Commission’s internal auditor should be clarified. |
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24.

In line with the views expressed in its Opinions No 4/2008 on the Financial Regulation of the Fusion for Energy Joint Undertaking and No 2/2010 on the Financial Regulation of SESAR Joint Undertaking, the Court considers that the current provision in the Statutes of the Joint Undertaking on the role of the Commission’s internal auditor should be clarified.

| 25. | Article 10 of the Statutes of the IMI Joint Undertaking states that the functions of the Commission’s internal auditor are to be carried out under the responsibility of the Governing Board of the Joint Undertaking. Such an arrangement is appropriate for the internal auditing function within the Joint Undertaking but not for the Commission’s internal auditor, whose responsibilities relate to the general EU budget as a whole. |
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25.

Article 10 of the Statutes of the IMI Joint Undertaking states that the functions of the Commission’s internal auditor are to be carried out under the responsibility of the Governing Board of the Joint Undertaking. Such an arrangement is appropriate for the internal auditing function within the Joint Undertaking but not for the Commission’s internal auditor, whose responsibilities relate to the general EU budget as a whole.

This report was adopted by Chamber II, headed by Mr Morten LEVYSOHN, Member of the Court of Auditors, in Luxembourg at its meeting of 20 October 2010.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

Table

Innovative Medicines Initiative Joint Undertaking (Brussels)

| Areas of Union competence deriving from the Treaty | Competences of the Joint Undertaking as defined in Regulation (EC) No 73/2008 | Governance | Resources made available to the Joint Undertaking in 2009 | Main achievements for 2009 |
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| Treaty on the Functioning of the European Union

  Title XIX ‘Research and Technological Development and Space’.

  Article 187 (ex Article 171 EC) states:
  The Union may set up joint undertakings or any other structure necessary for the efficient execution of Union research, technological development and demonstration programmes.

  Article 188(1) (ex Article 172(1) EC) states:
  The Council, on a proposal from the Commission and after consulting the European Parliament and the Economic and Social Committee, shall adopt the provisions referred to in Article 187. | Objectives

  Article 2 of Regulation (EC) No 73/2008 states:
  The IMI Joint Undertaking shall contribute to the implementation of the Seventh Framework Programme and in particular the Theme ‘Health’ of the Specific Programme Cooperation implementing the Seventh Framework Programme. It shall have the objective of significantly improving the efficiency and effectiveness of the drug development process with the long-term aim that the pharmaceutical sector produce more effective and safer innovative medicines. In particular it shall:






  (a) | support ‘pre-competitive pharmaceutical research and development’ in the Member States and countries associated with the Seventh Framework Programme via a coordinated approach to overcomethe identified research bottlenecks in the drug development process; |

Areas of Union competence deriving from the Treaty

Competences of the Joint Undertaking as defined in Regulation (EC) No 73/2008

Governance

Resources made available to the Joint Undertaking in 2009

Main achievements for 2009

Treaty on the Functioning of the European Union

Title XIX ‘Research and Technological Development and Space’.

Article 187 (ex Article 171 EC) states:

The Union may set up joint undertakings or any other structure necessary for the efficient execution of Union research, technological development and demonstration programmes.

Article 188(1) (ex Article 172(1) EC) states:

The Council, on a proposal from the Commission and after consulting the European Parliament and the Economic and Social Committee, shall adopt the provisions referred to in Article 187.

Objectives

Article 2 of Regulation (EC) No 73/2008 states:

The IMI Joint Undertaking shall contribute to the implementation of the Seventh Framework Programme and in particular the Theme ‘Health’ of the Specific Programme Cooperation implementing the Seventh Framework Programme. It shall have the objective of significantly improving the efficiency and effectiveness of the drug development process with the long-term aim that the pharmaceutical sector produce more effective and safer innovative medicines. In particular it shall:

(a)

support ‘pre-competitive pharmaceutical research and development’ in the Member States and countries associated with the Seventh Framework Programme via a coordinated approach to overcomethe identified research bottlenecks in the drug development process;

| (b) | support the implementation of the research priorities as set out by the Research Agenda of the Joint Technology Initiative on Innovative Medicines (hereinafter referred to as ‘Research Activities’), notably by awarding grants following competitive calls for proposals; |
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(b)

support the implementation of the research priorities as set out by the Research Agenda of the Joint Technology Initiative on Innovative Medicines (hereinafter referred to as ‘Research Activities’), notably by awarding grants following competitive calls for proposals;

| (c) | ensure complementarity with other activities of the Seventh Framework Programme; |
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(c)

ensure complementarity with other activities of the Seventh Framework Programme;

| (d) | be a public-private partnership aiming at increasing the research investment in the biopharmaceutical sector in the Members States and countries associated to the Seventh Framework Programme by pooling resources and fostering collaboration between the public and private sectors; |
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(d)

be a public-private partnership aiming at increasing the research investment in the biopharmaceutical sector in the Members States and countries associated to the Seventh Framework Programme by pooling resources and fostering collaboration between the public and private sectors;

| (e) | promote the involvement of small and medium-sized enterprises (SME) in its activities, in line with the objectives of the Seventh Framework Programme. |
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(e)

promote the involvement of small and medium-sized enterprises (SME) in its activities, in line with the objectives of the Seventh Framework Programme.

Tasks

Article 1 of the Statutes annexed to the Council Regulation states:

The main tasks and activities of the IMI Joint Undertaking shall be:

| (a) | to ensure the establishment and sustainable management of the Joint Technology Initiative on ‘Innovative Medicines’; |
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(a)

to ensure the establishment and sustainable management of the Joint Technology Initiative on ‘Innovative Medicines’;

| (b) | to define and carry out the annual implementation plan referred to in Article 18 via calls for project; |
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(b)

to define and carry out the annual implementation plan referred to in Article 18 via calls for project;

| (c) | to regularly review and make any necessary adjustments to the Research Agenda of the Joint Technology Initiative on Innovative Medicines in light of scientific developments occurring during its implementation; |
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(c)

to regularly review and make any necessary adjustments to the Research Agenda of the Joint Technology Initiative on Innovative Medicines in light of scientific developments occurring during its implementation;

| (d) | to mobilise the public and private sector resources needed; |
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(d)

to mobilise the public and private sector resources needed;

| (e) | to establish and develop close and long-term cooperation between the Union, industry and the other stakeholders such as regulatory bodies, patients organisations, academia and clinical centres, as well as cooperation between industry and academia; |
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(e)

to establish and develop close and long-term cooperation between the Union, industry and the other stakeholders such as regulatory bodies, patients organisations, academia and clinical centres, as well as cooperation between industry and academia;

| (f) | to facilitate coordination with national and international activities in this area; |
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(f)

to facilitate coordination with national and international activities in this area;

| (g) | to undertake communication and dissemination activities; |
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(g)

to undertake communication and dissemination activities;

| (h) | to communicate and interact with the Member States and the countries associated within the Seventh Framework Programme via the IMI States Representatives Group, specifically established for this purpose; |
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(h)

to communicate and interact with the Member States and the countries associated within the Seventh Framework Programme via the IMI States Representatives Group, specifically established for this purpose;

| (i) | to organise at least an annual meeting (hereinafter referred to as a ‘Stakeholder Forum’) with interest groups to ensure openness and transparency of the Research Activities of the IMI Joint Undertaking with its stakeholders; |
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(i)

to organise at least an annual meeting (hereinafter referred to as a ‘Stakeholder Forum’) with interest groups to ensure openness and transparency of the Research Activities of the IMI Joint Undertaking with its stakeholders;

| (j) | to notify legal entities that have concluded a grant agreement with the IMI Joint Undertaking of the potential borrowing opportunities from the European Investment Bank, in particular the Risk Sharing Finance Facility set up under the Seventh Framework Programme; |
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(j)

to notify legal entities that have concluded a grant agreement with the IMI Joint Undertaking of the potential borrowing opportunities from the European Investment Bank, in particular the Risk Sharing Finance Facility set up under the Seventh Framework Programme;

| (k) | to publish information on the projects, including the name of the participants and the amount of the financial contribution of the IMI Joint Undertaking per participant; |
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(k)

to publish information on the projects, including the name of the participants and the amount of the financial contribution of the IMI Joint Undertaking per participant;

| (l) | to ensure the efficiency of the Joint Technology Initiative on ‘Innovative Medicines’; |
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(l)

to ensure the efficiency of the Joint Technology Initiative on ‘Innovative Medicines’;

| (m) | to carry out any other activity needed to achieve the objectives referred to in Article 2 of the Regulation. |
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(m)

to carry out any other activity needed to achieve the objectives referred to in Article 2 of the Regulation.

1 —   Governing Board

The Governing Board is the main decision-making body of the IMI JU and shall be responsible for the supervision of the Joint Undertaking in the pursuit of its objectives. It ensures close collaboration between the Joint Undertaking and its Members in the implementation of its activities. It therefore guarantees the fulfilment of the objectives set by the IMI JU, namely overcoming bottlenecks in European pharmaceutical R & D and supporting biomedical research for the benefit of patients.

2 —   Executive Director

The Executive Director — appointed by the Governing Board — shall be the chief executive responsible for the day-to-day management of the IMI Joint Undertaking in accordance with the decisions of the Governing Board. In that context, he/she shall regularly inform as well as respond to any specific ad hoc requests for information from the Governing Board and the Scientific Committee. The Executive Director shall be the legal representative of the IMI Joint Undertaking. He/she shall perform his/her tasks with complete independence, and shall be accountable to the Governing Board.

3 —   Scientific Committee

The Scientific Committee is an advisory body to the Governing Board and conducts its activities in close liaison with the support of the Executive Office.

The Scientific Committee shall advise on the Research Agenda on the scientific priorities for the annual implementation plan proposal and on the scientific achievements described in the annual activity report.

IMI JU is also supported by 2 external advisory bodies:

4 —   IMI States Representatives Group

The IMI States Representative Group consists of one representative of each Member State and of each country associated to the Framework Programme. It has an advisory role for the IMI Joint Undertaking and acts as an interface between the IMI Joint Undertaking and the relevant stakeholders within their respective countries.

5 —   Stakeholder Forum

The Stakeholder Forum is a meeting opened to all stakeholders to provide comments and convened at least once a year by the Executive Director.

6 —   External Audit

Court of Auditors.

7 —   Discharge Authority

Parliament on a recommendation of the Council.

Budget

81,9 million euro funded by Union contribution and 50 % of the running costs received form EFPIA (0,5 million euro)

Staff at 31 December 2009

29 posts in the annual establishment plan of which 12 occupied at 31.12.2009 and assigned to the following duties:

| — | Executive Director: 1, |
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Executive Director: 1,

| — | scientific: 3, |
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scientific: 3,

| — | operational tasks: 5, |
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operational tasks: 5,

| — | administration tasks: 3. |
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—

administration tasks: 3.

Set up of IMI Joint Undertaking and management

The Governing Board met 3 times.

The Scientific Committee also met 3 times.

The States Representatives Group met twice.

The IMI JU Executive Director, Michel Goldman, was appointed by the Governing Board on 10 June 2009 and took up his position on 16 September 2009. Until this date the interim Executive Director appointed by the European Commission, Alain Vanvossel, fulfilled the duties of Interim Executive Director.

The main task for 2009 was the preparatory actions necessary for the autonomy of the IMI JU granted on 16 November 2009.

These actions included in particular the recruitment of staff and setting up the IMI JU offices and procedures for administrative and operational actions.

With the autonomy the IMI JU had the operational capacity to implement its budget. Until this moment the European Commission (EC) was responsible for the establishment and the initial operations of the IMI JU in collaboration with the other Founding Member in accordance with Article 16 of the Council Regulation establishing the IMI JU.

Call for proposals and project management

The first call for proposals, launched in 2008 — was finalised and 15 project proposals selected in the two-stage call process with the assistance of independent experts. A majority of Grant Agreements was sent to the Project Coordinators for signature and 10 of them started by the end of the year.

IMI JU second call for proposals was launched on the 27 November 2009 with the deadline for the first stage in February 2010.

IT infrastructure

The IT infrastructure in the temporary IMI location was set up. It will be redesigned and a new set up will take place in the future premises.

The submission tool has been completely redesigned with a dedicated module publicly available for applicant consortia allowing the submission and evaluation of the expressions of interest (stage 1 of call for proposals).

Communication

Three major communication events took place during 2009. A press event was held on the 14 September for the presentation of the new Executive Director, and for presenting the topics for IMI’s second call for proposals.

An information-day was held on the 17 November informing o the second call to potential applicants.

An autonomy event took place on 15 December.

Source: Information submitted by the Joint Undertaking.

REPLIES OF THE JOINT UNDERTAKING

Implementation of the budget

Paragraph 16

IMI Joint Undertaking acknowledges the low implementation rate for payments in 2009, which was a consequence of the start-up phase of the Joint Undertaking.

Internal control systems

Paragraphs 20-21

IMI Joint Undertaking acknowledges the comments of the Court. The Joint Undertaking continues to develop its internal controls and is taking steps to address the issues raised by the Court.

Lack of host State agreement

Paragraph 22

IMI Joint Undertaking continues to cooperate for the implementation of the provisions of a host State agreement and awaits the outcome of the next steps of the procedure to have an agreement signed.

Internal Audit Function and Commission Internal Audit Service

Paragraph 23

An internal auditor is to be appointed with effect from November 2010.

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(1)  Council Regulation (EC) No 73/2008 of 20 December 2007 setting up the Joint Undertaking for the implementation of the Joint Technology Initiative on Innovative Medicines (OJ L 30, 4.2.2008, p. 38).

1

(2)  These accounts are accompanied by a report on the budgetary and financial management during the year which gives, inter alia, an account of the rate of implementation of the appropriations with summary information on the transfers of appropriations among the various budget items.

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(3)  The financial statements include the balance sheet and the economic outturn account, as well as the description of the significant accounting policies and other explanatory information.

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(4)  The budget implementation report comprises the budget outturn account and other explanatory information.

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(5)  OJ L 248, 16.9.2002, p. 1.

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(6)  Financial Rules of the IMI Joint Undertaking adopted by Decision of its Governing Board on 2 February 2009.

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(7)  Article 33 of Commission Regulation (EC, Euratom) No 2343/2002 of 19 November 2002 (OJ L 357, 31.12.2002, p. 72).

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(8)  Article 38 of Regulation (EC, Euratom) No 2343/2002.

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(9)  The rules concerning the presentation of the accounts and accounting by EU bodies are laid down in Chapter 1 of Title VII of Regulation (EC, Euratom) No 2343/2002 as last amended by Regulation (EC, Euratom) No 652/2008 of 9 July 2008 (OJ L 181, 10.7.2008, p. 23) and are incorporated in the Financial Rules of the IMI Joint Undertaking.

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(10)  International Federation of Accountants (IFAC) and International Standards of Supreme Audit Institutions (ISSAI).

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