Report from the Commission to the European Parliament, the Council, the Committee of the Regions and the European Economic and Social Committee - Life sciences and biotechnology - A strategy for europe - Third progress report and future orientations {SEC(2005)850}
Date: 2005-06-29
Institutions: European Commission
Subjects: EU research policy, biology, biotechnology, report

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 29.06.2005 
COM(2005) 286 final 

REPORT FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE COMMITTEE OF THE 
REGIONS AND THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE 

LIFE SCIENCES AND BIOTECHNOLOGY – A STRATEGY FOR EUROPE 
THIRD PROGRESS REPORT AND FUTURE ORIENTATIONS 

{SEC(2005)850} 

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1. 

INTRODUCTION 

In  January  2002,  the  Commission  adopted  a  Strategy  for  Europe  on  Life  Sciences  and 
Biotechnology1, consisting of two parts – policy orientations and a 30-point plan to transform 
policy  into  action.  It  sets  out  what  is  needed  from  the  Commission  and  the  other  European 
Institutions, while also recommending actions for other public and private stakeholders. 

The Commission intends to report regularly on the progress made. The Commission adopted 
its  second  progress  report  on  7  April  2004,  which  highlighted  the  progress  made  but  also 
pointed out delays in some areas2. 

This  Communication  is  the  third  such  response.  As  last  year,  this  report  is  supported  by  a 
Commission  Staff  Working  Paper,  which  provides  detailed 
the 
implementation of the action plan. 

information  on 

2. 

LIFE SCIENCES AND BIOTECHNOLOGY IN THE REFOCUSED LISBON AGENDA 

In  its  report  to  the  Spring  European  Council3,  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. 

Therefore, following the request of the European Parliament, the Commission has 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 

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COM(2004)250, supported by Commission Staff Working Paper SEC(2004)438 
COM(2005)24 

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kind of independent study should help to increase public awareness and understanding of life 
sciences and biotechnology.  

Priorities for future actions 

The Commission will  

►  carry  out  an  independent  study  aimed  at  providing  a  comprehensive  assessment  and  cost-
benefit  analysis  of  the  consequences,  opportunities  and  challenges  that  applications  of  modern 
biotechnology present for Europe in terms of economic, social and environmental aspects, 

►  draw  on  both  the  study  and  an  in-depth  assessment  of  the  progress  achieved  since  2002  to 
update  the  Community  Strategy  on  Life  Sciences  and  Biotechnology  in  good  time  for  the 
2007 Spring European Council. 

3. 

OVERVIEW OF POLICY DEVELOPMENTS AND PRIORITIES FOR ACTIONS 

3.1. 

Harvesting the potential 

3.1.1.  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 stagnancy). 

According to a recent comparative study4, the European biotech industry, with approximately 
the  same  number  of  companies  as  in  the  American  sector,  employs  nearly  half  as  many 
people, spends one third as much on R&D, raises three to four times less venture capital and 
has access to four times less debt finance. Nevertheless, the US industry generates only about 
twice as much revenue as the European sectors. 

According  to  the  same  study,  the  financing  gap  is  probably  the  biggest  single  barrier  to 
European competitiveness in biotechnology. That said, it is not the supply of seed financing 
or  early  venture  capital  that  is  holding  back  European  biotechnology.  The  main  obstacle 
seems  to  occur  later  in  the  business  cycle.  After  a  few  years,  at  the  time  when  Europe’s 
companies ought to be taking off, most of them appear to run out of money. 

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 that their European counterparts. 

In order to address this issue the Commission has adopted a proposal for a Competitiveness 
and Innovation Programme5 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, the Commission has, within 

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“Biotechnology in Europe: 2005 Comparative study” by Critical I 
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its  proposal  for  the  7th  R&D  Framework  Programme6,  outlined  a  new  financing  instrument, 
the  “risk-sharing  finance  facility”,  which  could  provide  loans  for  larger  research  and 
infrastructure projects.  

3.1.2.  The Competitiveness in Biotechnology Advisory Group 

The  Competitiveness  in  Biotechnology  Advisory  Group  with  Industry  and  Academia 
(CBAG)  was  appointed  by  the  Commission  in  2003  in  accordance  with  Action  10b  of  the 
Strategy.  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.  

In  its  second  report7,  the  group  reviews  its  first  set  of  2003  recommendations,  the  progress 
made  towards  them  last  year  and  any  remaining  or  new  barriers  to  be  tackled.  The 
Commission welcomes this second report and invites the CBAG to continue its contribution 
in view of the announced future update of the Strategy. 

The  CBAG  confirms  its  support  for  the  2002  European  Strategy  for  Life  Sciences  and 
Biotechnology. 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.  

At the same time, the CBAG notes that implementation of the strategy has been patchy and 
there  remain  some  serious  concerns.  In  order  to  address  those  concerns,  10  key 
recommendations  have  been  issued.  This  report  responds  to  some  of  them.  The  remaining 
recommendations will be addressed in the broader Commission reflection in the light of the 
announced future update of the Strategy. 

3.1.3. 

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.  

To date, twenty Member States8 have transposed Directive 98/44/EC9 on the legal protection 
of biotechnological inventions into their national legal systems while the other Member States 
are currently at varying stages of progress.  

On  9  July  2003,  the  Commission  referred  eight  Member  States  to  the  European  Court  of 
Justice for their failure to transpose the Directive into national legislation. Among those, three 
infringement  procedures  are  still  pending10.  In  December  2004,  two  other  infringements 
procedures were launched against Latvia and Lithuania. 

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COM(2005)118 
the full text of the Group’s report is available at http://europa.eu.int/comm/dgs/enterprise/index_en.htm 
Denmark,  Finland,  Ireland,  United  Kingdom,  Greece,  Spain,  Portugal,  Sweden,  the  Netherlands, 
France,  Germany,  Belgium,  Estonia,  Czech  Republic,  Slovakia,  Cyprus,  Poland,  Hungary,  Malta  and 
Slovenia. 
OJ L 213, 30.7.1998, p.13. 
Luxembourg, Austria and Italy. 

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For its part, the Commission has considered two questions identified in the Annual Report of 
the  Commission  to  the  European  Parliament  and  the  Council  on  the  development  and 
implications of patent law in the field of biotechnology and genetic engineering provided for 
by Article 16c of Directive 98/44/EC11, namely the scope of patents relating to sequences or 
part-sequences of genes isolated from the human body, and the patentability of human stem 
cells  and  cell  lines  obtained  from  them.  These  two  topics  have  been  addressed  in  the 
Commission report under Article 16c of the Directive. 

Priorities for future actions 

Member States 

►  to fully and swiftly transpose and implement Directive 98/44/EC. 

Commission 

►  to  continue  to  monitor  whether  there  are  any  economic  consequence  of  possible  divergences 

between Member States’ legislation on the issue of scope of patents of gene sequences. 

3.1.4.  Networking Europe’s biotechnology 

The informal network of Member States officials on competitiveness issues, as established 
in  accordance  with  action  10a  of  the  Strategy,  has  continued  to  operate  and  has  played  an 
effective role in the benchmarking exercise of European Public Biotechnology Policies. 

The benchmarking exercise aimed primarily at providing European policy-makers with a set 
of  tools  that  will  assist  them  in  formulating  their  policies  on  biotechnology.  The  general 
objective of the project was to identify types of public policies that affect the development of 
biotechnology  in  Europe  and  assess  their  effectiveness  against  a  background  of  verifiable 
data.  Analysis  of  the  first  round  of  benchmarking  has  identified  both  the  benefits  and  the 
limitations  of  this  exercise,  which  should  be  repeated  at  regular  intervals,  together  with  the 
necessary improvements in methodology. 

A  comparison  of  the  national  portfolios  between  the  countries  and  between  the  different 
periods considered (1994/95 and 2004) reveals a general increase in public policies in favour 
of biotechnology. 

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Priorities for future actions 

Commission and Member States  

►  to continue cooperation and exchange of information through the existing Biotechnology network 

with Member States. 

Member States 

►  to  repeat,  in  2006,  the  benchmarking  programme  to  provide  a  basis  for  an  exchange  of  best 
practices  and  fine-tuning  of  policies.  The  results  of  this  exercise  should  also  contribute  to  the 
future update of the Strategy 

►  to report to the Commission on progress in implementation of the biotech strategy as part of the 

benchmarking exercise  

3.2. 

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, in particular in terms of the critical mass 
of  human  and  financial  resources,  sharing  of  knowledge  and  facilities,  strengthening  of 
scientific excellence, coordination of national activities and support for EU policies.  

The  6th  Framework  Programme  for  Research  has  also  continued  to  attract  industry  and  in 
particular SMEs. However, 

The 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. 

On  6  April,  the  Commission  adopted  a  proposal  for  the  Seventh  EC  Research  Framework 
Programme  2007-2013  (FP7)12.  A  Key  priority  of  FP7  will  be  to  make  the  way  it  operates 
much  simpler  and  to  make  participation  in  the  programme  easier,  through  measures 
addressing the procedures, plus a streamlining of instruments.  

By  focusing  more  on  themes  and  less  on  instruments,  the  programme  should  become  more 
flexible  and  adaptable  to  the  needs  of  industry,  as  well  as  more  straightforward  for  its 
participants. 

Life  sciences  and  biotechnology  research  for  medical  applications  will remain  an  important 
priority  in  FP7.  The  Commission  intends  to  bring  together  the  relevant  technologies  and 
sectors  to  develop  a  European  Knowledge-Based  Bio-Economy,  which  will  provide  the 
necessary critical mass, synergies, and outputs to meet social and economic demands for the 
sustainable and eco-efficient production and utilisation of renewable biological resources and 
their transformation into health, food, energy and other industrial products. This, in turn, will 
provide an incentive for increased growth and employment. 

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Priorities for future actions 

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 in co-
ordination with the Standing Committee on Agricultural Research. 

3.3. 

Confidence in science-based regulatory oversight 

3.3.1.  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.  

Following the adoption of the new Community Pharmaceutical legislative framework and its 
publication  on  30  March  2004,  work  has  focused  on  implementing  this  legislation  and  thus 
introducing  implementing  measures  and  guidelines.  These  measures  include  a  Commission 
Regulation  on  incentives  for  Small  and  Medium-sized  Enterprises  (SMEs)  in  their  dealings 
with the European Medicines Agency (EMEA). 

In addition, the Commission adopted a proposal for a Regulation on paediatric medicines on 
29 September  2004.  This  will  provide  industry  with  a  number  of  incentives  to  develop 
medicines specifically for use in children, including enhanced intellectual property rights. 

3.3.2.  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.  

At  its  orientation  debate  on  28  January  2004,  the  Commission  agreed  on  the  way  forward 
regarding pending decisions on Genetically Modified Organisms (GMOs) and the upcoming 
application of the new regulatory framework. 

Throughout  2004,  the  Commission  has  implemented  the  approach,  and  has  progressed  with 
the  pending  decisions  concerning  the  placing  on  the  market  of  new  GM  products  and  the 
lifting  of  national  safeguard  measures  through  the  relevant  comitology  procedures,  in 
accordance with the provisions of the relevant EU legislation. 

Three decisions concerning the placing on the market of GM products have been adopted by 
the Commission following the failure of Member States to provide a qualified majority in the 
Regulatory Committee or Council.  

The  Commission  also  listed  17  plant  varieties  derived  from  an  authorised  GM  maize  line 
(MON810) in the Common Catalogue of Varieties of Agricultural Plant Species, meaning that 
the seeds of such GM varieties can be marketed throughout the Community.  

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Moreover, the Commission has contributed to the enforcement of the Community legislation 
on GMOs by adopting a measure preventing the import of non authorised GM products into 
the Community. 

Further draft decisions continue to make progress through the administrative procedures, but, 
in  spite  of  improvements  in  the  new  regulatory  framework,  public  and  political  concerns 
about GMOs continue. 

In  its  most  recent  orientation  debate  on  22  March  2005,  the  Commission  confirmed  its  full 
confidence  in  the  existing  regulatory  framework  on  GMOs  and  concluded  that  it  would 
continue to comply fully with its legal obligations and proceed with the approval of pending 
authorisations as appropriate.  

The  Commission  now  expects  more  active  cooperation  from  all  Member  States  in  ensuring 
correct  implementation  of  the  new,  more  rigorous  legislation  governing  GMOs,  which  they 
themselves demanded—and subsequently committed themselves to. 

Priorities for future actions 

Member States 

►  to play their role in the implementation of the new regulatory framework on GMOs 

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. 

The Commission has also decided to step up its efforts to address all the outstanding issues 
identified,  which  could  increase  cooperation  in  decision  making  and  ultimately  result  in  a 
wider consensus amongst institutions and other stakeholders.  

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Priorities for future actions 

European Food Safety Authority 

►  to promote and make full use of the networking of national scientific bodies, in line with Article 
36  of  Regulation  (EC)  178/2002  on  food  law,  and  thus  to  increase  the  possibility  of  resolving 
diverging scientific opinions among the Member States 

The Commission will 

►  enhance its coordination role on co-existence issues, as defined in Directive 2001/18/EC, through 
the  establishment  of  a  coordination  network  designed  to  facilitate  the  exchange  of  information 
on co-existence with and between Member States, 

►  report to the Council and the European Parliament by the end of 2005, using information from the 
Member States, on the experience gained in the Member States concerning the implementation of 
measures  to  address  co-existence,  including,  where  appropriate,  an  assessment  of  all  possible 
and necessary steps to be taken. 

3.4. 

Newly emerging issues 

3.4.1.  Tissue engineering 

The  CBAG  stresses  the  importance  of  Europe  having  a  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.  

Together  with  other  biotechnologies,  such  as  gene  therapy  and  somatic  cell  therapy,  these 
advanced therapies represent a fast-growing sector, which holds great promise for improved 
treatment opportunities and enhanced quality of life across Europe. To develop this potential, 
the Commission has been working on a proposal for a regulatory framework on human tissue 
engineered products.  

Following the public consultations that took place in 2002 and 2004, the principles and main 
elements  of  this  legislative  proposal  have  now  been  agreed  upon.  Stakeholders  will  be 
consulted on this draft in May-June 2005. Adoption of the Commission proposal is scheduled 
for the last quarter of 2005. 

Priorities for future actions 

The Commission will 

►  finalise  legislation  to  harmonise  the  authorisation  procedures  for  marketing  products/processes 
from  human  tissue  engineering,  while  guaranteeing  a  high  level  of  protection  for  patients,  to  be 
presented to Parliament and Council before the end of 2005. 

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3.4.2.  Genetic testing 

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 Europe13. 

The Commission is conscious of the far-reaching consequences that the lack of an adequate 
quality  assurance  system  for  genetic  testing  might  have  for  the  person  tested  and  his/her 
family. Without wishing in any way to interfere with Member States' competence regarding 
genetic  testing,  the  Commission  intends,  in  addition  to  the  priority  actions  identified  in  the 
2nd progress report, to continue its efforts to ensure the highest quality of genetic testing in 
the EU and beyond. 

Priorities for future actions 

Commission and Member States 

►  to enhance an EU-wide exchange of information on best practice and cooperation on the development and 
use  of  genetic  testing  through  the  open  method  of  coordination.  In  particular,  an  evaluation  of  the  clinical 
validity/utility of genetic tests and the establishment of a referral system at EU level for genetic testing of rare 
and complex diseases will be addressed in 2005- 2006 

►  to take whatever action appropriate or required, as arising from the coordination  

The Commission will 

►  launch an initiative on the protection of workers' personal data in the employment context, taking account of 
the European Group on Ethics in Science and New Technologies Opinion No 18 “Ethical Aspects of Genetic 
Testing in the Workplace”. The initiative will also address the processing of genetic data, 

►  analyse the possibility of setting standards on genetic testing under Article 152 or 153 of the Treaty and the 

appropriate legal instrument. 

►  Analyse the Directive 98/79/EC on in vitro diagnostic medical devices in the context of genetic testing and in 

particular regarding quality and performance assurance of genetic test devices. 

►  Launch a mapping and networking exercise on public health aspects of genetic testing. 

3.4.3.  Pharmacogenetics 

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 European Medicines Evaluation 
Agency  (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 6th 
Framework  Programme  for  Research  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.  

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E.g. Austria, Belgium, Czech Republic, Finland, Germany, Netherlands, Slovakia, Spain, Sweden - Add 
website link to the survey conducted by DG RTD 

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Priorities for future actions 

The Commission will 

►  launch  initiatives  on  the  potential  benefits,  risks  and  possible  new  policy  issues  associated  with  the 
application  of  pharmacogenetics,  including  a  prospective  study,  and  consider  the  need  for  an  opinion  from 
the European Group on Ethics on the ethical implications.  

3.4.4.  Biobanks  

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. 

Priorities for future actions 

Commission and Member States 

►  to  launch  initiatives  to  establish  recommendations  for  general  principles  governing  biobanks,  which  will 
optimise data and sample-sharing for research purposes across the EU. The activities should take account of 
ongoing work at national and international level, such as the activities of the Council of Europe and OECD 

The Commission will  

►  consider the need for an opinion from the European Group on Ethics regarding the ethical implications, some 

of which were covered in their Opinion No 19 “Ethical aspects of umbilical cord blood banking”.  

4. 

CONCLUSIONS 

As  described  in  more  detail  in  the  accompanying  staff  working  paper,  further  progress  has 
been  made  since  last  year’s  report  on  implementation  of  the  Strategy  and  roadmap  on  Life 
Sciences and Biotechnology at Community level.  

As last year, it is acknowledged that the situation regarding European biotechnology and its 
competitiveness still needs to be improved. 

Regrettably, delays are still reported in the transposition  of Directive 98/44/EC  on the  legal 
protection  of  biotechnological  inventions.  There  is  also  a  need  for  more  active  cooperation 
from  all  Member  States  in  the  implementation  of  the  new  legislative  framework  governing 
GMOs. 

Against  the  above  background,  the  Commission  will,  for  its  part,  commence  a  process  of 
reflection on the role of Life Sciences and Biotechnology in the renewed Lisbon Agenda and 
on  the  identification  of  the  most  appropriate  measures  needed  to  fulfil  the  Lisbon 
commitments. This process will draw on the results of a comprehensive biotechnology study 
and on an assessment of the progress achieved since 2002. 

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The  Commission  invites  the  Council  and  all  stakeholders  involved  to  participate  in  this 
reflection process. 

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