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Brussels, 21 October 2005

Third progress report and JRC biotechnology assessment study

This memo provides the following information:

• Biotechnology is an important economic player
• Figures on biotechnology industry in Europe
• Major challenges
• JRC study on opportunities and challenges of modern biotechnology for Europe
• 1. Scope of the study
• 2. Outline of Work Programme – Main Tasks
• 3. Communication and stakeholder involvement
• Annex: Results from the 2005 biotechnology progress report

Biotechnology is an important economic player

Modern biotechnology can be defined as the use of cellular, molecular and genetic processes in the production of goods and services, and its beginning dates back to the early 1970s when recombinant DNA technology was first developed. Unlike traditional biotechnology – which includes fermentation and plant and animal hybridisation – modern biotechnology is associated with a different set of technologies including the industrial use of recombinant DNA, cell fusion, tissue engineering and others.

Modern biotechnology is one of the key enabling technologies of the 21st century with a potentially wide range of applications in e.g. healthcare, agriculture, and industrial processes. Biotechnology is widely considered as a major contributor to innovation and competitiveness affecting almost every field of human activity:

• Biotechnology applied to medical processes: Biotechnology provides an increasing share of innovative new medicines and therapies opening up new possibilities to prevent, treat and cure hitherto incurable diseases. It is estimated that over 80% of the biotechnology activity in Europe today is health-care related. Modern biotechnology techniques have opened new avenues for the development of innovative and more accurate diagnostics, and for the discovery of novel drugs, thereby impacting disease prevention and therapy significantly (e.g. genetic tests, monoclonal antibodies).
• Biotechnology applied to agricultural processes: Biotechnology provides a set of tools for plant and livestock breeding. It plays an important role in making plants resistant to heat, salt and parasites. Modern biotechnology techniques are being applied in breeding to facilitate selection of organisms with the required characteristics.
• Biotechnology applied to industrial processes: Biotechnology has a good potential to provide new industrial processes that consume less resources, clean up the environment, or substitute more harmful chemical processes. Also the potential for alternative and renewable energy remains to be explored. Finally, it is a significant enabling technology in more traditional sectors, such as chemicals, papers, textiles etc. in the production of industrial goods (e.g. plant breeding for chemicals or biodegradable polymers).

Biotechnology can make a difference in achieving our goal of revitalising the European economy. It can become the backbone of a knowledge-based economy and a vital driver of Europe’s economic recovery.

It is evident that modern biotechnology offers unique opportunities to address many needs and could consequently serve as a major contributor in achieving European Union (EU) policy goals on economic growth and job creation, public health, environmental protection and sustainable development.

Biotechnology industry in Europe, some figures

Biotechnology has had a late and slow start in Europe, but has eventually taken off. With a successful start-up phase in the late nineties, today the biotechnology research sector in Europe is estimated to outnumber that of the US: 1,861 companies in Europe against 1,473 companies in the US.

European companies on average tend to be smaller, employ less people, invest less in research and development (R&D) and generate smaller revenues than in the US. As a whole and despite positive examples, Europe is still lagging behind in its ability to generate, organise, and sustain innovation processes in biopharmaceuticals.

Nevertheless, 2004 seems to have been a year of consolidation rather than growth for European biotechnology with stagnating numbers of companies acting in the field in both Europe and the US. The barriers to European competitiveness are familiar.

Compared to the US:

• European employment is only nearly half as much, despite an approximately equal number of companies
• European spending on R&D is only a third
• The European sector raises three or four times less venture capital and has access to four times less debt finance
• The European sector generates only half the revenue.

In addition, fierce competition is emerging from the Asia Pacific region

The financing gap appears to be the biggest single barrier to competitiveness in biotechnology, whereas the problems do not seem to occur at early stages (seed financing and early venture capital) but later in the business cycle so that many companies run out of money before they manage to take off.

Major challenges for European biotechnology industry

European biotechnology industry faces a crucial challenge: It needs to catch up with its international rivals.

The major challenges are to:

• Establish a mature and consolidated industry
• the US is still global leader in the field with less but more mature companies than Europe
• Augment spending in R&D
• In 2004, the US spent more than 3 times as much on R&D than Europe
• Push Member-States to implement EU legislation
• This particularly relevant regarding GMOs and pharmaceuticals. Another obstacle is the lack of progress with regard to the implementation of the Biopatent Directive
• Enhance international cooperation and the transatlantic relationship
• The EU still has to deal with the pending trade dispute in the WTO concerning the “GMO moratorium”

See Annex “Results from the 2005 biotechnology report

JRC study on “Consequences, opportunities and challenges of modern biotechnology for Europe”

Modern biotechnology is a horizontal technology with a potentially wide range of applications in many sectors. At the same time modern biotechnology has contributed to major advances in basic science. Recent data on the economic performance as well as on R&D activities of the European biotechnology industry indicate that 2004 was a year of consolidation rather than growth. Moreover, recent reports suggest that the actual adoption of modern biotechnologies by various European sectors may be lower than anticipated (e.g. genetically modified crops are hardly grown in Europe, stem cell-related applications are still in R&D phases, and gene therapy is currently not available outside clinical trials). In fact, it appears that modern biotechnology might have been successful primarily in niches where economically competitive alternatives do not exist (e.g. antibody-based pharmaceuticals). However, modern biotechnology today still is a developing, immature technology and extensive research and development programmes are under way to develop new products and new applications.

Against this background, and following a request of the European Parliament, the European Commission has announced in its third annual report on its biotechnology strategy of 2002 that it will “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 [1] , and sustainable development”.

The purpose of this study is twofold:

• 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 reflection on the role of the Life Sciences and Biotechnology in the renewed Lisbon Agenda.
• Secondly, this kind of independent study should help to increase public awareness and understanding of life sciences and biotechnology.” [2]

The Commission Services have assigned the study to its Joint Research Centre, where the study will be led by the Institute for Prospective Technological Studies (JRC-IPTS).

The main challenge for the study is to provide a comprehensive assessment of the opportunities and challenges that applications of modern biotechnology present, in particular concerning:

• economic growth and job creation;
• public health and quality of life;
• food safety, food production and rural development;
• environment and energy.

The final results of the study will be put into a framework that provides an overview of biotechnology research in the EU, including a description of its strengths and weaknesses, and human resources.

Scope

The study will focus on modern biotechnology. This includes biotechnologies covering DNA, proteins and other molecules, cell and tissue culture and engineering, process biotechnologies, and sub-cellular organisms, but excludes traditional biotechnology processes used for example in the food industry or for bioremediation.

The focus of the study will be on existing biotechnology applications, though reference will also be made to emerging biotechnology applications. The aim is to provide the necessary background for policy-making over the next 5 years. Depending on the policy area, this may entail the need for analysis of developments over a substantially longer time horizon.

The study will cover biotechnology applications in the EU-25. The results will be compared with the situation in the US, Japan, and China, and for specific application areas, additional countries such as South Korea and Canada.

Outline of Work Programme – Main Tasks

The study is planned to be completed by mid 2007. A mixed quantitative/qualitative methodology based on indicators will be employed for the assessment of the economic, social, and environmental consequences of modern biotechnology. A quantitative approach will be used wherever feasible and appropriate. This will be complemented by qualitative analyses, focusing on factors shaping costs and benefits. This comprehensive assessment will be supplemented with a representative set of in-depth case studies on specific biotechnology applications.

The study will include the following three tasks.

Task 1:

• Mapping of modern biotechnologies and applications,
• Analysis of data availability and
• Identification of indicator sets

The deliverable should be directly useable for Task 2. Task 1 is planned to start October 2005.

Task 2:

• Mapping of the adoption of modern biotechnology in the EU;
• Evaluation of the consequences, opportunities and challenges of modern biotechnology applications for Europe in terms of economic, social, and environmental aspects, and
• Provision of input to an assessment of important emerging applications

Task 2 is the core data gathering and evaluation exercise. Results of Task 1, in particular the produced indicator sets, will be used and complemented where necessary.

Biotechnology applications will be analysed under the following headings:

• human and animal health;
• agriculture, fisheries and food and feed production;
• industrial processes, energy, and environment;

The collection of data for the EU involves original research. The comparison with the situation in the US, Japan and China will be based on the analysis of published sources.

Challenges linked to biotechnology applications such as potential risks and their management or social non-acceptance and ethical concerns will be discussed as factors influencing adoption and the realisation of existing opportunities. This includes the analysis of potential consequences of non-adoption of specific biotechnologies.

Task 3:

• Relation of the economic, social, and environmental consequences, opportunities and challenges of modern biotechnology applications to major EU policy objectives, assessing the contributions to their achievement;
• Assessment of potential future impacts of biotechnology by performing quantitative scenario analyses in a small number of selected policy areas;
• Assessment of the potential impact of important emerging applications;

Communication and stakeholder involvement

• Stakeholder involvement

In order to inform stakeholders and obtain their views on the study approach, a meeting will be organised at the end of Task 1. Stakeholders will also participate in the final symposium.

• Final symposium

The study findings will be presented to policy-makers at a one-day symposium, planned to take place in Brussels in mid 2007. Members of the European Parliament will be invited, as well as stakeholders from industry, consumer, patient and environmental groups, and representatives of academia.

• Advisory Committee

The JRC has established an Advisory Committee comprising high level scientists from the fields of biotechnology, economy, social sciences, and sustainable development. The Advisory Committee’s task is to advise on the approach, methodologies, scope and results of the study, and on the composition of expert panels, if needed.

Annex

Results from the 2005 biotechnology report

(Third report on the 2002 Community Strategy for Europe on Life Sciences and Biotechnology)

The report is the third of its kind laying out what needs to be done by the Commission, other European institutions as well as public and private stakeholders to deliver on the aims set out in the Commission’s biotechnology strategy of 2002.

The Commission has responded in its report by priorities for future action:

Current concerns and needs Priorities for future action Assessment and cost-benefit analysis of biotechnology and genetic engineering Commission: To carry out an independent study on social, economic and environmental consequences, opportunities and challenges of modern biotechnology To update the Community Strategy on Life Sciences and Biotechnology well before the European Spring Council 2007 Intellectual Property (IP) Protection: A simplified, workable and affordable European patenting system Enforce implementation of IP Directive Member States: to fully and swiftly transpose and implement Directive Commission, Member States, interested parties: to continue exploring whether further harmonisation would be desirable on the issue of scope of patents of gene sequences Networking Europe’s biotechnology: Draw on the results of the successful work of informal network with Member States officials on competitiveness issues Commission and Member States to continue co-operation 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. to report on progress in implementation of biotech strategy Funding Research in Europe The 7th Framework Programme should be designed with a streamlined administration system to encourage greater participation, and radically increase the number of participating SMEs Commission to simplify procedures and instruments in FP7 to make participation easier to bring together relevant technologies and sectors to develop a European Knowledge-Based Bio-Economy Improving the regulatory framework Review of the pharmaceutical legislation Registration and licensing procedures of medicines derived from biotechnology are still too complex and too expensive Legislation on Genetically Modified Organisms (GMOs) Member States should remain responsible for the correct implementation of EU legislation on GMOs that they have adopted Member States to play their role in the implementation of the new regulatory framework on GMOs Commission to complete labelling thresholds for the adventitious or technically unavoidable presence of authorised GM seeds in seeds of both conventional and organic varieties to increase cooperation and consensus among decision-makers through a coordination network Tissue Engineering A clear regulation for human tissue engineered products, harmonisation of national existing regulations and increased promotion in Member States Commission to finalise legislation aimed at harmonising authorisation procedures for marketing products/processes from human tissue engineering, which guarantee a high level of protection for patients, before end 2005 Genetic Testing Lack of an adequate quality assurance system for genetic testing Commission and Member States to enhance the EU-wide exchange of information on best practice and collaboration regarding the development and use of genetic testing through the open method of coordination Commission to submit a proposal for a directive on the protection of workers’ personal data in 2005 to analyse the possibility of setting standards on genetic testing Pharmacogenetics Uncertainty regarding the potential impact of pharmacogenetics on health care and its ethical, legal and socio-economic implications Commission To launch initiatives on the potential benefits, risks and possible new policy issues, including a prospective study Bio-Banks Ethical concerns regarding the collection and storage of human biological material Simultaneous need to optimise the use of bio-banks through collaboration in order to ensure progress European biomedical science Commission and Member States Recommendations for general principles governing bio-banks (data and sample sharing for research purpose)

[1] Agenda 21 is a comprehensive plan of action to promote sustainable development, adopted by the 1992 United Nations Conference on Environment and Development in Rio de Janeiro, Brazil.

[2] Life Sciences and biotechnology – a strategy for Europe. Third progress report and future orientations. COM (2005) 286 final

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