Brussels is willing to accept higher costs for healthcare systems to win the global biotech race. A new EU incentive would extend intellectual property rights for a handful of cutting-edge drugs, delaying cheaper biosimilars at an estimated €615 million a year. Europe is betting the trade-off will be worth it.
The incentive offers an additional year of intellectual property protection. To qualify, a medicine must contain a genuinely new active substance, demonstrate a distinct mechanism of action, run clinical trials across multiple EU member states, and carry out at least part of its manufacturing inside the Union.
The Commission’s analysis underpinning the proposed Biotech Act sets out the case for the new incentive. Brussels hopes it will help keep more clinical trials, manufacturing, and investment inside Europe.
Extra cost per qualifying medicine
The Commission estimates the measure would add roughly €70 million in extra public payer costs per qualifying medicine. It would temporarily delay the wider expansion of lower-cost biosimilar access. However, Brussels argues the incentive could influence company investment decisions “at the margin” by encouraging developers to place more high-value activities in Europe.
The proposal offers one of the clearest illustrations yet of how dramatically Brussels’ biotechnology strategy is changing. The analysis shows the Commission increasingly sees biotechnology not simply as a health policy issue, but as a strategic industrial sector where Europe risks losing ground to the United States and China.
You might be interested
At the centre of the Commission’s diagnosis is a stark figure. Europe faces an estimated €40 billion annual biotechnology investment gap with the United States. Under its most ambitious scenario, the Commission believes new investment instruments linked to the Biotech Act could help mobilise up to €210 billion in biotechnology investment over seven years.
From regulation to industrial strategy
The Commission increasingly frames biotechnology as a strategic economic sector linked to industrial resilience, competitiveness, advanced manufacturing, and geopolitical positioning. The Staff Working Document repeatedly argues that Europe’s challenge is no longer scientific excellence. But the inability to scale companies, retain investment and translate research into commercial products.
Taken together, these effects position the Biotech Act as a structural enabler of a more competitive, innovative, and resilient EU biotechnology ecosystem.
— European Commission, Biotech Act impact assessment
Regulatory complexity, fragmented clinical trial systems, limited scale-up financing, and insufficient manufacturing capacity have all pushed Europe to steadily lose ground to competing regions. The Biotech Act aims to address these “key structural bottlenecks” by combining regulatory simplification, investment mobilisation, and industrial support measures. “Taken together, these effects position the Biotech Act as a structural enabler of a more competitive, innovative, and resilient EU biotechnology ecosystem,” the Commission writes in the assessment.
Brussels bets on clinical trial reform
One of the most economically significant parts of the package concerns the proposed reform of Europe’s clinical trial system. The Commission estimates the changes could reduce authorisation timelines for clinical trials from 106 days to 75 days, or to 47 days where no additional information is requested from sponsors.
According to the analysis, the reforms could generate direct annual savings for sponsors of between €1.5 billion and €3.1 billion through faster procedures and lower administrative costs. Indirect savings of a similar scale are also expected, linked to shorter development timelines.
Brussels estimates the reforms could increase the number of clinical trials conducted in Europe by between 10 and 30 per cent. The impact assessment projects that such an increase could generate between €3.6 billion and €10.7 billion in economic gains and create between 16,500 and 49,500 additional jobs across the EU. The Commission also argues the reforms could help reverse Europe’s declining share of global commercial clinical trials, which fell from 22 per cent to 12 percent between 2013 and 2023.
Accelerating advanced therapies
The Commission’s analysis also places strong emphasis on advanced therapy medicinal products, including cell and gene therapies. The proposed reforms would remove environmental risk assessments during clinical trial applications for certain low-risk genetically modified ATMPs and eliminate an additional 50-day assessment period.
According to the Commission, the current system has become a competitive disadvantage compared to the United States. The Food and Drug Administration (FDA) grants exclusions from environmental assessments for most gene therapy investigational applications.
The analysis states that the changes could remove between 0.15 and 0.3 full-time equivalent years of administrative burden per clinical trial application. This should also make Europe more attractive for early-stage ATMP development.
The Commission also proposes greater flexibility to adapt ATMP definitions in response to scientific progress. It argues that rigid classifications have already delayed certain innovations in Europe for years while similar products were approved in the United States.
Strategic projects and the scale-up problem
The Biotech Act also introduces a new framework for strategic biotechnology projects and high-impact flagship projects. These projects would benefit from accelerated permitting procedures, administrative support, simplified coordination, and easier access to financing.
According to the Commission’s medium uptake scenario, strategic projects could mobilise between €15 billion and €28 billion in cumulative investment by 2038. High-impact projects could mobilise an additional €4 billion to €12 billion.
Combined, Brussels estimates the frameworks could mobilise between €19 billion and €40 billion in biotechnology investment by 2038. The Commission argues the measures are particularly important for Europe’s scale-up gap. Companies often struggle to secure late-stage financing or industrial deployment capacity.
Under the most ambitious scenario, the investment framework could eventually mobilise around €210 billion in biotechnology investment over seven years.
— European Commission, Biotech Act impact assessment
To address this, the proposed EU Health Biotechnology Investment Pilot would work with the European Investment Bank and European Investment Fund to mobilise private capital into biotechnology companies. The Commission notes that the EIB estimates Europe currently faces a €40 billion annual biotechnology investment gap with the United States. Under the most ambitious scenario outlined in the assessment, the investment framework could eventually mobilise around €210 billion in biotechnology investment over seven years.
Biosimilars and regulatory simplification
Another major section of the analysis focuses on biosimilars. The Commission proposes reducing the need for large comparative efficacy studies for biosimilars where advanced analytical testing can already demonstrate sufficient similarity with originator products.
According to the impact assessment, removing certain clinical trial requirements could reduce development costs for biosimilar monoclonal antibodies by between €19 million and €26 million per product. The Commission estimates the reforms could generate cumulative net industry savings of between €1.5 billion and €2.8 billion over five years in medium and high uptake scenarios.
At the same time, Brussels argues wider biosimilar competition could significantly expand patient access and healthcare savings. The assessment projects annual biosimilar-related healthcare savings could rise from around €13 billion today to between €22 billion and €35 billion annually by 2035–2038.
However, the Commission also warns that Europe faces a growing “biosimilar void”. Of roughly 100 biologics expected to lose exclusivity by 2032, 79 per cent currently have no biosimilar versions in development.
Artificial intelligence and biotechnology
The Commission also identifies artificial intelligence and high-quality biomedical data as critical enabling technologies for Europe’s future biotechnology competitiveness. The Biotech Act proposes new guidance on the use of AI across the medicinal product lifecycle. This includes dedicated AI-enabled biotechnology testing environments and data quality accelerators.
Under medium uptake scenarios, the Commission estimates these infrastructures could serve between 1,100 and 3,400 companies and data users annually. They could also mobilise between €650 million and €1.3 billion in infrastructure investment.
The assessment argues that better data quality, shared validation infrastructure and clearer regulatory guidance could significantly shorten biotechnology development timelines. This should also improve Europe’s ability to compete in AI-enabled drug discovery.
A more interventionist Brussels
Taken together, the analysis reveals a far more interventionist biotechnology strategy than previous EU life sciences initiatives. The Biotech Act no longer focuses only on regulation and research support. Instead, it combines industrial policy, intellectual property incentives, strategic financing, accelerated permitting, clinical trial reform and advanced manufacturing support into a coordinated competitiveness agenda.
The cumulative benefits of the package are expected to significantly outweigh the associated costs.
— European Commission, Biotech Act impact assessment
The Commission repeatedly argues that the cumulative impact of the measures is expected to be “materially greater than the sum of each measure assessed in isolation.” “While the magnitude of these benefits will depend on uptake, implementation and broader market conditions,” the Commission concludes, “the assessment indicates that the cumulative benefits of the package are expected to significantly outweigh the associated costs.”
