Europe’s biotech future is at a crossroads. With €10 billion on the table, the European Commission is racing to show that its funding plans and new incentives will actually drive innovation—before global rivals pull ahead. MEPs are demanding clear evidence that the money will deliver results for both investors and public health.

At the centre of the discussion is a €10 billion initiative developed with the European Investment Bank (EIB). It aims to mobilise public and private investment into high-risk biotech projects. The instrument addresses a structural gap in Europe’s life sciences sector: limited late-stage financing for scaling innovation.

The Commission combines EU guarantees, EIB lending and venture-style debt to crowd in private capital. It aims to reduce investment risk in a sector where Europe trails the United States.

The initiative is a part of a broader shift towards economic policy tools in health and biotech, as Health Commissioner Olivér Várhelyi told MEPs during a parliamentary exchange with the European Parliament’s Committee on Industry, Research and Energy (ITRE) and Committee on Public Health (SANT).

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“The big challenge is whether we are going to be able to have a real response to the global challenge, which is also related to investments,” he said. “We are not only providing you with a regulatory proposal, we are also providing an economic one.”

Financing model under scrutiny

MEP Nikos Papandreou (S&D/GRC) questioned how the funding will translate into tangible outcomes. “We have €10 billion from the EIB. But I’d like an impact assessment on how we will get benefit out of that,” he said. Mr Várhelyi confirmed further analysis is underway. “We are doing an assessment of impact. It should be with you in early May,” he told MEPs. He adding that the basics are already covered in the pharmaceutical legislation’s impact assessment.

The Commission has failed to provide a comprehensive cost-benefit analysis of the proposed 12-month supplementary protection certificate extension. — MEP Vytenis Andriukaitis (S&D/LTU)

The €10 billion pilot has already been launched ahead of the Biotech Act’s adoption. Mr Várhelyi said this reflects urgency in responding to global competition. He added that the instrument could serve as a model for future EU funding under the next multiannual financial framework. “We have already rolled out the very tool we think could be the response,” Mr Várhelyi said.

However, he stressed that financing alone will not shift investor behaviour. “If you want to promote investments you have to make sure that the value which is created can also be translated to the economy.”

In that context, the Commission proposes economic incentives such as extending supplementary protection certificates (SPCs) to increase the commercial value of biotech innovation. The measure would grant an additional 12 months of market protection for certain biotechnology medicines. “The SPC extension is a major economic incentive (…) an economic incentive which has a market value,” Commissioner Várhelyi said. “If you want to create economic value (…) this is the way to go.”

Lawmakers question SPC rationale

That approach has triggered concern in Parliament, particularly over the absence of a comprehensive cost-benefit analysis. Speaking on behalf of MEP Tiemo Wölken (S&D/DEU), SANT rapporteur MEP Vytenis Andriukaitis (S&D/LTU) criticised the proposal. “The Commission has failed to provide a comprehensive cost-benefit analysis of the proposed 12-month supplementary protection certificate (SPC) extension,” he said.

Products eligible for the SPC extension must involve a new biological mechanism and a new mode of action. They must also be developed, tested and manufactured in Europe. — Olivér Várhelyi, Commissioner for Health and Animal Welfare

He warned that delaying the entry of generic and biosimilar medicines could increase pressure on national health budgets. “It also remains unclear whether alternative regulatory, financial or market-based incentives have been examined,” he added.

Mr Andriukaitis argued that the Commission should have addressed these issues through a full impact assessment. “All of the questions could have been addressed if the Commission had taken the time to provide a proper impact assessment,” he said on behalf of MEP Wölken.

Targeted incentive design

Mr Várhelyi rejected the criticism, arguing that the SPC extension is tightly targeted and conditional. “These are very strict conditions,” he said. He noted that eligible products must involve a new biological mechanism and a new mode of action. They must also be developed, tested and manufactured in Europe.

According to the Commission, this design aims to ensure that economic benefits remain within the EU. “The extension we are providing is exactly to create economic value but also to make sure that these are not going to be manufactured elsewhere,” Commissioner Várhelyi said.

We are in the last minute to save our still existing competitive edge. — Olivér Várhelyi, Commissioner for Health and Animal Welfare

On costs, he pointed to earlier analysis from the pharmaceutical review. “It is roughly €160 million per product per year,” he said, while arguing that this must be weighed against broader economic and societal benefits. “That’s the cost… but we will have access to the product and an economic benefit at large for society,” he added.

He also confirmed that the Commisson considered alternative incentives, including data exclusivity, but ultimately rejected them. “We thought that this is the best tool to create also an economic value that can boost investments into the sector,” he said.

Policy tensions and next steps

The exchange underscores a structural policy tension in the EU’s biotech agenda: how to balance investment incentives with affordability and evidence-based policymaking. On one side, the Commission is pushing a model that combines public financing with market-based incentives to strengthen Europe’s competitiveness in biotech.

On the other, MEPs are demanding stronger justification for these tools, particularly given their potential impact on healthcare budgets. The upcoming impact assessment, expected in early May, is likely to shape parliamentary negotiations on the Biotech Act and related elements of the pharmaceutical package.

Mr Várhelyi framed the debate in strategic terms, warning that Europe risks losing ground if it fails to act. “We are in the last minute to save our still existing competitive edge,” he said. ITRE rapporteur Wouter Beke (EPP/BEL) echoed that concern from Parliament. “If we do nothing, we could lose an entire sector in the coming decades,” he said.

As negotiations advance, the Commission will need to demonstrate that its financing model and incentive structure can deliver both investment and public value. A balance that remains contested across institutions.