Will a new European Biotech Act unlock the full potential of biotechnology in the EU?

The European Commission, in an initiative to reshape the biotechnology landscape in Europe, announced plans in July 2024 for the introduction of a new European Biotech Act. Almost a year on, the Commission has now launched a call for evidence to obtain feedback on the proposed legislation's objectives. The resulting impact assessment will be taken into account in the Commission's proposal for the act which is tentatively planned for the third quarter of 2026.

The biotechnology industry encompasses multiple domains including healthcare, food and agriculture, industrial manufacturing, and environmental management. In 2022, Europe's biotechnology industry contributed £38.1 billion in gross value added to the economy, led by the healthcare sector, with industrial biotech also experiencing rapid growth.

Legislative and policy action

Despite these advancements, a number of barriers are perceived as limiting the EU's ability to reap the biotech industry's full potential benefits. The new European Biotech Act is intended to address these barriers through legislative and policy action across five main areas: regulation, financing, scale, skills and data.

According to the Commission's call for evidence, the new Biotech Act will propose a series of measures to create an enabling environment to accelerate the transition of biotech products from laboratory to factory to the market, while maintaining the highest safety standards for the protection of the population and the environment.

Following the call for evidence, a public consultation will be launched in the third quarter this year and the results of these consultations will form the basis of an impact assessment that will feed into the Commission's proposal for the act. This presents stakeholders with an opportunity to contribute feedback to help shape the future of the biotech sector.

Challenges for the biotech sector

Despite the EU's strong position in research and development, it faces issues converting this research into products or industrial processes that can safely be brought to market. According to the Commission's March 2024 communication "Building the future with nature: boosting biotechnology and biomanufacturing in the EU" some of the main challenges faced by the biotech sector include complex and inconsistent regulatory frameworks, insufficient risk-tolerant capital, market fragmentation, skills shortages and underutilisation of digital tools and AI. The Commission's call for evidence seeks to explore the challenges and propose solutions to address them.

Complex and inconsistent regulatory frameworks

One challenge identified is that the relevant EU regulatory framework is outdated and poorly tailored to the fast-evolving nature of the biotech sector and there is a lack of consistent implementation of across member states. This creates a difficult environment for small to medium-sized enterprises (SMEs), spin-outs and start-ups to expand within the EU.

The Commission intends to explore ways to streamline and expedite the regulatory processes for risk assessment, product development and approval. The aim is to achieve a faster turnaround time for biotech products to reach the market without a compromise in biosecurity, health or environmental safety standards.

Several activities have already been initiated by the Commission to achieve this goal including reforms in pharmaceutical legislation and proposed legislation for plants obtained through new genomic techniques (NGT).

However, progress has been slow on both fronts. For example, numerous aspects of the EU pharma package have yet to be deliberated, debated or agreed by EU institutions, which will need to happen before a consensus can be reached and the final legislative texts published. This means that it could be 2028 or 2029 (or beyond) before the measures enter into force.

Likewise, progress on legislation concerning NGT plants has been slow, partly due to a controversial proposal by the European Parliament to ban patent rights for gene-edited plants. This has faced substantial resistance and is a source of difference in the negotiating positions of the European Commission, Parliament and Council in the trilogue process. It remains to be seen how quick progress might be moving forward, but the diverging positions of the EU institutions suggest that progress may well continue to be slow.

Insufficient risk-tolerant capital

Another challenge is insufficient coordination in providing access to public and private investment for SMEs, start-ups, and spin-offs, hindering the process of bringing biotech products to market. The EU captures only 5% of global venture capital funds in comparison to 52% for the US and 40% for China.

As a solution, mechanisms will be explored to attract risk-tolerant capital, increase access to venture capital and bring about cohesion in public and private funding strategies. This has been identified as important for the development of companies at all stages.

Market fragmentation

Despite the potential offered by a large single market, national interests tend to be prioritised meaning that biotech clusters tend to operate at a regional level. This is seen as subsequently limiting the scale of the economy and creating inefficiencies in the time-to-market process causing market fragmentation.

Market fragmentation was highlighted as one of the "terrible ten" most harmful barriers to the single market in the Commission's recent single market strategy. The Commission commits to addressing regulatory harmonisation, which is particularly pertinent for the biotech sector, and will be supportive of and complementary to any specific harmonising measures included in the new Biotech Act.

The Commission's call for evidence acknowledges that the EU has significant untapped potential in both production scale and market size. A proposal is to seek support for the development, operation, governance and coordination of biotech clusters or centres of excellence in the EU. Particular focus will be placed on biomanufacturing with an aim to explore how the EU and Member States can implement targeted incentives to attract and retain investment in high-tech biomanufacturing.

Skills shortages

Manufacturing biotech products requires highly specialised equipment and a highly skilled multidisciplinary workforce. However, a concern is that the demand in the EU for biotech and biomanufacturing skills outweighs the available labour supply. There is also a perceived disconnect between academic research in this sector and companies seeking to commercialise innovative biotechnology.

To address this issue, the impact assessment will consider ways to upskill and reskill the EU workforce to ensure companies have access to adequately trained staff and academics are equipped with the necessary entrepreneurial skills to create and develop companies.

Underutilised digital tools and AI

There is huge potential for all sectors underpinned by biotechnology to benefit from access to supercomputing capacity and high-quality datasets. Currently, this avenue remains underexploited by the EU and, given this is a globally competitive area for investment, there is a risk that the EU may fall behind if it is slow to adopt and fully exploit the potential of digital tools, including AI.

The Commission notes that AI is playing an increasingly large role in biotech, for example in the context of drug discovery, and that access to anonymised real-world health data, storage services and AI computing resources is essential for establishing a strong foundation for research and innovation. The EU also has an opportunity to leverage initiatives and legal frameworks such as the European Health Data Space to ensure access to this data.

However, it will be important to ensure appropriate measures are in place to prevent the malicious use of biotech in this context. The Commission envisages targeted projects and customised EU programmes to promote the development and adoption of digital solutions and AI in a responsible way.

Osborne Clarke comment

The Commission's call for evidence marks a positive step towards the proposed new European Biotech Act, signalling a significant prioritisation of the biotech sector in the EU. The direction of travel in the EU acknowledges the potential of biotechnology to solve some of the most pressing challenges in health, climate and economic growth.

This mirrors the sentiment being expressed in the UK, where a number of recommendations have been made to the government to support the growth of the engineering biology sector. The strategic importance of biotech in the global technology race is therefore clear.

The aims of the act are encouraging: the call for evidence envisages a more predictable and innovation-friendly regulatory landscape, enhanced access to capital and a stronger ecosystem for growth and collaboration.

Time will tell how the Commission will respond to the findings from the call for evidence, and how this will shape its forthcoming legislative proposal. Although there is a long way to go, stakeholders will want to keep track of developments and input to the ongoing consultation process, which provides the opportunity to contribute to shaping the future of biotech in the EU.

Shereen Younis, trainee solicitor at Osborne Clarke, assisted in producing this Insight.