Michael Lohan, the CEO of IDA Ireland, has expressed concerns over the impact of increasing EU regulations on Europe’s life sciences industry. The new guidelines proposed by Brussels last year for the pharmaceutical sector may further exacerbate the existing technological disparity between the EU and the US, according to Lohan.
He cited the agility and responsiveness of the American regulatory system as a stark contrast to the European counterpart, which he believes has become more strenuous and could potentially hinder innovation.
Lohan reminisced about a time a mere ten years ago when Europe was the preferred destination for medical device manufacturers, a position it has since forfeited. Meanwhile, Ireland has proved to be a potent magnet for foreign direct investment thanks to its low tax regime, skilled labour force, expertise, and EU membership, with life sciences emerging as a predominant sector. In fact, major pharmaceutical and medtech corporations have set up operations in the country, contributing to the production of 40% of the globe’s contact lenses amongst other products.
Nevertheless, David Walsh, who heads healthcare and life sciences strategy at KPMG Ireland, expressed that the recent regulatory efforts by Brussels, including last year’s new proposals and the 2017 medtech legislation, have proven vexing for investors. He goes on to indicate that if investors perceive the European market as more complex, they may naturally gravitate towards the US or Asia Pacific region.
Consequently, Walsh asserts that more assistance is required from regulators and various organisations to help firms maneuver through the intricate regulatory framework. In contrast, Neale Richmond, a junior minister at Ireland’s Department of Enterprise, Trade and Employment, advocates for faster regulation to facilitate the domestic sale and usage of drugs produced in Ireland.
The US has been drawing a significantly higher proportion of research and development (R&D) investment compared to Europe, reveals the European Federation of Pharmaceutical Industries and Associations, which operates from Brussels. The lobby group has highlighted that the US received 33% more R&D funding than Europe recorded in 2010. As per their report, this gap broadened to over 66% by 2020.
“Innovation is shifting towards the US, and Europe is finding itself lacking in R&D,” expressed Lars Fruergaard Jørgensen, the head of Efpia and Novo Nordisk, the most valuable pharmaceutical company in the EU, in his conversation with the Financial Times. He anticipates that corporations may further limit their financial allocation for new medicine discovery in Europe if the returns shrink.
The commission’s upcoming proposals for the pharma sector, still under debate and not yet legalised, mandate drug manufacturers to launch new medicines across all 27 EU nations within two years. This would lead to a cut in the exclusivity period protecting against competition from generic drugs, from the current 10 years to just eight.
Officials in Brussels believe these changes would reduce the cost of medicines and make them more widely accessible to people. An EU commission spokesperson said, “Our aim is to encourage industry investment and help them maintain their competitive advantage.”
However, Mr Lohan from IDA has raised concerns over creating new “hurdles in the R&D process for new treatments,” which could potentially postpone market entry. “We must strike the right balance from a European viewpoint,” he concluded – Copyright The Financial Times Limited 2024.