Europe pushes to regain ground on competitors with new Biotech Act
With the publication of the Biotech Act, the EU sets out how it intends to boost the sector’s competitive position in the face of China’s rapid rise
The Biotech Act Regulation sets out a broad framework that combines investment, regulatory reform, artificial intelligence, and biosecurity safeguards, all aimed at ensuring that biotechnology breakthroughs are not only discovered in Europe but also developed and manufactured here.
At its core, the Act responds to Mario Draghi’s stark analysis that, despite Europe’s scientific excellence, global leadership in biotech innovation is increasingly shifting elsewhere.
Presenting the initiative, Health Commissioner Olivér Várhelyi, set out the scale of the challenge: “While Europe is very strong globally, and the whole European biotech industry is very important when it comes to its contribution to our GDP and exports, we also see that we are gradually losing the competition,” he said. “For example, when it comes to clinical trials, over the last 10 years, Europe has gone down from 22% to 12% of global share, while the number of clinical trials in Europe remained the same.”
MEP Stine Bosse (Renew, Denmark), Vice Chair of the Parliament’s Health Committee said the Act was a priority for her: “Biotechnology will ultimately help ensure our European prosperity and strategic autonomy.”
Biotech Investment Pilot
One of the most consequential elements of the Act will be the creation of an ‘EU Health Biotechnology Investment Pilot’, led by the European Investment Bank and other implementing partners. The pilot will combine equity instruments with venture-style debt tailored to the high-risk, high-reward investment in biotechnology. It will initially run for a two-year period and then be subject to review.
However, the current funding gap is enormous. The Act estimates that Europe currently faces an annual investment shortfall of €40 billion compared with other regions.
The ‘BioTechEU’ initiative, announced today, will act as a foundation for the future pilot. It aims to mobilise €10 billion in investment in 2026-27.
“Under-investment is a major stumbling block for Europe’s biotech companies and a serious obstacle for our innovative start-ups. The BioTechEU project should contribute to reversing that trend,” said Várhelyi.
President of the European Investment Bank, Nadia Calviño, said the investment would "ensure that breakthroughs made in Europe can scale and thrive in Europe”.
More incentives for pharma
The Act also introduces a 12-month extension of the Supplementary Protection Certificate (SPC) for medicinal products developed using biotechnology processes and for Advanced Therapy Medicinal Products (ATMPs).
Tiemo Wölken MEP (S&D, Germany) sounded a note of scepticism: “While this incentive aims to promote the development of innovative products, enhance their therapeutic benefit for patients, and support clinical development and manufacturing in the EU, we only last week reached an agreement on market protection under the Pharmaceutical Directive. Therefore, the proposed SPC extension needs to be carefully examined.”
But for EFPIA Director General, Nathalie Moll, the proposal is too constrained: “Strengthening Europe’s intellectual property provisions is particularly important, however, its effectiveness may be limited by restricting it to an overly small subset of products or geographical conditions on manufacturing.”
Catherine Feore
Clinical trials
At the same time, the Commission is targeting one of the industry’s biggest bottlenecks: slow clinical trial approvals.
“We aim to make clinical trials much faster, that they will not take longer than 47 days down from 100 days on average today,” Várhelyi said. “If you compare it to our direct competition, US, UK or China, we are way out of the league on this one.”
AI-first biotechnology and regulatory sandboxes
Aligned with the EU’s ‘AI-first policy’ under the Apply AI Strategy, the Biotech Act will actively encourage the integration of artificial intelligence across the medicinal product lifecycle. The European Medicines Agency will issue guidance on AI use, while trusted AI testing environments and data-quality accelerators will be recognized as high-impact strategic projects.
The Regulation also establishes a ‘Union-level regulatory sandbox’ for early-stage health biotechnology products that fall outside existing legal frameworks—offering innovators a controlled environment to test novel solutions without immediate regulatory barriers.
To ensure coherence across Europe, a ‘European Health Biotechnology Steering Group’ will be set up to coordinate member states, the Commission, and stakeholders' efforts.
Biosecurity
Beyond innovation and investment, the Act introduces a framework to prevent the misuse of biotechnology products of concern, reinforcing the EU’s commitment to protecting citizens from biotechnological threats while fostering responsible innovation.
Industry reaction: optimism, with caveats
Industry response has been broadly positive. EuropaBio, the European Association for Bioindustries, welcomed the initiative while signalling that further work lies ahead.
“The EU Biotech Act has hit the ground running, with a strong baseline for a more competitive EU amidst global geopolitical changes that require urgent and ambitious action,” said Director General Claire Skentelbery.
Skentelbery praised specific measures, including the SPC extension, faster clinical trial approvals, a dedicated regulatory sandbox for substances of human origin, and the EIB-led investment pilot, but said there were “a few notable absences”.
Whether the Biotech Act will be able to make a difference in a world increasingly dominated by the US and China remains to be seen. Measures to transform Europe’s capital markets may, in the end, be of greater importance.