EU policies "have negative" R&D impact

17 November 2008

Despite the emphasis placed by the European Union on innovation and competitiveness since the 2000 Lisbon strategy, many regulations penalize research-based businesses, including in the pharmaceutical industry, according to a new report by the France-based think-tank, the Institut economique Molinari. The paper, titled Risks and regulatory obstacles for innovating companies in Europe, draws attention to the importance of investment risks that are inherent in the R&D process, noting for example, that it takes 10,000 molecules to generate one successful drug.

Given the degree of uncertainty under which drugmakers operate, the IeM argues that adding regulatory costs onto the pharmaceutical sector has a potentially serious deterrent effect to future investment. Valentin Petkantchin, the IeM's research director, lists three areas where EU policies at the central or national level have a negative impact on innovation: safety regulations; health care spending limits; and anti-trust rules.

Dr Petkantchin writes that, "despite...laudable goals, current approval systems have become a substantial hindrance to innovation and, by themselves, are among the factors responsible for the sharp rise in the cost of R&D and of new drugs brought to the market in recent years." A European Directive effective in 2004 raised the cost of clinical trials in the region by 85%, according to data published in the European Journal of Cancer in 2006.

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