Biotech firms call for single market rules

Date: 11/01/1996

By Tim Jones

EUROPEAN biotechnology firms are growing increasingly impatient.

That fact will be uppermost in the minds of the participants at this week's biotechnology conference hosted by the European Commission, Parliament and the Council of Ministers.

Like the audio-visual and multimedia sector, biotechnology was identified as a growth area for European industry in the White Paper on growth, competitiveness and employment.

These often small companies are struggling with competitors, mostly in the US, to develop pharmaceutical and agricultural products using the latest methods of genetic engineering.

In their size and innovative approach, these firms typify the new industrial economics that evolved in the Eighties and Nineties. What makes them unusual is their slow return on investment, a problem that the industry feels is being exacerbated by EU policies.

It can take as long as a decade to take a drug or other biotechnological product from the laboratory through testing on animals, patent trials and regulatory approval before it is ready to hit the market. The full research and development costs for one product can be as high as 300 million ecu.

That factor makes this fast-growing sector different from other small- and medium-sized enterprises which have sprung up across the EU over the past ten years and now employ 70 million people.

Over a decade of product development, biotech companies need constant injections of cash, with nothing to offer investors except high risk and the possibility of huge returns sometime in the future.

For optimistic investors, Californian biotech company Amgen offers a lesson in early investment. This firm, only founded in 1980, has grown into a top pharmaceutical company within 15 years with a share capital of 8 billion ecu.

On the other hand, failures have made just as many headlines and some biotech companies have consequently felt starved of funding, with many forced into mergers or link-ups with bigger pharmaceutical firms.

All this means that the sector is highly sensitive to any measures that prolong the development stage or undermine investor confidence.

“We believe the industry in Europe is at a disadvantage compared to its competitors,” says Andrew Dickson, secretary-general of the Senior Advisory Group on Biotechnology (SAGB).

The SAGB will spell out the views of 33 large and small biotech companies, including giants like Monsanto, Rhone-Poulenc, Nestlé, Ciba-Geigy and Unilever, in a paper to be submitted to today's (11 January) conference on biotechnology in Brussels.

“There is still not a single market in these biotech products,” says Dickson. “There is a need for a corpus of clear and transparent law on the issues related to the sector.”

For the industry, the most glaring defects in the EU are in the area of clearing products for marketing, particularly in the case of genetically-modified micro-organisms (GMOs) used for agriculture.

These products, which include modified rapeseed, soya bean, maize and chicory, are intended to increase farmers' yields, sometimes through making the seeds more resistant to herbicides.

Some of the EU's international competitors manage to win clearance for marketing these products within a year. In 1994, for example, the US allowed between 12 and 14 products through, while only one product was cleared in the Union.

The industry believes this is a result of the EU's cumbersome process for approving products. Companies wishing to register GMOs for field trials and marketing must apply first in one member state, after which others have 60 days to give their views on the decision.

If this is not agreed unanimously, it is voted through the 'Article 21 committee' by qualified majority.

The failure of even this system was recently exemplified by the cause célèbre of genetically- modified rapeseed. This product was developed by Plant Genetic Systems NV (PGS), a small agricultural biotechnology company based in Ghent employing 135 people, half of whom work in research.

The firm, founded in 1982, specialises in developing, producing and selling value-added seeds using biotech methods, but still has no products on the market.

When its modified rapeseed came before the Commission for approval late last year, Environment Commissioner Ritt Bjerregaard sought special labelling for it before providing clearance. This was opposed by other Commissioners who felt it would be considered a protective trade act.

A related problem for the industry is one the Commission has been trying to address for the past eight years - that of patent protection.

Back in 1988, the Commission proposed a directive to give legal protection to biotechnological inventions, arguing that common rules were needed to give these inventions an equal level of patent protection in all EU member states.

“Without common legislation compatible with the single market,” says Internal Market Commissioner Mario Monti, “European research and exploitation of its results, particularly for therapeutic purposes, will be discouraged and placed at a disadvantage compared with competitors in third countries.”

The Commission was worried that existing patent law, drawn up 30 years ago when the possibilities offered by biotechnology were inconceivable, left too many questions unanswered.

If these legal gaps were left open, there was a danger that national legislators would draw up their own divergent laws and the Union would be left without a single market.

However, opposition in the European Parliament scuppered the directive in March last year, even after a conciliation committee had inserted a raft of amendments demanded by deputies.

On 13 December, the Commission adopted a new proposal aimed at taking into account the objections of the Parliament.

Nevertheless, it insists that patent law cannot fully address the ethical issues that worried so many deputies last March. This is because it only applies once research on a product has been completed and a company wants to put it on the market.

The new proposal excludes 'germ-line' gene therapy on humans - a process which can alter a future individual's genetic identity in the course of in-vitro fertilisation and pass this alteration on to future generations - from patentability.

On the question of whether an animal can be patented, the proposal creates a criterion of proportionality: is the suffering of an animal worth the resulting invention?

At the moment, the European Patent Office is reviewing the licence for a genetically-altered mouse designed to contract cancer. Seventeen animal welfare and religious groups have lodged an appeal with the Munich-based office calling on it to revoke a 1992 decision to grant a licence to Harvard University and its partner, drugs company DuPont.

To win the backing of Parliament, the proposal also draws a distinction between inventions and discoveries, stating that a discovery cannot be patentable and setting out the conditions under which an invention may be patented.

Under the planned rules, finding a natural substance would be a discovery, while developing a process for obtaining that substance would be patentable.

Willi Rothley, the German Socialist MEP and vice-chairman of the Parliament's legal affairs committee, who was rapporteur to the conciliation committee last time round, is more hopeful this time. He hopes to be appointed as rapporteur again when a decision is made in the coming fortnight, and he joins fellow deputies Evelyn Gebhardt and Jean-Pierre Cot in representing the key legal affairs committee at today's conference meeting in the Borschette Centre.

The hundreds of biotech companies across the EU will be crossing their fingers that the patent law proposal has an easier ride this time - and that the EU will stop foot-dragging and start living up to the promises made in the 1993 White Paper which seemed, at the time, to herald a new dawn for the sector.