EU needs a regulatory cure to fight rare diseases

Since 70-80% of rare diseases have a genetic origin, biotechnology offers enormous opportunities for the development of breakthrough treatments.

There have already been some notable successes such as Herceptin, used to treat patients suffering from aggressive forms of breast cancer, and Remicade and Enbrel, which can improve arthritis sufferers' quality of life.

The EU has the potential to lead the world in biotech medical research, but industry insiders complain about a lack of political will to create the right fiscal and regulatory conditions for innovative smaller companies.

In the EU, many treatments in the pipeline are being created by small- and medium-sized companies. The Belgian company TiGenix is currently developing cell therapies to be used in the treatment of cartilage damage and osteoarthritis. The drugs, explains chief executive Gil Beven, are now close to the market, but the past few years have been a struggle.

"The key point is the higher labour costs," says Beven, who employs 22 highly skilled researchers. The company has raised a total of _30 million in equity from private sources since it was formed in 2000, which has been ploughed into research and development. Beven laments that the EU is falling behind the US because of chronic underfunding. There are other burdens holding companies back, explains Beven. "The fragmentation in the European regulatory situation delays the arrival of treatments on the market," he says. In the absence of a community patent, small companies have to grapple with the idiosyncrasies of 25 different jurisdictions, spending badly needed funds on legal counsel and translation costs.

Andrea Rappagliosi, chairman of the healthcare council of industry lobby EuropaBio, agrees that additional help is needed to complement funding initiatives. "Developments in technologies such as genomics have brought a better understanding of disease to the scientific community. Member states could support them [small companies] with fiscal and other types of interventions, not only crude funding. Giving this kind of support sometimes has more value than giving a simple pot of money," he says.

Some member states are already leading the way. Sweden, Denmark and Germany have 'bio-clusters' - networks offering technical, legal and financial support to biotech companies. France has pioneered the fiscal status of the Young Innovative Company (YIC), offering cuts of 30% in social charges to small- and medium-sized companies investing more than a fifth of their capital in research and development. To qualify, companies must be small and up to eight years old.

Industry has been pushing the European Commission since last year to follow France's example.

The signs are that guidelines could be issued for fiscal treatment of YICs all over the EU. "The principle has been accepted," says Rappagliosi. A good starting point, he says, would be an EU recommendation. TiGenix has only taken six years to develop its product, which has just cleared the testing phase, but most small companies will take far longer to get a return on their investment. In most cases, it will take 10-15 years for a company to deliver marketable results, which makes it difficult to attract flighty venture capitalists. Early-stage funding, fiscal incentives and regulatory clarity, however, would help Europe's stunted companies grow into world leaders.

Since 70-80% of rare diseases have a genetic origin, biotechnology offers enormous opportunities for the development of breakthrough treatments.