The European Commission’s comprehensive report on the future of European competitiveness identifies critical challenges facing the pharmaceutical industry, as well as a number of other sectors across Europe, Osborne Clarke reports.
Mario Draghi, former president of the European Central Bank and former Prime Minister of Italy, outlined in his report strategies to boost growth, innovation and regulatory compliance in the European Union.
For pharmaceutical, biotech, regulatory and legal executives, the implications of Draghi’s report are significant, particularly in the areas of innovation, compliance and market competitiveness.
Innovation gap and digital transformation
The Commission report emphasises the widening innovation gap between the EU and other global economies, notably the US and China. European pharmaceutical companies, although leaders in drug discovery and development, face structural challenges in translating innovation into commercial success.
In particular, the report notes that while European pharma and biotech companies continue to invest heavily in research and development, they are being outpaced by their US and Asian counterparts, who are adopting advanced technologies such as artificial intelligence (AI) and digital health solutions more quickly and seamlessly.
For pharmaceutical companies, this presents both a challenge and an opportunity. For example, the integration of artificial intelligence can facilitate drug discovery, optimise clinical trials and improve patient outcomes.
The report emphasises that combination products that bring together medical devices, drugs and digital technologies such as AI are a key growth area. This echoes the proposed EU legislative reform, which includes the first legal definitions of combination products in the EU, looking at complex combinations and products used exclusively with medical devices. Companies that invest in drug development using artificial intelligence and personalised medicine may have a better chance of gaining a competitive advantage over the next decade, Draghi said in the report.
Regulatory compliance and the drive for harmonisation
One of the most pressing challenges identified in the Commission’s report is the fragmentation of the regulatory framework in the EU. The lack of regulatory harmonisation across member states creates significant obstacles for pharmaceutical companies, especially those conducting clinical trials in different countries or seeking to bring new products to market across the EU.
Pharmaceutical companies should closely monitor upcoming changes to the EU regulatory framework and be prepared for a more streamlined but stringent regulatory environment. The Commission is expected to place greater emphasis on data transparency, safety and post-marketing surveillance, which will have a direct impact on the lifecycle of pharmaceutical products from development to post-launch monitoring.
Legal and regulatory departments may want to prioritise compliance strategies that take into account the changing rules for clinical trials, drug approvals and market surveillance.
Marketing authorisations
The European Medicines Agency (EMA) is central to the approval processes for pharmaceuticals, including biosimilars, advanced therapy medicinal products (ATMPs) and generics. The report highlights that centralised marketing authorisation applications submitted through the EMA provide a simplified approach to market entry in EU member states.
For complex medicines such as ATMPs, biosimilars and other innovative therapies, it is recommended to engage with regulators at an early stage of development. This can ensure compliance with clinical trial requirements and provide opportunities for faster authorisation.
The report highlights the importance of adaptive pathways, conditional marketing approvals, and early dialogue with regulators.
Adoption of AI and digital health solutions
Artificial intelligence and digital health technologies are emerging as key drivers of innovation in the pharmaceutical industry. From optimising supply chains to improving clinical trial design and patient monitoring, AI is revolutionising the way pharmaceutical companies operate. The report highlights that despite progress, European pharmaceutical companies are lagging behind non-EU countries in incorporating AI into their core business.
Investments in digital health technologies such as AI-based research, real world evidence (RWE) integration and advanced patient engagement tools are becoming increasingly significant. These technologies have the potential to improve operational efficiency and meet regulatory demands for greater data transparency and patient-centred care.
At the same time, the categorisation of some AI systems as high risk under the new EU AI law creates significant hurdles for companies providing or implementing these systems.
Green transition in pharmaceuticals
Environmental sustainability is another area of focus in the Draghi report, especially in relation to the European Green Deal programme. The pharmaceutical and biotechnology industries, like other sectors, are expected to reduce their environmental footprint by adopting greener production processes and reducing waste. This includes using energy more efficiently in production, reducing emissions from transport and minimising the use of hazardous chemicals.
For pharmaceutical companies, these changes present both regulatory and operational challenges. Companies should anticipate stricter environmental regulations, which may include mandatory reporting of carbon emissions and sustainability practices. Those companies that invest early in green technologies and sustainable practices are more likely to benefit from government funding and regulatory incentives.
Osborne Clarke Commentary
The Draghi report provides important insights for pharmaceutical and biotech companies operating in the EU.
It highlights significant challenges such as the innovation gap with global competitors and the fragmented regulatory landscape across EU member states. The report stresses the importance of integrating advanced technologies, such as artificial intelligence and digital health solutions, to enhance drug discovery, optimise clinical trials and improve patient outcomes. It also points to the potential benefits of investing in AI-enabled drug development and personalised medicine, which can provide a competitive advantage. This comes at a time when the EU’s new AI regulation is having a huge impact on European healthcare, including where low-risk AI is concerned.
Furthermore, the report emphasises the need for companies to stay ahead of regulatory changes, especially those related to data transparency, security and post-marketing controls.
The Commission also emphasises the importance of sustainable practices in line with the European Green Deal, urging companies to adopt greener production processes and reduce their environmental impact. This includes using energy efficiently, reducing emissions and minimising the use of hazardous chemicals. Companies that actively invest in sustainable technologies can take advantage of public funding opportunities and regulatory incentives.
As the EU attempts to move towards regulatory harmonisation, it is critical for pharmaceutical and biotech companies to ensure that their compliance systems are adaptable to changing regulations. By focusing on these strategic areas, companies will be better able to navigate the challenges and capitalise on the opportunities presented by the changing European landscape.
