The European Commission has just published new state aid
rules (1) – backed by a communication on tax incentives to
stimulate R & D (2). The new rules recognize
EuropaBio’s Young Innovative Companies (YIC) status as
an eligibility criterion for state aid. This will enable
Member States – who so wish - to provide extra public funds
like tax and other financial incentives to their young
innovative biotechnology companies without running into
trouble with EU competition rules. The YIC was introduced
as a EuropaBio policy by France Biotech who successfully
campaigned for it in France. In addition to the R and D tax
incentives communication, the new EU rules enable
governments to give extra incentives to companies that are
less than 6 years old and spend 15% or more of their
revenues on R & D. With effect from January 1st,
2007, the new EU rules, which are not sector specific, will
benefit research, development and innovation across Europe.
The biotech industry expects that these measures will
encourage more private and institutional investors to invest
in biotech companies which need to raise substantial sums of
money to meet the increasingly high costs of research and
development.
“Our industry welcomes the
Commission’s new state aid rules which will
hopefully contribute to create a more attractive environment
for research intensive enterprises in
Europe,”
says Philippe Archinard, Chairman of the Emerging Enterprise
Council at EuropaBio – the EU association for bioindustries.
In Europe, there are some 2000
small and medium sized biotechnology companies which are
struggling to raise money from private and institutional
investors in order to carry out the necessary research and
development for the new bioproducts and bioprocesses that
are environmentally sound and the revolutionary therapies
for often life threatening diseases. These companies need
access to finance. A recent comparison between the European
and US biotechnology industries shows that both have around
2000 companies, however the US employs nearly twice as many
people, spends around three times as much on research and
development, has twice the number of employees involved in
research and development, raises over twice as much venture
capital, and has access to 10 times as much debt finance. It
earns twice as much revenues (3).
France adopted the YIC status
in December 2004, Belgium has adopted it in 2006 and a
project is currently under way with EuropaBio’s National
Associations to promote the status in the Nordic countries.
A major conference in Stockholm will take place in February
28 2007 to discuss how to implement the status.
“Firstly, Young Innovative Companies are living on borrowed
money. This measure will help them to become more
attractive to investors and play their full role in building
the knowledge based bio-economy, creating jobs and growth.
The uptake of biotechnologies across European industrial
sectors will also be a major boost for
Europe’s competitiveness.” says Johan Vanhemelrijck,
EuropaBio Secretary General.
(1) European
Commission on State Aid
-
Commission press release
-
The State Aid Communication
-
European Commission Q and A on State Aid
