Biotechnology is fast becoming a key tool in building economic power, health security, and geopolitical resilience. The ability to develop, manufacture, and deploy innovations shapes how societies create new therapies for patients, manage chronic and infectious diseases, and withstand global shocks such as pandemics and famines. Against this backdrop, the European Commission has proposed “Part One” of a European Biotech Act to strengthen Europe's competitiveness in an increasingly important sector. The ambition is not simply to attract investment and speed up innovation, but to ensure that breakthroughs developed in Europe translate into real-world impact for patients, health systems, and the wider economy.
While Europe is home to world-class biotech expertise, it continues to lag behind the United States and China in attracting private investment, scaling late-stage research and development, and bringing successful products to market quickly. This gap is becoming harder to ignore as technological change accelerates beyond governance frameworks, climate and migration pressures increase the risk of health emergencies, and geopolitical tensions expose vulnerabilities in global supply chains. A stronger European biotech sector would directly support resilience, preparedness, and long-term economic growth. RAND Europe's research portfolio in biotech and health innovation offers insight on what is needed to support a healthy biotech ecosystem in the European Union. Our previous work includes cost-benefit analysis of nucleic acid screening, a study on financial ecosystems for medicines R&D, and a wide range of projects on innovation systems and the adoption of new technologies in health settings. Through these projects, we have developed a deep understanding of the conditions which would allow the European biotech sector to flourish.
The Commission's new proposal aims to provide a wide set of measures to boost competitiveness. These include new public–private investment tools for strategic biotech projects, extended intellectual property protections linked to EU-based activity, and regulatory reforms designed to shorten clinical trial timelines and better accommodate novel technologies. Further provisions focus on strengthening EU manufacturing capacity, supporting biosimilar development, and improving security oversight of sensitive biotech products such as synthetic nucleic acids. Together, these measures reflect growing recognition that biotechnology is not only an industrial policy priority, but a strategic one.
While the Biotech Act responds to many of these challenges, it does so mainly by focusing on the supply side of innovation. This addresses real weaknesses, but it leaves a central issue unresolved: whether Europe offers a reliable and attractive market for biotech products that will reflect the value that they bring once they are approved. Without stronger demand-side conditions, faster innovation alone will not translate into better access for patients or stronger health systems.
Without stronger demand-side conditions, faster innovation alone will not translate into better access for patients or stronger health systems.
Speeding Up Innovation Without Securing the Market
A successful biotech ecosystem depends on both supply and demand. Supply-side measures reduce the cost, risk, and time associated with research, development, and regulation. Demand-side measures determine whether innovations are adopted, reimbursed, and used at scale.
The first part of the Biotech Act proposal concentrates heavily on supply-side reforms. It prioritises shorter time-to-market, funding for research and development, and greater regulatory flexibility for emerging technologies that do not fit neatly into existing categories. For example, regulatory sandboxes and improved foresight for new technologies respond to long-standing concerns about slow and fragmented regulatory processes in Europe that make the journey to the market long and unpredictable.
The focus on supply-side measures is understandable, but it risks overlooking demand-side challenges. Investors do not judge markets solely on the speed of approval. They also assess whether products will be reimbursed, adopted, and scaled across health systems in a predictable way. The EU's inability to attract capital for later stage R&D reflects a lack of confidence that products will enter the market and provide a competitive return in comparison to other investment opportunities. Uncertainty around these factors has been a key reason why later-stage investment often flows elsewhere.
The result is a familiar paradox. Europe supports early innovation and accelerates approvals, yet still struggles to capture the full economic and health benefits if products fail to find a viable market after approval. Without clearer signals on uptake and reimbursement, efforts to mobilise private capital will remain constrained.
Health Systems and the Limits of EU Action
Turning innovation into patient benefit ultimately depends on health systems. Creating an effective market will require systems that can accurately assess the value that innovations represent and that are prepared to pay for that value. In short, much depends on reimbursement and procurement, which remain the primary responsibility of Member States, limiting how far the EU can directly address demand-side barriers.
However, the EU can still play a meaningful role. It could for instance introduce mechanisms that encourage more consistent engagement with innovators, as well as greater alignment on market authorisation, knowledge sharing, procurement, and health technology assessment. EU-level cooperation on assessing the value of innovative health technologies could also help Member States deal more effectively with therapies whose benefits are realised over time.
From Policy Ambition to Patient Benefit
Industry responses to the Biotech Act have been largely positive, particularly its emphasis on speed and flexibility. These are important, but they are not enough. The Act's success should ultimately be judged on whether it meets health policy goals and whether patients across Europe can access, afford, and benefit from new therapies.
While it addresses important bottlenecks, as it stands the proposal does not fully confront Europe's weakness as a fragmented and uncertain market. This risks repeating a familiar pattern: innovation developed in Europe, commercialised elsewhere, and re-imported at higher cost. Much will depend on implementation of the current proposal, follow-up guidance, and what is included in the second phase of the Act.
Because responsibility is shared between the EU and Member States, progress will require commitment on both sides. Without stronger coordination on adoption, value assessment, and sustainable financing, faster innovation will not deliver its promised public benefit. If these gaps are addressed, the Biotech Act could help ensure that Europe not only innovates faster, but also turns innovation into real outcomes for patients and health systems alike.
