Draghi report on EU competitiveness offers new recommendations for pharma and biotech

The European Commission's comprehensive report on the future of European competitiveness has identified critical challenges facing the pharmaceuticals industry as well as among a range of other sectors across Europe.

The report, which has been presented by Mario Draghi, the former president of the European Central Bank President and ex-prime minister of Italy, outlines strategies to drive growth, innovation and regulatory compliance in the European Union.

For pharmaceutical and biotech executives, regulatory and legal professionals, the implications of the Draghi report are substantial, particularly in the areas of innovation, compliance, and market competitiveness.

Innovation gap and digital transformation

The Commission's report stresses the widening innovation gap between the EU and other global economies, particularly the United States and China. European pharmaceutical companies, although leaders in drug discovery and development, face structural challenges in translating innovation into commercial success.

Specifically, the report notes that, while European pharma and biotech continues to invest heavily in research and development, it is being outpaced by American and Asian counterparts who are integrating advanced technologies, such as artificial intelligence (AI) and digital health solutions, faster and more seamlessly.

 For pharmaceutical companies, this presents both a challenge and an opportunity. The integration of AI, for instance, could enhance drug discovery, optimise clinical trials and improve patient outcomes.

 The report highlights combination products, which integrate medical devices, drugs, and digital technologies like AI, as a key area of growth. This echoes the EU's ongoing proposed legislative reform which includes the first legal EU definitions of combination products, addressing integral combinations and products used exclusively with medical devices. Companies that invest in AI-driven drug development and personalised medicine may be more likely to secure a competitive edge in the coming decade, the Draghi report suggests.

Regulatory compliance and the push for harmonisation

One of the most pressing challenges identified in the Commission's report is the fragmentation of regulatory frameworks across the EU. Inconsistent regulations across member states create significant obstacles for pharmaceutical companies, particularly those engaged in multi-country clinical trials or seeking to bring new products to market across the EU.

 Pharmaceutical companies may need to closely monitor upcoming changes in EU-wide regulatory frameworks and be prepared for a more streamlined yet stringent regulatory environment. The Commission is expected to place greater emphasis on data transparency, safety, and post-market surveillance, which will directly impact the life cycle of pharmaceutical products from development to post-launch monitoring. Legal and regulatory departments may want to prioritise compliance strategies that account for evolving rules around clinical trials, the approval of medicinal products, and market surveillance.

Marketing authorisations

The European Medicines Agency (EMA) is central to regulatory 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 offer a streamlined approach for market entry across EU member states.

For complex products such as ATMPs, biosimilars, and other innovative therapies, engaging with regulatory authorities early in the development phase is recommended. This can ensure compliance with clinical trial requirements and provide opportunities for faster approvals. The report emphasises the importance of adaptive pathways, conditional marketing authorisations, and early dialogue with regulators.

Embracing AI and digital health solutions

AI and digital health technologies are emerging as pivotal drivers of innovation in the pharmaceutical industry. From optimising supply chains to improving clinical-trial design and patient monitoring, AI is revolutionising how pharmaceutical companies operate. The report highlights that despite progress, European pharmaceutical companies lag behind other, non-EU jurisdictions in incorporating AI into their core operations.

Investments in digital health technologies, such as AI-driven research, real-world evidence (RWE) integration, and enhanced 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-centric care. At the same time, the classification of certain AI systems as high risk under the new EU AI Act bears significant hurdles for companies providing or deploying these systems.

The green transition in pharmaceuticals

Environmental sustainability is another area of focus in the Draghi report, particularly in relation to the European Green Deal. The pharmaceutical and biotech industries, like other sectors, are expected to reduce their environmental footprint by adopting greener production processes and reducing waste. This includes more efficient energy use in manufacturing, reducing emissions from transportation, and minimising the use of hazardous chemicals.

For pharmaceutical companies, this shift presents both regulatory and operational challenges. Companies must anticipate stricter environmental regulations, which may include mandatory reporting on carbon emissions and sustainability practices. Those that invest early in green technologies and sustainable practices are more likely to benefit from public funding opportunities and regulatory incentives.

Osborne Clarke comment

The Draghi report provides crucial 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 member states. The report underscores the importance of integrating advanced technologies like AI 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-driven drug development and personalised medicine, which could offer a competitive edge. This comes at a time where the EU's new AI regulation bears tremendous impact for European healthcare, including where low-risk AI is involved.

Additionally, the report stresses the need for companies to stay ahead of regulatory changes, particularly those related to data transparency, safety, and post-market surveillance.

The Commission also emphasises the importance of sustainable practices in line with the European Green Deal, urging businesses to adopt greener production processes and reduce their environmental footprint. This includes efficient energy use, reducing emissions, and minimising hazardous chemicals. Companies that proactively invest in sustainable technologies may benefit from public funding opportunities and regulatory incentives.

As the EU attempts to move towards regulatory harmonisation, it is crucial for pharmaceutical and biotech companies to ensure their compliance frameworks are adaptable to evolving rules. By focusing on these strategic areas, businesses can better navigate the challenges and seize the opportunities presented by the evolving European landscape.