More funds for biotech companies as new State
Aid Rules recognize Young Innovative Company Status
Brussels, November 23, 2006: 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.
For further information, contact
Adeline Farrelly, Tel: +32 2 739 1174 (Direct) Mobile: +32 475 93 17 24
e-mail: a.farrelly@europabio.org
Notes to Editors
(1) European Commission on State Aid
Commission Press Release http://europa.eu/rapid/pressReleasesAction.do?reference=IP/06/1600&format=HTML&aged=0&language=EN&guiLanguage=en
The State Aid Communication
http://ec.europa.eu/comm/competition/state_aid/reform/rdi_en.pdf
European Commission Q and A on State Aid
http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/06/441&format=HTML&aged=0&language=EN&guiLanguage=en
(2) European Commission on Tax incentives
Commission Press Release on tax incentives for R and D
http://europa.eu/rapid/pressReleasesAction.do?reference=IP/06/1598&format=HTML&aged=0&language=en&guiLanguage=en
Communication on tax incentives
http://eur-lex.europa.eu/LexUriServ/site/en/com/2006/com2006_0728en01.pdf
European Commission Q and A on tax incentives communication
http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/06/440&format=HTML&aged=0&language=EN&guiLanguage=en
(3) Critical I Report for EuropaBio (June 2006)
http://www.europabio.org/ne_criticalI2006.htm
About EuropaBio
EuropaBio, the European Association for Bioindustries, has 70 direct
members operating Worldwide, 12 associate members and 5 bioregions as
well as 24 national biotechnology associations representing some 1800
small and medium sized enterprises involved in research and development,
testing, manufacturing and distribution of biotechnology products.
http://www.europabio.org
