BRUSSELS, Belgium — The relief of the European pharmaceutical industry at the successful passage into law this spring of the 10-year-old attempt to boost biotechnology patents in the European Union (EU) is clearly discernible in the just-released annual report of the European Federation of Pharmaceutical Industries and Association (EFPIA), the industry's principal European lobby group.

Outgoing president Rolf Krebs wrote in his foreword: "I saw at close hand the alarming threat that fears of biotechnology can pose to rational argument, progress, and to the interests of the patient. The directive on the legal protection of biotechnological inventions, which is crucial to the future of the pharmaceutical industry in Europe, was at risk of becoming a casualty of these fears." EFPIA director general Brain Ager wrote of the "ferocious and purely ideological opposition" to the directive.

Although the draft "was heavily amended to accommodate various ethical concerns that no patent law had hitherto been expected to address, such as human cloning, animal rights, and safeguarding the world's genetic heritage," the EFPIA "congratulates the EU institutions on adopting the directive," which it says will help attract biotechnology investment and jobs. Currently, only 25 percent of all the biotechnology-derived medicines under development worldwide are being developed in Europe, compared to 63 percent in the U.S., said the EFPIA.

Adoption of the new directive "should nonetheless help restore confidence in Europe by demonstrating that the EU is capable of assimilating new technologies."

"The sheer scale of investment risk shouldered by pharmaceutical companies renders them highly vulnerable, not least because they fund their [research and development] almost entirely out of their own earnings," warned the EFPIA, and this vulnerability "is at its most acute in Europe's biopharmaceutical sector."

"One-fifth of the 50 new medicines launched onto the world market each year are now biotechnology-derived. However, although Europe's biopharmaceutical sector is growing steadily, it is still dwarfed by its American rival," the report said.

What the EFPIA called "Europe's late start" in biotechnology reflects, it said, "the old continent's attitudes to new technologies, attitudes which shape the overall climate in which research and innovation take place."

Pharmaceutical companies are directly affected by the constraints that EU biotechnology legislation imposes on this already highly regulated industry, the report said, because, "unlike U.S. legislators, who adapt sector-specific legislation to biotechnology, the European Union legislates for all sectors, often overlooking the fact that biotechnology denotes not an industry in itself, but a range of processes used in various industries." Biopharmaceutical companies are founded and flourish in economic environments that favor innovation — in particular those that are free from price controls on innovative medicines — the EFPIA said.

"When, in the mid-1970s, biotechnology was first successfully applied in the pharmaceutical field, each country responded differently to this scientific breakthrough," the report went on. "The priority aim of the measures taken by the U.S. and Japanese authorities was to ensure that biotechnology was put to use in various industries as quickly as possible. They not only lent substantial financial support, but helped set up major university/industry research programs to exploit synergies between basic and applied research. Action to foster new technologies is needed in Europe, too, if the authorities genuinely wish to make Europe a more attractive [research and development] location."

Despite a wide range of warnings over the deteriorating regulatory climate that the EFPIA's annual report expressed, it is clear that the European pharmaceutical industry as a whole has performed well, according to the EFPIA's own figures. In 1997, exports rose 9 percent over the previous year, to US$22 billion; European research investment has risen five-fold over the last 15 years, to US$12 billion a year; the industry still directly generates well over a half-million jobs; and the value of its production has risen to nearly US$100 billion a year — a 500 percent increase in 15 years.

The industry produces more than 40 percent of the world's pharmaceutical output, making it "the world's leading pharmaceutical manufacturing location, ahead of the U.S.A.," the report said. Europe's trade surplus in pharmaceuticals is US$15 billion, and the value of the European market has risen to around US$70 billion at manufacturers' 1997 prices. *