Biotechnology in the European Commission's Competitiveness Compass

On January 29, the European Commission presented the "Competitiveness Compass," the first major initiative of this mandate, providing a clear strategic framework to guide the Commission's work. This document outlines and describes priority actions for the Commission until 2029. At AseBio, we have conducted an in-depth analysis of the document.

The document is structured around three cross-cutting measures identified in the Draghi Report: closing the innovation gap, a joint roadmap for decarbonization and competitiveness, and reducing excessive dependencies while increasing security.

Additionally, it includes actions on horizontal enablers and financing to support competitiveness, simplify the regulatory environment, strengthen the single market by removing barriers, promote skills and quality jobs, and better coordinate policies at the national and EU levels.

Closing the Innovation Gap

The document states that the EU must reignite its innovation engine and identifies market fragmentation, limited access to venture capital, and insufficient support for innovation as obstacles to the creation and growth of companies in Europe.

To address these barriers, the document proposes establishing a specific EU strategy for business creation and scaling (Q2 2025). This strategy will begin by improving relations between universities and businesses and creating better prospects for patent commercialization. It will also work on eliminating barriers caused by lack of access to venture capital, a fragmented single market, limited availability and mobility of talent and skilled workers, and insufficient or unfocused innovation support.

Additionally, the document proposes the European Innovation Law (expected between Q4 2025 and Q1 2026), which will facilitate innovative companies' access to European research and technology infrastructures, intellectual assets generated by publicly funded R&D, and regulatory testing environments.

The Commission will propose a legal framework addressing corporate law, insolvency, labor, and tax regulations to simplify applicable rules and reduce the cost of business failures.

The document highlights the need for a suitable financial environment for startups and suggests deeper and more liquid capital markets to mobilize resources. This proposal aligns with the one recently presented by AseBio. Furthermore, the Commission states that it will work with the EIB Group and private investors to implement a TechEU investment program aimed at supporting disruptive innovation, strengthening Europe's industrial capacity, and scaling companies investing in innovative technologies.

The Commission will also introduce a European Research Area Law to strengthen R&D investment, aiming to reach 3% of GDP.

Excelling in Technologies for the Economy of Tomorrow

The document stresses that Europe must lead innovation in key technological sectors crucial for the future economy, including biotechnology, to enhance technological sovereignty and competitiveness.

Investing in New Growth Engines

The document highlights that life sciences are driving biotechnology innovation and have significant competitive potential across various sectors, including pharmaceuticals, agriculture, energy, food, and feed.

The EU Bioeconomy Strategy will position the EU within the rapidly expanding bioeconomy market, which has substantial growth potential in biomaterials, bio-manufacturing, biochemistry, and agri-biotechnology. This strategy will also reduce dependence on fossil fuels and improve economic prospects in rural areas.

A new European Biotechnology Law will establish a forward-looking framework to foster innovation in areas such as health technology assessment and clinical trials.

In response to the exponential increase in demand for advanced innovative materials, the Commission will propose an Advanced Materials Law (2026) to provide a comprehensive framework supporting the entire lifecycle—from research and innovation to startup creation, manufacturing, and deployment.

A Joint Roadmap for Decarbonization and Competitiveness

Europe's goal is to become a decarbonized economy by 2050, which requires integrating decarbonization policies with industrial, competition, economic, and trade policies. To achieve this, the new Clean Industrial Deal (expected in Q1 2025) aims to make the EU attractive for manufacturing, promote clean technologies, and develop new circular business models.

Regarding energy costs for businesses and households, the document proposes an Affordable Energy Action Plan to ensure broader direct access to low-cost energy.

In terms of clean production and circularity, the document suggests measures to boost demand for low-carbon products through public procurement and financial incentives via contracts.

The Vision for EU Agriculture and Food Production (Q1 2025) will outline how to ensure the long-term competitiveness and sustainability of the agriculture and food sectors, while guaranteeing food security and resilience.

Finally, the Circular Economy Law (expected in Q4 2026) will catalyze investment in recycling capacity and encourage EU industries to effectively replace virgin materials, among other goals.

Reducing Excessive Dependencies and Increasing Security

The Draghi Report highlights the need for Europe to ensure the resilience of its supply chains, particularly in critical raw materials. Another key concern is the current dependence on the supply of active ingredients for critical medicines, which are essential for public health and certain patients, as well as fertilizers, which support food security. Therefore, the EU must continue implementing policies to reduce its dependence on key strategic sectors.

Following the recent experience with AggregateEU, the Commission will create a joint purchasing platform for critical raw materials (Q2–Q3 2025) to identify industry needs, aggregate demand, and coordinate joint purchases.

Similarly, the Critical Medicines Law will aim to strengthen the supply of essential medicines and their ingredients, address market failures, and reduce dependency.

Lastly, the Commission will propose introducing a European preference in public procurement for strategic sectors and technologies. To achieve this, it will revise the Public Procurement Directives to enhance technological security and national supply chains, while also simplifying and modernizing procurement rules, particularly for startups and innovative companies.

These three major measures will be complemented by horizontal enablers to support competitiveness across all sectors, including:

• Simplifying the regulatory environment
• Strengthening the single market by removing barriers
• Promoting skills and quality jobs
• Better coordination of policies at the national and EU levels

Horizontal Enablers of Competitiveness

The document proposes a simpler, lighter, and faster regulatory framework to ensure that EU regulations are fit for competitiveness. To achieve this, it encourages local, national, and EU institutions to establish simpler rules and accelerate administrative procedures.

Next month, the Commission will launch the first of a series of "Simplification Omnibus" packages, aimed at reducing complexity in sustainable financial reporting, sustainability due diligence, and taxonomy.

The document also aims to ensure proportionate and tailored regulation based on company size, proposing a new definition of small mid-cap companies.

Following the proposal to revise the EU pharmaceutical framework—intended to accelerate authorizations and streamline regulatory processes—the Commission is preparing short-term implementation measures to reduce burdens and simplify the regulatory framework for medical devices.

Regarding digital tools and artificial intelligence, the document emphasizes the need to facilitate their use through full cross-border interoperability. To ensure a level playing field and combat fragmentation and overprotection, the Commission will adopt a strong approach to achieving full harmonization and enforcement.

Maximizing the European Single Market

Building on recommendations from the Letta Report and the Annual Single Market Report, the Commission will propose measures to enhance market integration and remove barriers to the free movement of goods and services.

One key initiative will be the upcoming Single Market Strategy, aimed at reducing fragmentation, lowering barriers, improving cooperation with Member States, and ensuring better enforcement. This strategy will also strengthen the role of the Single Market Enforcement Task Force (SMET).

Additionally, a new approach to standard-setting will ensure that regulations keep pace with innovation to maintain European competitiveness and introduce alternative solutions in areas lacking harmonized EU standards.

Financing Competitiveness and a Union for Savings and Investment

Following the Draghi Report's recommendation that Europe requires an additional €750–800 billion in investment annually by 2030—equivalent to a 5 percentage point increase in the EU's GDP per year—the document highlights the need to mobilize private investment, including from institutional investors, while optimizing public funding with a more targeted approach.

To support this, the Commission will present a Strategy for a Union of Savings and Investment (Q1 2025) to enable wealth creation for EU citizens and mobilize capital for projects across Europe.

Beyond direct public investment, the document acknowledges that public support will be needed to de-risk and unlock private investment at the necessary scale.

The Commission also proposes budgetary reallocation through a new European Competitiveness Fund (2025), which will respond to economic needs in a more integrated manner. This fund will establish an investment capacity to support strategic technologies and manufacturing, including biotechnology.

Recognizing that public funding alone is insufficient, the document emphasizes leveraging large-scale private capital. It highlights the need to fully utilize the European Investment Bank (EIB) Group to attract private investments and close Europe’s investment gap.

To support higher-risk, large-scale investments in key economic sectors, the Commission proposes:

• Expanding the use of EU-funded de-risking schemes
• Mobilizing more EIB Group resources
• Expanding existing financing programs, starting with InvestEU

Skills and Employment

The document acknowledges that the EU has some of the world's top scientists and researchers, yet the European labor market is undergoing deep transformation. Skills gaps and labor shortages persist.

As noted in AseBio’s recently published biotech profiles study, nearly four out of five EU SMEs struggle to find workers with the right skills.

To align workforce skills with labor market demands, the Commission will introduce an initiative to build a Union of Skills, focusing on:

• Investment in adult and lifelong learning
• Future-proof skill development
• Talent retention and fair mobility
• Attraction and integration of skilled talent from third countries
• Recognition of diverse training types to facilitate employment across the EU

Competitiveness Coordination Tool

The Commission acknowledges that national and EU policies need better coordination, as industrial and research policies remain fragmented.

To address this, the document proposes a new Competitiveness Coordination Tool to align competitiveness priorities across key sectors and strategic European projects.

Initially, the Commission will coordinate EU and Member State policies in selected pilot sectors, with clear added value for EU competitiveness. One of these priority sectors is biotechnology, along with key manufacturing capabilities (e.g., for critical medicines).

Public funding for these pilot projects will be designed to maximize private capital involvement, given the significant investment needs.

To support this effort, the Commission proposes a new Competitiveness Fund, aimed at accompanying European projects throughout the entire investment journey—from research and scaling to industrial deployment and manufacturing.