France: the Land of Healthcare Innovation?

Author

Fellow - Healthcare

On May 5, 2021, the Biden administration announced its support for a temporary lift on Covid-19 vaccine patent protections, a move that triggered strong reactions in both Europe and the United States. The announcement - in line with a move previously made by India and South Africa before the World Trade Organization (WTO) - prompted the EU member countries to reach a common position on the issue. While France and the Netherlands seem to be in favor of lifting intellectual property rights, Germany, where the BioNTech laboratory is based, is opposed to it. Where is France today in terms of health innovations and patent applications? And how can it maintain its position in a competitive global market?

France is an innovative country, but it’s losing ground

France has many assets it can use to foster innovation. The 2017 Thomson Reuters ranking put France in 3^rd position for the number of innovative companies and institutions (all sectors combined), just behind the United States and Japan. France files a considerably greater number of patents than many of its European neighbors. It also has some important assets such as a dynamic research environment, dense entrepreneurial networks, state-of-the-art hospitals and well-qualified medical researchers and doctors.

The situation on the ground, however, paints a different picture, with players often working in silos for cultural or regulatory reasons or due to a lack of appropriate infrastructure. When it comes to being a land of innovation, France seems to be lagging behind. This is especially apparent when it is compared to certain innovation hubs such as Massachusetts and, in particular Boston, which has gained a reputation for establishing a network of players in an extremely dense life sciences sector. This ability to foster a network of specialists and leverage their respective assets has become a benchmark for success in the field. With increased international competition, France has been losing ground to countries such as Great Britain, the United States, Germany and China. There are several reasons for this decline.

France cannot escape the international race for talent

With institutions such as the CEA (French Alternative Energies and Atomic Energy Commission), the CNRS (French National Centre for Scientific Research) and the INSERM (French National Institute of Health and Medical Research) and 10% of international clinical research studies conducted on its territory, France is recognized worldwide for the excellence of its scientific and clinical research.

Too many French researchers choose to pursue their careers abroad without ever returning to France.

Meanwhile, too many French researchers choose to pursue their careers abroad without ever returning to France. Although there are many reasons for this brain drain, the average starting salary for French researchers is only 63% of the average salary in OECD countries. Two more incentives for moving abroad are the lack of career development opportunities in public research and the difficulty of moving jobs between the private and public research sectors.

Finally, the recruitment landscape has transformed as well-the life sciences industry now needs highly multidisciplinary candidates trained in biotechnologies, digital technologies, data analysis and AI, and medical devices. Higher education institutions must adapt their offering to meet these new challenges.

The challenge of financing and scaling up

Although France has created many startups (in 2017, 18 BioTech or MedTech companies per million inhabitants, compared to 10 per million in the United States), many of them are faced with the difficulties of raising funds and the complex French regulatory environment, and have thus chosen to further their development abroad.

On the one hand, France offers many seed capital subsidies for young entrepreneurs launching a business. On the other hand, private and public funders have little incentive to invest in scaling up (venture capital or growth capital), which helps startups establish themselves as small and mid-sized companies. Even if ROI is often high in the healthcare, it also requires a long-term vision and in-depth knowledge of the sector, the risk and complexity of which can put off investors.

In early 2020, the "French Tech 120" program was launched, demonstrating the government’s desire to boost support for healthcare startups in areas such as biotechnology, therapeutic solutions, medical devices and e-health. And while companies in the program receive support for international development, financing, market access and recruitment, there is still insufficient assistance when it comes to scaling up and improving global visibility.

French health regulations remain unstable and complicated

The instability and sluggishness of the regulatory system often discourage innovative companies from developing their activity in France, and deprive French patients of discoveries sometimes made in their own country. Although the country’s normative environment was designed to guarantee patients maximum safety, the latest health crises have only heightened the debate surrounding conflicts of interest and regulation and complicated procedures. And while countries everywhere are facing the same challenges, it is worth noting that some of France’s neighbors-the UK and Germany, for example- have been able to offer fast and transparent channels and more appropriate assessments.

France was a pioneer in setting up the Temporary Authorization for Use (Autorisation temporaire d’utilisation, ATU) in 1992, a procedure for access to medicines before marketing authorization (MA). But in Europe, France is still lagging behind when it comes to accessing innovative medicine; on average, it takes 33 days longer than the target set by the European directive known as the "Transparency Directive." Moreover, France ranks 21^st among European countries in terms of drug availability.

The instability and sluggishness of the regulatory system often discourage innovative companies from developing their activity in France.

The country is also struggling to renew the governance and skills of major agencies such as the French National Agency for the Safety of Medicines and Health Products (ANSM) and the French National Authority for Health (HAS), which do not have the appropriate means to evaluate new devices and integrate the new challenges of NICTs and digital technology.

Boosting strategies

A 2017 study revealed the strategies implemented by various countries to boost the appeal of their R&D and manufacturing. These strategies fall into six categories: setting up corporate taxation measures, for example, to reduce the corporate tax rate (the UK and France); improving market access through fast-track procedures (the UK and the US); reducing regulation and bureaucracy (employment legislation in Italy); developing a healthcare sector with genuine synergies across various public and private innovation players (Switzerland’s Innovation Park); strengthening relations between the public and private sectors; and boosting supply by promoting investment and providing export subsidies and support for industry.

There are multiple pathways to encouraging innovation and research. France needs to build its own momentum.

Copyright: DENIS CHARLET / AFP