Brussels, 28 May 2024
The European Commission has approved, under EU State aid rules, the first Important Project of Common European Interest (‘IPCEI’) to support research, innovation and the first industrial deployment of healthcare products, as well as innovative production processes of pharmaceuticals. This IPCEI will notably contribute to the European Health Union‘s objectives by delivering innovations addressing diseases for which there are no satisfactory means of prevention or treatment and by increasing the EU’s preparedness for emerging health threats.
The project, called ‘IPCEI Med4Cure’, was jointly notified by six Member States: Belgium, France, Hungary, Italy, Slovakia and Spain.
The Member States will provide up to €1 billion in public funding, which is expected to unlock additional €5.9 billion in private investments. As part of this IPCEI, 13 companies with activities in one or more Member States, including nine small and medium-sized enterprises (‘SMEs’), will undertake 14 highly innovative projects.
IPCEI Med4Cure concerns research and development projects covering all key steps of the pharmaceutical value chain from collection and study of cells, tissues and other samples, to sustainable production technologies of breakthrough therapies, including personalised treatments, and to application of advanced digital technologies.
The project aims at accelerating medical advancement and at fostering the resilience of the EU health industry by enhancing drug discovery, in particular for unmet medical needs such as rare diseases, and developing innovative and more sustainable production processes for pharmaceuticals. These developments will improve the quality of healthcare and increase the EU’s preparedness for emerging health threats while contributing to the green transition.
The completion of the overall IPCEI is planned for 2036, with timelines varying in function of the individual projects and the companies involved. According to the participating Member States, around 6,000 direct and indirect jobs are expected to be created.
The Commission assessment
The Commission assessed the proposed project under EU State aid rules, more specifically its 2021 Communication on Important Projects of Common European Interest (‘IPCEI Communication’). Where private initiatives supporting breakthrough innovation fail to materialise because of the significant risks such projects entail, the IPCEI rules enable Member States to jointly fill the gap to overcome these important market failures. At the same time, the IPCEI rules ensure that the EU economy at large benefits from the supported investments and limit potential distortions to competition.
The Commission has found that the IPCEI Med4Cure fulfils the required conditions set out in its Communication. In particular, the Commission concluded that:
- The IPCEI Med4Cure directly contributes to achieving several EU objectives of a greener, more secure and resilient economy as well as a more accessible healthcare set out in key EU policy initiatives, such as the updated Industrial Strategy, the European Health Union, including the Pharmaceutical Strategy for Europe and Europe’s Beating Cancer Plan, as well as the new European Research Area and the Green Deal.
- All 14 projects part of the IPCEI are highly ambitious, as they aim at developing technologies that go beyond what the market currently offers and will allow major improvements, notably in the areas of diagnostic solutions and management of rare diseases, antimicrobial resistance and cancers.
- The IPCEI also involves significant technological and financial risks. Therefore, public support is necessary to provide incentives to companies to carry out the investment.
- Aid to individual companies is limited to what is necessary, proportionate and does not unduly distort competition. In particular, the Commission has verified that the total planned maximum aid amounts are in line with the eligible costs of the projects and their funding gaps. Furthermore, if large projects covered by the IPCEI turn out to be very successful, generating extra net revenues, the companies will return part of the aid received to the respective Member State (claw-back mechanism).
- The results of the project will be widely shared by participating companies with the European scientific community and industry beyond the companies and countries that are part of the IPCEI, including through conferences, publications, access to pilot and production facilities, or licensing of intellectual property rights. As a result, positive spillover effects will be generated throughout Europe.
On this basis, the Commission concluded that the project in line with EU State aid rules.
Funding, participants and structure of the IPCEI
The IPCEI involves 14 projects from 13 companies. These projects will give rise to more than 70 planned collaborations.
The figure below presents the overall structure of IPCEI Med4Cure, including the individual workstreams:
The 14 projects are part of the wider IPCEI Med4Cure ecosystem, which also involves 11 associated partners in four Member States (Belgium, the Netherlands, Poland and Spain).
In addition, there are around 175 indirect partners, which are companies or research organisations that will benefit from the various dissemination activities of the IPCEI Med4Cure.
The figure below presents the overall structure of IPCEI Med4Cure and its wider ecosystem, including the individual projects:
Spain included its participation in the IPCEI Med4Cure in the Recovery and Resilience Plan and has the possibility to partly fund its projects through the Recovery and Resilience Facility.
More information on the amount of aid to individual participants will be available in the public version of the Commission’s decision, once confidentiality issues have been resolved with Member States and third parties.
Background
In March 2022, 16 Member States signed a joint Manifesto towards a health IPCEI, in which they stated their support for an IPCEI concerning innovation in production technologies of medicines, tackling antimicrobial resistance, rare diseases and emerging health threats and development of cell and gene therapies.
In addition to the IPCEI Med4Cure, the Commission approved today also the IPCEI Hy2Move. The Commission’s decisions concern the ninth and the tenth integrated IPCEIs approved under EU State aid rules. They are approved on the basis of the 2021 IPCEI Communication, setting out criteria under which several Member States can support transnational projects of strategic significance for the EU under Article 107(3)(b) of the Treaty on the Functioning of the European Union. The Communication aims at encouraging Member States to support highly innovative projects that make a clear contribution to economic growth, jobs and competitiveness.
The IPCEI Communication complements other State aid rules such as the General Block Exemption Regulation and the Framework for State aid for research and development and innovation, which allow supporting innovative and green projects whilst ensuring that potential competition distortions are limited.
As part of an effort to support a transparent, inclusive, and faster design of IPCEIs, the Commission published, on 17 May 2023, a Code of Good Practices on DG Competition’s dedicated IPCEI website. In addition, the Commission has set up the Joint European Forum for Important Projects of Common European Interests (JEF-IPCEI). The objective of the forum is to identify areas of strategic EU interest for potential future IPCEIs and to increase the effectiveness of the IPCEI process. The JEF-IPCEI brings together experts from Member States and the Commission services, as well as representatives from the industry, academia, and other stakeholders where relevant.
To further streamline and simplify the roll-out of IPCEIs, on 23 June 2023, the Commission introduced an amendment to the General Block Exemption Regulation (GBER) whereby R&D projects related to multi-country projects such as IPCEIs can receive aid up to €50 million without requiring notification to the Commission. At the same time, these projects are still recognised as part of the ecosystem created by an IPCEI.
The non-confidential versions of the decisions will be made available under the case numbers SA.105088 (Belgium), SA.104974 (France), SA.105126 (Hungary), SA.105085 (Italy), SA.105097 (Slovakia), and SA.105098 (Spain) in the State Aid Register on the competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.
Quote(s)
IPCEI Med4Cure covers key steps in the entire pharmaceutical value chain and focuses on unmet medical needs, such as rare cancers, and antimicrobial resistance. Through development of innovative treatments and more sustainable production processes, Med4Cure will improve the quality of healthcare and enhance Europe’s preparedness for health crises while at the same time contributing to the green transition of the pharmaceutical industry. The aid approved today will ensure that all these benefits for the EU citizens will be achieved without unduly distorting the competition.
Margrethe Vestager, Executive Vice-President in charge of competition policy
Source – EU Commission
Remarks by Executive Vice-President Vestager on the State aid approval of two Important Projects of Common European Interest “Hy2Move” and “Med4Cure”
Today, the Commission has approved two ambitious Important Projects of Common European Interest: They are the “Hy2Move”, which is the fourth IPCEI in the hydrogen value chain, and the “Med4Cure”, which is the first one in the health sector.
With today’s approvals, we reach 10 projects, so I will take the opportunity by the end to talk a little bit about this powerful instrument in our industrial policy toolbox.
Let me start with the IPCEI Med4Cure.
It involves 14 projects by 13 companies, including nine SMEs, from six Member States. The Member States are Belgium, France, Hungary, Italy, Slovakia and Spain. The project will enable a wider ecosystem, involving almost 200 partners, largely SMEs and research organisations.
The participating Member States will provide up to 1 billion euro in public funding and we expect that to unlock nearly 6 billion euro in additional private investments.
Med4Cure will support breakthrough innovations in the health space. It focuses on developing treatments for so-called ‘orphan’ diseases, which affect fewer than 1 in 2,000 people. Such could be rare skin diseases. It will also address emerging health threats such as antimicrobial resistance, where antibiotics no longer work and new treatments are needed. And it will also ensure that the European pharmaceutical sector is at the forefront when it comes to digitalisation and sustainability.
Participants in Med4Cure will focus on four workstreams:
First, on collecting, studying and digitalising cells and other samples of bio-resources. Participants will develop a network of biobanks to develop and identify drug and diagnostic candidates. By collecting samples of cells, of tissues and blood, and by sharing data, these biobanks will help improve our understanding of various diseases.
Second, developing pre-clinical models to test novel therapies and diagnostic methods. This will help turn scientific knowledge into real treatments. Participants will, for example, identify innovative treatments for conditions such as diabetes and heart diseases.
Following the research conducted in these two previous workstreams, the third workstream focuses on validating new treatments, vaccines, and gene therapies. One project will develop and test advanced therapy products made from human biological material to restore, for example, the cornea of patients with visual impairments caused by a rare disease.
Fourth, developing more innovative, more sustainable, technologies for producing pharmaceuticals, for example by reducing the need for energy or water.
Now, let me turn to the IPCEI Hy2Move.
This is about the development and first industrial deployment of breakthrough hydrogen technologies to help decarbonise the mobility and transport sectors.
It builds on the previous hydrogen projects. They are called Hy2Tech, Hy2Use and Hy2Infra. Hy2Move specifically tackles the challenges of applying hydrogen technology to mobility and transport applications, could be buses, trucks, ships, and trains. At the same time, Hy2Move projects will use the hydrogen infrastructure that is being set up by Hy2Infra.
The seven Member States involved are Estonia, France, Germany, Italy, the Netherlands, Slovakia, and Spain. Hy2Move covers 13 projects put forward by 11 companies. Some are very large industrial players. Small and medium-sized enterprises and start-ups participate as well. Hy2Move also has over 200 partners.
The participating Member States will provide up to 1.4 billion euro in public funding, and that is expected to attract another 3.3 billion euro in additional private funding.
There are four workstreams, which cover mobility and transport applications across the hydrogen value chain.
First, it is about how to integrate hydrogen technologies in transport means. For instance, one project is to design the platforms to integrate fuel cell technology into buses and into trucks.
Second, developing fuel cell technologies, which would use hydrogen to generate electricity. For instance, developing a fuel cell and a fuel cell module with sufficient power to move ships and trains.
Third, developing on-board storage solutions for hydrogen. As an example, a project is about how to develop a lightweight, yet robust hydrogen tank for a small hydrogen-powered aircraft, ensuring safety and efficiency in flight conditions.
After the three workstreams that focus on developing hydrogen-powered transport vehicles, the fourth workstream is about developing technologies to produce the hydrogen that goes into these vehicles. In particular, one project develops the technology for supplying hydrogen refuelling stations on-site with pressurised, “fuel-cell-grade” hydrogen.
Hy2Move will help achieve the objectives of the European Green Deal. And it contributes to achieving the 2050 target of 90% reduction of emissions from the mobility and transport sectors.
As for all IPCEIs, we have ensured that taxpayers’ money only supports truly innovative projects that would not otherwise happen. Also, we checked that all individual projects aim for breakthrough innovation going beyond the state-of-the-art.
This assessment is the result of true teamwork between and across Commission services. DG Competition is in charge of the State aid assessment and receives support from technical experts at various services, such as the Joint Research Centre, at DG CNECT, and at HERA.
Beyond making sure that projects are innovative, we also verify that the public support does not exceed what is actually needed for the project to go ahead. It is important that this support avoids overcompensation and does not crowd out, but rather crowds in, private investments.
Also, Member States have put in place what we call ‘claw-back mechanism’ for projects receiving large amounts of aid. If the project generates more net revenues than expected – and that is of course great news –, then the Member States will also get a share of the success.
As a result of our thorough assessment, we observe that these projects materialise even with a reduction in the amount of public funding that is being provided. Overall, we estimate that the aid amount of all projects approved so far was reduced significantly – give or take – by 25% on average.
Our assessment requires a fair bit of work. That is why we all need to do our best.
Member States among them are doing their best. They have been cooperating effectively and the coordinating Member States in particular deserve credit for bringing projects over the finish line.
Member States have also helped the Commission with additional resources: Germany, France, the Netherlands, and Hungary have sent national experts cost-free to temporarily join our teams at DG Competition.
The Commission has also done a lot to streamline and simplify the process.
In particular, with our “Green Deal Amendment” of the General Block Exemption Regulation, Member States can now support smaller projects related to R&D without needing to notify them. That way, the Commission has fewer projects to assess, but these projects are “associated” with the ecosystem, so the larger ecosystem created by the IPCEI itself.
Also, we have published a Code of Good Practices, and templates for data collection. By recommending working methods, by increasing uniformity, we can also speed up processes to get the IPCEI approved.
Finally, we have set up the Joint European Forum on IPCEI. This initiative brings together the Commission and Member States representatives to improve procedures and identify potential areas of European interest for future projects.
With today’s two new projects, the Commission has now approved ten Important Projects of Common European Interest, since 2018. These involve at least four Member States working together on research and development as well as first industrial deployment.
We now have: one on Next Generation Cloud Infrastructure and Services, two in batteries and two in microelectronics. And as of today, we have four in the hydrogen value chain and one in health.
And these projects have involved 22 Member States. The Commission has assessed more than 330 projects from nearly 250 companies.
And we have seen increased participation by small and medium-sized enterprises – from 7% in the first IPCEI on Microelectronics to more than 30% in the Hy2Move and now more than 60% of SMEs in the Med4Cure.
For those ten projects, the Commission has approved a total of aid of more than 37 billion euro.
These public investments are attracting 66 billion euro in additional private investments. In total, this means over 100 billion euro in investments to foster the competitiveness of European industry. This level of investment is comparable to the EU’s Horizon research programme.
These projects really bring great cross-border European collaborations in ambitious research and development that lead to first industrial deployment. And IPCEIs also generate spillovers, because the knowledge that is acquired in these projects are shared and this is thanks to our rules.
For instance, know-how and data are shared with the research community, especially in collaborations with universities and research organisations. For example, the first IPCEI on Microelectronics supported 351 PhDs. And in the context of the hydrogen project Hy2Tech, 42 patent applications have already been submitted by the participants.
IPCEIs create ecosystems. More than 2,100 partners have benefitted from working with the direct participants.
At this stage, most of the approved projects are still ongoing: scientists and companies are still deep in research or working on the practical steps towards first industrial deployment. Most projects will be completed between 2030 and 2036.
But we have already seen some great successes already:
In the field of power semiconductors, the IPCEI enabled STMicroelectronic’s project in Italy and France to improve the overall efficiency of power components and conversion modules. The research and development are already helping to reduce the dependency on extra-EU sources for producing Silicon Carbide power devices.
In the crucial field of battery technology, the first IPCEI on batteries has allowed BASF to inaugurate its production facility for active cathode materials, the first in Germany to produce such high-performance materials. It will supply products tailored to the specific needs of cell manufacturers and automotive producers in Europe.
One of the many projects under Hy2Tech was the French SME McPhy. It has developed a new alkaline electrolyser and it will gradually scale-up its production to a target capacity of 1 GW and it will be creating hundreds of jobs.
These successes are evidence that IPCEI innovations actually do “get to market”. The IPCEIs and the 100 billion euro of investments that they enable are industrial policy in practice. And they show that the European Union already has an effective toolbox to deliver industrial innovation and technological leadership.
Indeed, the IPCEI Communication is one State aid instrument. It is one among others. Some of them could be our Guidelines for Climate, Environment and Energy, our Regional Aid Guidelines, or our Chips Act Communication: in 2022 – and this is only one year -, industrial aid approved under such and other instruments amounted to more than 106 billion euro, corresponding to almost 240 euro per capita in the EU.
IPCEIs are special because they are truly European. They facilitate cross-border collaborations. They enable Member States to pool financial resources. The 10 projects approved so far show that joining forces can make a real difference. Not only for the industries involved, but for the ecosystems created, and by doing so for all Europeans.
Source – EU Commission