Slovenia: EU Commission approves €52m state aid to support Lek Pharmaceuticals

The Slovenian measure

Slovenia notified the Commission of its plan to support Lek, part of the Sandoz group, in the construction of a new biological drug substances production plant at its existing site in Lendava, Pomurje.The biological drug substances will be used by Sandoz AG to produce biosimilar medicines, which are clinically equivalent to a type of medicine called ‘biologics’. Biosimilars are developed when patent protection for a biologic expires, and they offer a cheaper alternative to biologics.Under the measure, the aid will take the form of a direct grant of around €52 million. The project will create approximately 330 direct jobs, as well as further indirect jobs. The measure will contribute to Slovenia’s objective of creating a smart, green, connected, and social Pomurje region.The factory will be located in Pomurje, an area eligible for regional aid under Article 107(3)(a) of the Treaty on the Functioning of the EU (‘TFEU’).

The EU Commission’s assessment

The Commission assessed the measure under EU State aid rules, in particular Article 107(3)(a) TFEU, which allows Member States to promote the economic development of the most disadvantaged areas of the EU, and the 2022 Regional Aid Guidelines.The Commission found that:

• The measure will contribute to job creation, the economic development, and the competitiveness of a disadvantaged area. In particular, the measure will have a positive impact on employment, creating around 330 direct jobs, as well as further indirect jobs.
• The aid has an incentive effect, as the beneficiary would not have carried out the project in the European Economic Area without the public support.
• The measure has a limited impact on competition and trade within the EU. In particular, it is necessary and appropriate to diversify the output of Lek’s existing site in Lendava, while contributing to regional development.
• The aid is proportionate since it is limited to the minimum necessary to trigger the investment and will not exceed the maximum allowed aid amount for the project calculated based on the Slovenian regional aid map.

On this basis, the Commission approved the Slovenian measure under EU State aid rules.

Background

Europe has always been characterised by significant regional disparities in terms of economic well-being, income and unemployment. Regional aid aims to support economic development in disadvantaged areas of Europe, while ensuring a level playing field between Member States.

In the 2022 Regional Aid Guidelines, the Commission sets out the conditions under which regional aid may be considered to be compatible with the internal market and establishes the criteria for identifying the areas that fulfil the conditions of Article 107(3)(a) and (c) of the TFEU (a- and c-areas respectively). On this basis, Member States notified their regional aid maps to the Commission for approval.

On 27 January 2022, the Commission approved the Slovenian regional aid map for granting regional aid from 1 January 2022 to 31 December 2027. On 13 February 2023, the Commission approved amendments to the Slovenian regional aid map in the context of the Just Transition Fund. On 3 September 2024, the Commission approved further amendments to the Slovenian regional aid map in the context of the Strategic Technologies for Europe Platform.

The non-confidential version of today’s decision will be made available under the case number SA.112940 in the State aid register on the Commission’s 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 Competition Weekly e-News.