Commission approves up to €1 billion of State aid by six Member States for the first Important Project of Common European Interest in the health sector

This article is brought to you in association with the European Commission.

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