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SME Instrument and Life Science – are they compatible with each other?

SME Instrument is a fantastic funding opportunity for small and medium-sized companies from a variety of fields and industries. The overarching aim of the program is to foster market deployment of innovative products and technologies of inherent dual character: they should contribute to solving significant and EU-relevant socio-economic challenges, and become the stepping stone for the accelerated growth and competitiveness of the applicant company.

Article 14

Analysing the multiple sources of information, guidelines and presentations on the SME Instrument, the message is clear: the support is aimed to close the gap to the market for the products and technologies that have already proven themselves in relevant environment (e.g. prototype has been successfully validated) and need support for the quicker market up-take.

Are those conditions applicable and transferrable to the Life Science sector dealing with medical devices, pharmaceuticals or biomarker development? Those fields are inherently characterized by extremely long development times, and the need for large scale clinical validation studies and regulatory processes to get the product approved and launched on the market. Besides, a significant effort is required to disseminate information about the product and convince s.c. Key Opinion Leaders (KOLs) to actually use the product in the clinical setting. Given the complexity of this environment and the associated costs, it is a standard praxis that SME companies take their drug or a medical technology to a certain clinical level (for example Phase IIa or Phase IIb study) and thereafter out-license the product to Big Pharma players with the resources, market coverage and networks required to bring the product to the market.

Given the above, the compatibility of the SME Instrument and the life science sector may be disputed and questioned. Is it worth investing in SME companies developing medical products and technologies that, in the majority of cases, especially in the domain of therapeutics and drugs, will end up in the hands of a few global players like Astra Zeneca, Roche, Bayer, GSK, Ferring, Merck, Novartis or Pfizer? Will the provision of funding to a clinical study that does not result in the market launch (commercialisation of the product) and regulatory approval of the product be in line with the vision of SME Instrument of closing the gap to the market for European innovations?

Within SME Instrument, funding to life science projects is currently provided within two dedicated topics:

  • SMEInst-03 – Dedicated support to biotechnology SMEs closing the gap from lab to market,
  • SMEInst-05 – Supporting innovative SMEs in the healthcare biotechnology sector

Both topics emphasize the importance of the European SME Life Science companies for the EU’s economy and its long-term competitiveness, and recognise the risks embedded in the development of biotechnology and medicinal products. In SMEInst-03, it is made clear that those SMEs are characterised by their research intensity and long lead times between early technological development and market introduction. They therefore need to be supported to overcome the so-called “valley of death”. SMEInst-05, in a similar tone, states that “the healthcare biotechnology sector offers huge business and commercial opportunities; however it also requires heavy and risky investments which are often lacking in Europe, hampering the development of the industry”.

In the life science sector, the innovation often follows the bottom-up pattern – new discoveries are often made in the labs of smaller companies and thereafter, as the validation requirements reach the critical mass stage (thousands of patients), the collaboration phase with larger partners is initiated. As such, the investments in the pharma development projects at early stages within SME Instrument are well justified and fully legitimate. The early stage pharma development projects can result in new knowledge, experiences and applications that significantly strengthen the ability of the small Life Science players to innovate. As such, the enhanced ability to pursue pharma and med-tech innovation project is one of the key impacts sought by the SME Instrument funding in the life science sector. The beneficiaries should not only take a significant step on the way towards the market with their product, but also lay scientific foundation for the continued investments in their discovery platforms or clinical programs.

From the application perspective, I dare to say that Life Science topics are the most challenging ones. They require the proper understanding of the mechanisms and character of this industry, market driving forces and the business results that can be delivered to the European Commission. Promising too much will make the proposal unrealistic from the clinical or regulatory point of view. Promising to little will result in a weak business case or insufficient impact.

At GAEU, we have already won funding to 9 Phase 2 projects in the Life Science domain of the SME Instrument, totalling approx. EUR 24 million and covering drug development, medical devices, biomarkers and industrial biotechnologies. This makes us one of the leading Life Science funding advisors in the EU.

I am convinced our team of experts will be able to deliver strong added value to your life science proposal, both from the strategic, commercial and regulatory point of view. We look forward to assisting your company on the exciting and challenging Life Science funding path!

Tomasz Wąsik
CEO, GAEU Consulting Sp. z o.o.