SPANISH BIOTECHS HIGHLIGHT FINANCE OBSTACLES

Spanish biotechnology industry association Asebio has urged the government to improve the investment climate for the local sector. The group's key recommendations include improvements to the legal framework, and exempting biotech start-ups from tax in their first three years. Asebio has also urged the creation of a new stock market specifically to trade biotech shares, in line with conditions in competitor Western European states.

Although some Spanish biotech firms have reported some encouraging development results in recent months, Spain's R&D spending as a proportion of GDP is still well below the European Union (EU) average of 1.9%, at just 1.1%.

Nevertheless, Spanish expenditure on biotech ventures reached EUR257mn (US$312.40mn) last year, nearly double levels in 2000. Government involvement has been minimal in the past, while private Spanish biotechs now spend an average 73% of sales on R&D.

Although the government is now increasing its funding for drug research, overall market conditions appear set to decline in the medium term. A new draft law on medicine pricing envisages a 20% cut in the price of two-year-old medicines, discounts on additional sales of up to 5%, and a reference pricing system based on the cost of finished products rather than active principles.

Unsurprisingly, industry groups have protested the measures, which will further hit a market where prices are already among the lowest in the EU. Industry observers estimate that the cuts could see market value reduced by 10%, from roughly EUR10bn (US$12.16bn) in 2004, while some firms expect their revenues to decline by as much as 20% as a result. Meanwhile, a number of foreign generic drug manufacturers have recently expanded in Spain, which remains the centre of a lucrative pan-European parallel export trade.