The economy and the biotech sector continue to navigate a challenging phase. In Germany, structural transformation issues, increasing competition in global markets, and significant uncertainties regarding access to the U.S. market are cause for concern.
As a result, investment activity has slowed. Venture capital in the European biotech sector accounts for only 7 percent of global funding. Over the past six years, 66 of the 67 EU biotech companies that went public chose to list outside of Europe. Europe is still struggling to attract globally available capital. [1]
In contrast, the U.S. pharmaceutical market accounted for 43 percent of total global sales in 2025. Europe, on the other hand, held a 22 percent market share. [2]
The proposal for the EU Biotech Act, published on December 16, 2025, is a response to the challenges the EU is facing. The Act aims to streamline authorization procedures to bring biotechnological innovations to market, and addressing bottlenecks in the current EU legal framework. The harmonization of EU law-including environmental law, pharmaceutical regulations, clinical trial regulations, the intellectual property framework, and funding instruments at the EU level-is intended to accelerate biotechnological innovation. In addition, harmonization shall further ensure the legal certainty that investors and companies need to invest. [3]
Mechanism of the EU Biotech Act
- Regulatory Simplification streamlining approval processes
- Regulatory Sandboxes allowing early stage experimentation while preserving safety and oversight for easier regulatory feedback and approval
- Clinical trial reform introducing minimal interventional clinical trials and simplifying multi-county trials to reduce timelines
- Establishing an EU-Health Biotechnology Support Network
- Improving access to investments and reducing the financing gap
- Introduction of a new European Investment Bank (EIB) financing instrument targeting biotech scale-ups with around €10 bn in EIB own-resources [4]
The legislation will be implemented in two phases:
Phase 1: On December 16, 2025, the Commission published the first draft (“Biotech Act I”), which focuses primarily on the health sector.
Phase 2: Industry & Biomanufacturing (Scheduled for Q3 2026)
Nevertheless, universities see a threat to basic research. It is believed that the focus will be mainly on the later (“market-oriented”) part of the value chain and will have significant consequences for basic research and its institutions5. With the draft of the EU Biotech Act I, academic institutions fear the focus shifting from open-ended research toward industrial interest. This carries the risk that basic research must align with short-term market-oriented goals. To ensure that well-trained researchers have attractive career opportunities in the EU in the long term, the EU Biotech Act I aims to remove regulatory barriers and accelerate innovation. The EU must strike a balance between free basic research and commercialization to boost the translation of scientific excellence into commercial success and accelerate the introduction of new treatment opportunities.
To achieve greater competitiveness, the Biotech Act signals strong support for biotechnology in Europe for innovation and investment. It addresses key challenges, especially in clinical research, with measures to speed up approvals, enhance harmonization, and improve coordination. However, experience shows that limitations in existing frameworks (CTR, MDR, IVDR) cannot be fully resolved through minor adjustments alone. Broader improvements are needed to strengthen Europe’s position. The initiative is very welcomed and stresses that rapid, effective implementation is essential to make regulatory processes more efficient, reliable, and harmonized, ensuring Europe’s long-term competitiveness in clinical research and biotech innovation to deliver ground-breaking medicines and treatments to patients.
The European Innovation Council and the EIC Fund
The European Innovation Council is the EU’s principal instrument for supporting breakthrough innovation and deep-tech companies. It combines grant, blended finance and equity mechanisms to support high-risk innovators. The EIC Fund is the venture investment arm associated with the EIC and is designed to crowd in private investment alongside public policy objectives [5].
The existing EIC STEP Scale Up scheme provides a useful comparator. In 2026, it has a stated budget of €300 million and provides equity-only investments of €10 million to €30 million for strategic technologies [6]. The Scaleup Europe Fund is intended to operate at a substantially larger scale, addressing the later-stage financing gap beyond the ceiling of existing EIC equity instruments.
For biotech, this means the fund should be viewed as part of a wider European financing ladder. Early research grants and EIC instruments may help create and validate companies; the Scaleup Europe Fund is aimed at the later point where credible companies need much larger rounds to execute development and commercialisation strategies.
The European Innovation Council Fund Board has selected EQT as the preferred investment adviser and fund manager for the Scaleup Europe Fund. EQT is a Swedish-headquartered global investment organisation with experience across private equity, infrastructure, growth equity and technology investing [3][4][7].
Reuters reported that the EU selected Swedish private equity firm EQT AB to manage the newly established €5 billion Scaleup Europe Fund [4].
EQT’s own announcement states that the fund will invest across European technology scaleups spanning digital systems, industrial systems and life sciences [7]. This is important for a biotech-focused audience because it confirms that life sciences sit within the intended investment universe, even though the fund is multi-sector.
About the Author:
Ariane Helfrich
FGK Clinical Research
References:
2. AstraZeneca. (February 18, 2026). Distribution of the total global pharmaceutical market sales from 2014 to 2025, by submarket [Graph]. In Statista. Retrieved March 19, 2026, from https://www.statista.com/statistics/266547/total-value-of-world-pharmaceutical-market-by-submarket-since-2006/
4. https://ec.europa.eu/commission/presscorner/detail/en/ip_25_3096