Next Generation EU: A EUR 5 Billion Modernization Opportunity

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The outbreak of the COVID-19 pandemic put an end to more than five years of economic growth in Spain. But the country was not alone. Due to strict containment measures, the Europe’s economy went into the greatest recession since the Second World War during the first half of 2020.

To alleviate the situation, aiming for a strong recovery, the European Union worked to create a framework that could establish economic tools for member states through a program called Next Generation EU. Spain, after Italy, became the country with the highest allocation of funds. The country expects to receive EUR 140 billion – EUR 72 billion of which need not be repaid – from Next Generation.

The opportunity ahead of Spain in terms of modernization of its economy, according to an official document, is comparable to that experienced when the country joined the EU in 1986.

To receive financial support from Next Generation, member states had to prepare detailed plans. A key component of Spain’s Recovery, Resilience and Transformation Plan (Plan España Puede) is the strengthening of the national health system’s capabilities.

Overall, the Spanish government expects to allocate 7.1 percent of the Next Generation EU funds (EUR 4.94 billion) to improve its health system. The investments are focused on the renovation of high-tech equipment, health promotion and prevention, preparation for future health crisis, training of healthcare professionals, and heath data lakes.

PERTE: The first action

This is a great opportunity for Spain to bring novel therapies to the patients, such as CAR-T based novel approaches. Spain also has the capacity to efficiently interconnect basic research with clinical research which is the key element for the development of novel therapy approaches.

Toni Andreu, scientific director of EATRIS

On December 2021, the Spanish government took the first step to transform the health system using EU funds, approving a public-private collaboration instrument. The project – officially called Recovery and Economic Transformation Strategic Project (PERTE) for Vanguard Health – looked to position Spain as a leader in precision medicine R&D and strengthen its healthcare sector with an investment of EUR 1.46 billion that would offer investment opportunities for a variety of companies and organizations.

During the announcement speech, Spanish president Pedro Sánchez stated that the plan was about “taking advantage of the historical opportunity that European funds offer to bet on science, on the national health system, and on a fair economic recovery through public-private collaboration.”

Calling it a “historic budgetary commitment,” Sanchez stressed the importance of having an entrepreneurial State that invests, collaborates and talks to the private sector in order to secure the financial sustainability of the public healthcare system and guarantee access for patients.

The project has four specific goals: positioning Spain as a leader in the R&D of advanced therapies aimed at “curing” diseases such as diabetes and neurodegenerative diseases; fostering personalized and precision medicine by favouring the development of “competitive companies”; developing a digitalized national health system with an integrated database; and promoting primary healthcare through advanced technology for all citizen-facing activities.

The agreement could be considered a win for the pharmaceutical industry, which was heavily involved in crafting the plan that served as the main basis for the approved PERTE project.

The industry’s original proposal, called Essential Medicines and Strategic Industrial Capacities (Medes), was led by industry association Farmaindustria, in collaboration with the Spanish Association of Generic Medicines (AESEG), amongst others.

While generics companies are not involved in the development of precision medicine and advanced therapies – the central theme of the project – they do fit with the objective of securing the sustainability of the healthcare system and reindustrializing the pharma sector.

According to Ángel Luis Rodríguez de la Cuerda, president of AESEG, whose members operate at least 13 production plants in the country, companies willing to invest could receive public funding for around 10 percent of the total cost.

 

Stakeholder reactions

It is always positive to have investment since it often results in growth and innovation. But… we must put words into action so that the promising landscape materializes into win-win results.

Joaquin Rodrigo, general manager, Sandoz Iberia

Toni Andreu, the scientific director of EATRIS – an EU-funded organization dedicated to promoting translational research among member states – is quite optimistic about the PERTE project. “This is a great opportunity for Spain to bring novel therapies to the patients, such as CAR-T based novel approaches. Spain also has the capacity to efficiently interconnect basic research with clinical research which is the key element for the development of novel therapy approaches.”

One sector that is set to benefit strongly is medtech as the government has looked at a plan (INVEAT) to renovate outdated hospital equipment. “The new funds coming from the European Union could provide much-needed help,” says Margarita Alfonsel, general secretary of the Spanish Federation of Healthcare Technology Companies (Fenin).

In the meantime, some members of the generics industry have raised concerns about the way funds are being allocated. “I believe that is a missed opportunity because I do not see any evolution in the way political personalities are looking at our industry; they have to change to allow companies to become more profitable while we are helping the system be sustainable,” said Raúl Díaz-Varela, chairman of Kern Pharma.

Although some generics colleagues prefer to wait and see. “It is always positive to have investment since it often results in growth and innovation. But… we must put words into action so that the promising landscape materializes into win-win results,” said the general manager of Sandoz Iberia, Joaquin Rodrigo.

On the contrary, some members of the generics industry have raised concerns about the way funds are being allocated. “I believe that is a missed opportunity because I do not see any evolution in the way political personalities are looking at our industry; they have to change to allow companies to become more profitable while we are helping the system be sustainable,” said Raúl Díaz-Varela, chairman of Kern Pharma.

Pharma innovators, on the other hand, welcome the strategy if nothing else because of the symbolism. “It is encouraging that the next generation funds from Europe have healthcare as the second strategic frame after the automotive sector. This demonstrates that the current Spanish government understands the strategic importance of healthcare and its role in the recuperation and transformation of the country,” Lilly’s general manager in Spain, Nabil Daoud said.


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