For most of the past century, if you invented a medicine, you brought it to Europe or to America. Two continents, two regulators, one shared assumption about where the money and the science lived. That assumption is rapidly becoming outdated.
China now runs nearly a third of the world’s clinical trials, up from just 5% a decade ago, and its biotech stocks jumped more than 110% in 2024, three times the gain posted by American peers. This did not happen because Chinese scientists got smarter overnight. It happened because Beijing spent a decade methodically wiring together regulation, financing, clinical infrastructure and industrial policy into a single machine built for speed and scale. Washington is not standing still either. The FDA still clears a new medicine in a median of roughly 240 days, against 420 or more at the European Medicines Agency, and American firms capture more than 70% of the world’s health-tech “unicorns”, against Europe’s 11%. What used to be a two-horse transatlantic race is now a three-way sprint, and Europe is not the one setting the pace. This is not, at root, a story about European science falling short: the continent still produces some of the best biomedical research on earth. It is a story about what happens to that research after it leaves the lab.
This should trouble Europeans more than it does, because the sector is not a peripheral concern. Health and life sciences generate roughly €140 billion in annual R&D spending, support more than 2.8 million jobs across the continent, and the EU remains the world’s second-largest pharmaceutical market. Health expenditure already accounts for 10% of EU GDP and is rising with an ageing population. Europe also sits on some of the richest troves of medical and health data anywhere, gathered through decades of universal, publicly financed healthcare. On paper, this ought to be a formidable comparative advantage. In practice, it isn’t because Europe has never finished building the market that would let it be.
Here is what losing that race looks like up close. A patient in Warsaw and a patient in Boston can be prescribed the same medicine, discovered in the same European laboratory and tested in the same clinical trials, and still wait wildly different lengths of time to actually receive it. In some EU member states, a newly approved medicine reaches pharmacies within weeks. In others, it can take years, if it arrives at all. The core diagnosis is unglamorous but important: Europe’s problem is not a shortage of ideas. It is fragmentation. A medicine that clears the EMA’s single, centralised approval then enters twenty-seven separate national systems, each with its own health-technology assessment, its own pricing negotiation, its own reimbursement timeline, and often its own clawback or rebate regime designed to claw money back from manufacturers after launch. The scale of the resulting gap is striking. EU-wide tracking of medicine approvals shows that only 46% of medicines centrally authorised by the European Medicines Agency between 2020 and 2023 were available to patients across all member states, with an average delay of 578 days between EU-level approval and national availability.
In the United Kingdom, repayment rates under the industry pricing scheme reached 26.5% in 2023. France’s “clause de sauvegarde”, originally a temporary safety valve, has hardened into a recurring levy. Italy runs multiple payback systems at both national and regional level. None of these mechanisms is irrational on its own; each reflects a legitimate desire to control public spending. But stacked together across a continent, they create a patchwork of small, sequential, unpredictable markets rather than one large, coherent one, and companies respond to that patchwork exactly as economic theory predicts: they launch where returns are fastest and most certain, which today means the United States first, Europe later, if at all.
The consequences compound. Clinical trials, which need scale and speed to generate globally credible evidence, increasingly avoid Europe for the same reason: Europe’s share of global trials fell from 22% in 2012 to just 12% in 2023, even as its scientific publication record stayed strong. Venture capital follows the same logic – American biopharmaceutical firms attract four to five times more funding than their European counterparts, and the United States accounts for 39% of global biotech patent families against less than 20% for Europe. Weak downstream incentives feed back into weaker upstream investment, which feeds back into weaker downstream incentives. It is a genuinely vicious circle, and no single country can break it alone, because the problem is not any one national policy. It is the absence of a functioning single market at exactly the stage where scale matters most.
What would it actually look like if Europe fixed this? Not a single European drug price, and not Brussels overriding how member states run their health budgets — both would be neither realistic nor desirable, since pricing and reimbursement are, rightly, matters of national democratic choice. A functioning market looks more modest and more achievable than that. It starts with data: a genuine European Health Data Space, with clear, trusted rules for the secondary use of health records, would let researchers and companies run studies and generate real-world evidence at a continental scale instead of twenty-seven fragmented ones – worth an estimated €11 billion in efficiency gains alone, before counting the research it would unlock. It continues with time: aligning the EMA’s scientific evaluation more closely with the EU’s new Health Technology Assessment framework, and holding national systems to the 180-day reimbursement decision window that already exists on paper but is routinely missed in practice, would compress the gap between approval and patients actually receiving a medicine – without touching a single national price. And it extends to procurement and finance: the EU’s joint purchase of COVID-19 vaccines proved that when Europe pools demand credibly, it can offer manufacturers scale, predictable volumes, and bankable contracts that de-risk investment. This is exactly the kind of signal that is otherwise missing for rarer diseases or antimicrobial resistance, where the World Bank estimates up to 39 million deaths by 2050 without new treatments, yet where sales volumes are structurally too small to attract investment on their own.
Crucially, none of this requires treating health spending as a cost to be minimised. The evidence increasingly points the other way. Analysis cited across the OECD and by institutions such as McKinsey suggests that expanded, well-targeted health spending – particularly in prevention and early treatment – can generate returns of roughly four euros for every euro invested, through fewer hospitalisations, better workforce participation and reduced long-term disability. Europe has spent the past two budget cycles treating healthcare largely as a fiscal liability to be contained, first after the financial crisis, then again as defence spending competes for the same euros. That framing is precisely backwards for an innovation-intensive sector where predictable revenue, not the lowest possible price, is what attracts the capital that eventually pays for better and cheaper treatments down the line.
For citizens, a completed market is not an abstraction. It means the 578-day gap between a medicine’s European approval and its arrival on a pharmacy shelf in Warsaw, Bucharest or Lisbon starts closing, rather than persisting as a structural feature of living in a smaller or less wealthy member state. It means European researchers whose work is funded by European taxpayers see it developed and manufactured in Europe more often, sustaining the jobs and industrial capacity that go with it, rather than watching the value captured abroad. And it means a continent with an ageing population and rising chronic disease treats innovation as insurance against future health shocks, rather than discovering, as it did with vaccines during the pandemic, only in a crisis that it could have moved fast all along. There is a positive value case to be made to treat health innovation as a European industrial policy priority.
Europe does not need to match America’s speed or China’s scale. It needs to finish something it started decades ago and never completed: a single market not just for goods and capital, but for the knowledge, data and innovation that increasingly decide which countries lead in health innovation and which countries fall behind.
© IE Insights.
