08 Jan 2008   |   News

Commission gives green light to lead markets

The European Commission has selected six areas of pioneering research for its long-awaited lead markets initiative.

Commission Vice President Günter Verheugen: coordinated action “urgently needed”.

Can Europe ever repeat the success it had when it developed the GSM standard in mobile telephony? The Commission thinks so. It has selected six areas of pioneering research for special treatment under its long-awaited “lead markets initiative”, with the hope that European researchers will not only break new ground in the lab, but also in the marketplace.

The GSM standard for interoperability of mobile phone networks was developed in the the 1980s in Europe, with the help of EU R&D funding. After establishing itself in Europe it went on to become the technology standard in almost every country in the world (the US being a notable exception).

Europe's mobile phone industry has thrived thanks to GSM’s success, creating thousands of jobs, billions in sales and one clear cut market leader – Nokia.

Commission Vice President Günter Verheugen is determined to repeat this success story. To do so, the European Union must step in to help bring innovative products and services to market. “The lead market initiative (LMI) has identified promising emerging markets in which the EU has the potential to become world leader and where coordinated action is urgently needed,” he said.

The six markets are eHealth, protective textiles, sustainable construction, recycling, bio-based products and renewable energies. Although in their infancy, the chosen areas already generate over €120 billion in sales and employ over 1.9 million people in the EU.

The Commission believes that with coordinated action by the 27 member states of the Union they could grow to over €300 billion in sales and over three million jobs by 2020.

“The lead markets initiative will foster the emergence of these markets by improving legislation, encouraging public procurement and developing interoperable standards,” the Commission said in a statement announcing the move.

No special favours

The Commission insists it isn’t trying to pick winners. It won’t favour one company or research institute over another, it said, as this would be anti-competitive. “The initiative is decisively focused on a competitive, demand-driven approach,” the Commission said.

All six of the chosen areas promise lucrative returns to companies that get established quickly. The opportunity to take the lead in these areas has “a rather short time span”, it said, adding that Europe’s small and medium-size enterprises (SMEs) are well placed to be among the market pioneers because of their ability to move fast.

It has identified specific needs for coordinated government action in each of the six areas. With eHealth, for example, standardisation of various information exchange formats, certifications of systems and large-scale demonstration projects could help create computer-based technologies that would connect every GP’s surgery, hospital and clinic in Europe, allowing more efficient healthcare for all.

Europe is already a powerful force in the area of biotech research, but as a market it is already being left behind by the US and countries in Asia, in areas such as the development of biofuels. “Perceived uncertainty about product properties and weak market transparency hinder the fast take-up of products,” the Commission said. “Communication, standardisation, labelling and certification could be used to overcome this,” it suggested.

EuropaBio, the industry association, welcomed the Commission’s lead market initiative in the area of bio-based products, such as enzymes, biochemicals such as bio-based building-blocks or bioplastics. “By developing support policies and measures that will stimulate the demand for these products, this new policy will encourage innovation for bio-based products by transforming knowledge into new bioproducts and bioprocesses,” the trade group said in a statement.

Many European biotech firms are making greater headway in the US because the market conditions there are so much simpler, said EuropaBio’s communications director, Adeline Farrelly.

“The US is a more homogenous market. We need to look at how to de-fragment Europe by overcoming all the practical obstacles companies encounter here and that's partly what this lead markets initiative aims to do,” she said.

The lead markets initiative will be discussed at next month’s competitiveness Council meeting of national government ministers. It is also due to be discussed by heads of state and government at the spring summit in March.

Never miss an update from Science|Business:   Newsletter sign-up