Europe calls on entrepreneurs to revive its moribund economies

There’s a long lead time from forming a spin-out to developing products, building markets, creating jobs and generating growth, raising the question of whether politicians should be hanging hopes of recovery on entrepreneurship and innovation.

The biotech and pharmaceutical industry is a notable example of long lead times, with novel drugs taking ten or more years to get from bench to bedside. But, said Alexander von Gabain, chair of the governing board of the European Institute of Innovation and Technology (EIT), approval of a new drug is not the point at which impact begins. “It’s not the product, it’s the growth stage of companies that creates jobs and is changing the landscape of the continent,” he told the Science|Business European Entrepreneurship Summit in Brussels on 21 February.

Von Gabain observed this at close quarters as the founder of Austrian vaccines specialist Intercell. At the point he set up the company as a spin-out from the University of Vienna in 1998, the Campus Vienna Biocentre did not have a single biotech. Since then, the campus has seen investment of €100 million in infrastructure and the building of new research institutes, and the ten biotechs now based there employ 300 staff.

Fertile soil

The current emphasis on innovation and entrepreneurship is appropriate because it takes “more than universities and well-educated people to spur growth,” von Gabain said. What is needed is “fertile soil” and a network of individuals who are “willing to take ideas and drive them forward.”

A biotech start-up may take a while to create jobs, but other flavours of innovation can have immediate impact, believes Anne Glover, the European Commission’s recently appointed Chief Scientific Adviser in the Cabinet of President Barroso. She cited the way in which mobile phone networks are supporting serial innovation, such as the introduction of mobile online banking. “Science underpins this,” Glover said. “Knowledge is transferred through the innovation process into the economy.”

Viral infection

The boom years up to 2008 made Europe complacent. “It seemed okay just to do things the same, but now we have the opportunity to do things differently,” Glover believes. This will stir the economy. “It’s a bit like a viral infection – one person does [something] and then another follows,” said Glover.

Maria da Graça Carvalho, a Member of the European Parliament (MEP) and former science minister of Portugal, noted that while knowledge transfer can take time to have a social and economic impact, the pipeline requires sustained support. Projects financed by the European Union some years ago, in areas including aeronautics, car manufacturing and air quality, now underlie marketed products in sectors where Europe is globally competitive. “We have to keep feeding the pipeline and to continuously sponsor research in general,” said Carvalho.

This is why it is important to tie the Horizon 2020 research programme so closely to the agenda for jobs and growth, and why MEPs have voted to increase the budget for the 2014 – 2020 programme from the   €80 billion proposed by the Commission, to €100 billion, Carvalho noted.

Think differently

From his perspective as Dean of ESADE, one of Europe’s leading business schools, Alfons Sauquet said one of the key ways to spur innovation is to provide young people with the opportunity to think differently. “If you want to create entrepreneurs you have got to change the way students are addressed, and give students control. However, academics don’t feel comfortable about this,” Sauquet said.

At the same time as developing the entrepreneurial mindset it is important to get small and large companies interacting through open innovation. Small companies “can’t build value” without large companies, while large companies “don’t become innovative” without prompting from their smaller counterparts, Sauquet observed.

Robert Sorrell, Vice President of Private Partnerships at BP Research and Technology described his direct experience of this phenomenon, saying it is easier for BP to assess a new technology through a relationship with a fast-moving SME, than to explore it in house. “We learn very quickly about the market,” Sorrell said. At the same time SMEs get the benefits of having an experienced corporate partner. “There is potential for SMEs to grow and develop further,” said Sorrell.

Bureaucratic hurdles

SMEs are a fount of new ideas, but often the amount of paper work involved deters them from taking part in collaborative projects, noted Ludo Lauwers, Senior Vice President of Research at Janssen Pharmaceutica. While there are some good efforts to work together to increase the productivity of pharma and biotech – most notably the €2 billion Innovative Medicines Initiative – this bureaucracy creates a hurdle for small companies. “We need to beef up efforts to involve SMEs,” Lauwers said.

But there is a barrier do doing this because innovation does not sit well with the traditional system of applying for and awarding research grants, noted Anders Flodström, Vice Chairman of the EIT’s governing board. “Since there is no KPI [key performance indicator] for innovation it is difficult to have an EU instrument that is both satisfactory in terms of accountability and in terms of how innovation works,” he said.