A glimpse at the numbers and one can understand why Europe's scientists migrate toward richer pastures. European countries spend far less than the United States and some Asian countries on research and development—widening the innovation gap. Two years ago, the EU's statistical office Eurostat showed that government and industry invested only 1.9 percent of gross domestic product (GDP) on research and development in 2004—significantly less than Japan at 3.18 percent and the United States at 2.66 percent.
The bad news, however, has instigated change. Late last year, legislators firmed their commitment to the Lisbon strategy of 2000, which set a goal to transform the EU into a competitive knowledge-based economy. The European Council approved the 7th Framework Programme (FP7)—the EU's chief instrument for funding science and technology research from 2007 through 2013.
FP7 allocates €53 billion over seven years to better integrate Europe's fractured research scene—a 40 percent increase over the previous program. While most money will go to applied research projects, FP7 allocates more than €7 billion to another agency for which scientists have fought hard: the European Research Council (ERC), an agency akin to the US National Science Foundation. Run by scientists, the ERC will dole out money solely for basic research.
FP7 is part of a suite of initiatives intended to spur innovation across Europe. Not only is the European Parliament offering more money to scientists to encourage them to collaborate, individual member countries are also expanding their budgets. That means more grant money and fellowships will be available to scientists in the near future.
Biotechnology is also getting a boost. In some countries, new legislation is making it easier for European companies to grow. In others, programs that teach young scientists how to be entrepreneurs are expanding. The hope is that within a decade not only will science drive innovation, but the continent will also become a destination hot spot for the world's most talented scientists.
EU's Push to Compete
Antonio Rothfuchs knows firsthand the challenges of working as a medical scientist in Europe. He earned both his undergraduate and graduate degrees at the Karolinska Institutet in Stockholm before landing at the US National Institutes of Health for his postdoc in 2004.
Rothfuchs wanted to experience working abroad. But many young scientists in Sweden face temporary unemployment after finishing their Ph.D.'s
"In Sweden there is a lot more competition for funds that cover, at best, only part of your research costs," Rothfuchs wrote in an essay published in Euroscience News last year. After completing a postdoc, finding financial support to set up your own research lab is difficult, he says, even if you have finished successfully. In the United States, the odds are greater that a scientist will be able to launch his or her own lab, sometimes with startup money from a university.
The problem isn't one of neglect but one of scale. Sweden, in fact, leads Europe in R&D spending—the nation spent 3.74 percent of GDP in 2004. But with only 9 million citizens, Sweden is tiny. Consequently grants tend to be much smaller. In 2006 the US National Institutes of Health had a $27 billion budget—nine times larger than that of the Swedish Research Council.
Rothfuchs's experience is typical of many European scientists. And while countries do support young scientists or full professors with various special grants, junior level scientists face sparse choices. Permanent positions or grant money to transition from working under a supervisor to independent research are scarce—many leave and don't return.
Europe Boosts Funding and Other Initiatives
By making more money available on top of what governments already offer, the EU's new funding scheme hopes to at least slow the exit stream. Scientists initially criticized FP7 because the proposed budget falls €20 billion short of the amount anticipated. The budget will, however, increase incrementally. By 2010 FP7 sets a goal to spend 2.6 percent of the EU's GDP on R&D projects. By 2013, FP7 calls to raise that value to 3 percent. Taxpayers will contribute one-third of the funds; the rest will come from businesses.
Most grants will go to applied research projects, which are organized into categories. The largest, "Cooperation," gets €32.4 billion and addresses information and communication technologies, health, and transport. The "People" category, which includes the Marie Curie grants for young scientists, provides €4.8 billion for training, work abroad, and luring expatriates back to Europe. "Capacities" contains some €4.1 billion for new research infrastructure such as radiation sources, data banks, and telescopes.
The last category, "Ideas," covers the ERC, a new agency that funds basic research. The ERC additionally offers grants to support scientists at different career stages. A European postdoc, for example, can now apply for a Starting Independent Researcher grant to launch his or her own lab. Applicants who are two to eight years postdoctorate are eligible and the grants amount to upwards of €1.4 million over five years—as many as 200 of these might be offered each year. Grants will also be available to support advanced scientists and are not restricted to European scientists. Researchers must, however, conduct their research within the EU.
The ERC "is a great thing," comments Birgit Müller , a geoscientist at Geophysical Institute, University of Karlsruhe in Germany. "In most grant proposals you have to show the immediate application of the research and most grants are for one to three years. In terms of basic research, that is very short."
But some are skeptical that the EU will achieve its investment goals. While some countries such as Sweden and Finland already spend more proportionally than the EU average on R&D, others such as Bulgaria and Romania spend as little as 0.5 percent. "I think we will struggle as a union to reach 2.6 percent," says Tony Mayer, governing board member at Euroscience—an agency representing European scientists. Obviously to reach that goal, stronger countries will have to make up for weaker ones. Some countries such as Germany, France, and Britain, however, do stand out in this regard.
In 2006 the Deutsche Forschungs Gemeinshaft (DFG)—Germany's primary research funding body—increased its budget to €1.6 billion. The nation spent 2.5 percent of GDP on R&D, a figure comfortably above the EU average of 1.9 percent, and the federal government pledged to boost R&D spending to 3 percent of GDP by 2010.
In 2005 DFG also implemented an initiative to encourage German universities to compete for funds. Called the Excellence Initiative, it dedicates €1.9 billion of DFG's budget from 2006 through 2011 toward programs to raise the international profile of German science. These include: up to €1 million per year for new graduate schools, €6.5 million yearly for each of 30 "excellence clusters" that increase cooperation between universities and other research centers, and money available to universities that develop strategies to boost themselves to world-class status. The federal government covers 75 percent of the program and state governments cover the rest. An accompanying "pact for research and innovation" guarantees 3 percent increases for Germany's nonuniversity research institutes, including the Max Planck Society, through 2010.
Changes are also under way to support the country's mid-career scientists. Under current regulations, scientists with temporary posts at publicly funded institutions can only work a maximum of 12 years in the public system. The rules were intended to promote mobility. But with so few permanent positions available and industry's preference to hire young scientists who are more trainable, (Germans, who typically do not finish schooling until their early 30s, are at a disadvantage in this regard), mid-level scientists are often left with little choice except to go abroad, says Müller. "We would prefer it if contract decisions were made based on the quality of the science and not on the scientist's age or how long they've been working."
Two years ago thousands of French scientists marched through the streets of Paris to protest what many saw as a crisis. Even though France already spends 2.16 percent of GDP on R&D, studies were showing that both the quantity and quality of French research was declining. Relative to other countries, France produces fewer new patents and biotech startups. Put off by low wages and scarce lab resources, young people were choosing other careers.
The French government responded by passing a package bill last year that includes several measures to lure young people into labs and to spur innovation. The research budget will grow from €19.9 billion in 2005 to €24 billion in 2010. Along with providing more money, the new law simplifies research management and empowers a new National Research Agency (ANR) to grant funds for projects based on merit reviews, a novelty in France. The proposed ANR budget for 2007 is €1 billion.
With ANR grant money, researchers can allocate funds to employ postdocs or technicians on temporary contracts and also to purchase equipment and consumables. As such ANR's model departs from traditional funding. To date most funds have been distributed via the public research organizations (PROs), quasiautonomous institutes with their own laboratories and permanent staff. These institutes typically fund groups on a yearly basis, but there is little relation between scientific results and funding.
The government also created a new Industrial Innovation Agency with a budget of €1.7 billion through 2008. Its aim is to support large-scale industrial R&D programs aimed at new technology-rich products or services that target a significant market.
The United Kingdom
By contrast, the UK lags behind Germany and France. Public and private sector investment in R&D hovers around 2 percent of GDP.
But the numbers don't account for funds available through charitable trusts such as Wellcome and Cancer Research UK—two foundations with annual budgets that together add another £1 billion.
After the Bill and Melinda Gates Foundation, The Wellcome Trust is the second largest charitable trust in the world. It invests 85 percent of its annual budget in bioscience projects in the UK, of which 20 percent goes toward fellowships. "You could pretty much go from cradle to grave on Wellcome Trust Fellowships," says Sohaila Rastan, director of science funding. Because the trust is independent, it can be flexible. Grants are available to scientists without permanent positions and can run as long as seven years (see the Career Initiatives box for a list of new fellowships). The key criterion for winning a grant is excellence, says Rastan.
Money from charitable trusts, however, doesn't typically pay for research infrastructure such as laboratory upgrades and new equipment. In Europe, the primary source for facility upgrades and new equipment—the type of resources likely to attract top-notch scientists—is government money. In 2004, the British government published a 10-year plan for science and innovation that calls to boost science spending to 2.5 percent of GDP by 2014.
In a sense, "The framework money is forcing countries to come up with matching money," says Mayer of Euroscience. "And that's a good thing because the bulk of research investment is from the member countries in the form of salaries, equipment, bricks and mortar."
The same force that has held back European science has also worked against European biotech—a lack of funds. While biotech startups are able to access seed money through private sources or government, many are unable to raise subsequent cash to grow. A study by UK-based Critical Limited, a consulting company, shows that while the number of biotech companies in Europe and the United States is almost equal, European companies are much smaller and have very few products in later stages. The industry employs over 190,000 people in the United States. In Europe the industry only accounts for about 97,000 jobs. American companies also spend three times more on R&D and receive almost three times more venture capital funding. Two-thirds of European companies employ 20 or fewer people.
In terms of size and number of products, "European biotech is about 10 years behind the US," says Adeline Farrelly at EuropaBio.
Biotech Tax Breaks
Young Innovative Listed Enterprise (YILE) status is a new initiative proposed by France Biotech and the French Strategic Council for Innovation to encourage public investment in biotechnology. To qualify a company would need to have raised more than €5 million via an IPO on a regulated or managed European market; spend more than 15 percent of its operating costs on R&D; employ less than 250 employees; have a turnover of less than €50 million or a balance sheet total of no more than €43 million. If adopted by the French government, YILE companies will be able to offer shareholders the following tax benefits for the eight years following listing on market:
Several governments have, however, launched initiatives to help biotech companies grow faster and remain in business. In 2004, for example, the French government adopted legislation that gives startups a tax break. Any company that raises more than €5 million through an IPO and spends more than 15 percent of its operating costs on R&D is exempt from paying social security tax for employees involved in R&D projects. The measure can save companies up to 20 percent in employee costs, which they can reinvest in the company.
Called Young Innovative Company Status (YIC), the measure was initially conceived by France Biotech—an umbrella organization representing the industry in France—and the French Strategic Council for Innovation. Other European countries are following France's lead. Belgium adopted a YIC scheme in 2006; Sweden, Portugal, and Hungary also are considering similar schemes.
France biotech has proposed other initiatives that would offer shareholders who invest in small and medium sized enterprises tax-breaks (see the Biotech Tax Breaks box for details).
Such incentives are steps in the right direction, says Christopher Lowe, director of the Institute of Biotechnology at Cambridge University. "Governments need to make sure that the regulatory and financial climate is right to allow these developments to take place." Lowe points to the UK as an example. With 63 publicly traded companies and an industry that has acquired more than $275 billion in venture capital funds since 1998, the UK leads Europe's biotechnology scene. Many companies sprung up 10 years ago, says Lowe, when startups were especially unconstrained by political policy.
Lowe also points to culture's role in Britain's relative success. "There's a long history of entrepreneurship here," says Lowe, who has experienced a similar spirit in Scandinavia. Many of Sweden's universities, for example, have set up technology transfer divisions to promote entrepreneurship. Last year Karolinska Institutet began offering undergraduate courses in bio-entrepreneurship and plans to expand the courses into a graduate program.
Integration Issues Still Loom
While the influx of cash will certainly improve the profile of European science, it's not enough, says Helga Nowotny, vice-president of the ERC. Despite the European Commission's efforts to harmonize laws among member countries, regulations still vary. Research is fractured and that holds back frontier science.
"Even if R&D funding goes up, there is no direct way to translate this into more innovation," she cautions. "R&D policies don't stand alone." Governments need to facilitate, she says. To start, that means working harder toward greater legislative harmony, especially in the life sciences, and toward mobility-friendly pension systems and tax incentives for business, for example.
These issues don't negate the need for funds, they only highlight the need to nurture Europe's potential in other ways, Nowotny says. Europe very well may become a scientific powerhouse in the future. "We have some very good research institutions and much to offer in terms of quality of life." And many changes already under way reflect steps in the right direction. Germany's Excellence Initiative, which promotes competition among universities to create elite institutions, is a good example she says.
"I also see the ERC contributing with new opportunities to lure European researchers back," Nowotny adds. "We have to transform the brain-drain of scientists into 'brain circulation' both within Europe and beyond."
Gunjan Sinha is a freelance writer living in Berlin, Germany.