Category Archives: New Technologies come of age

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THE CHALLENGES OF THE BIOTECHNOLOGY SECTOR IN SPAIN

The biotechnology sector in Spain has experienced an immense development in the past decade, already being the world ninth and European fifth ranked country in scientific production. In 2012 it had an impact on the Spanish GDP of 7,8 % (last known data according to the Spanish National Institute of Statistics – INE- ). Keeping in mind that this indicator did not surpass a 3% of the Spanish GDP in 2008, we can then establish the fast development of this sector, and how Spanish companies are increasingly relying on biotechnology use as a means to innovate and grow in their respective markets.

Other statistics also prove this development, according to the Annual Report of ASEBIO (Spanish Association of Biotechnology Companies)[1]: the employment rate has grown, creating almost 800 new jobs in 2012, the number of companies that declare to perform biotechnology activities has risen to more than 3.000 and the turnover has reached an annual 80.000 million euro. Finally, another note that shows the importance of the sector in Spain is that 2014 has been declared as the “Biotechnology Year in Spain”.

Catalonia is the region where most biotechnology companies are, concentrating almost 20% of all Spanish biotechnology companies, followed by Andalusia (with almost 15%) and the Madrid Community (with 13%). The Autonomous Community has traditionally been the headquarters of numerous biotechnology companies: for example, 50% of all Spanish pharmaceutical companies are located here, including the five biggest companies, including Almirall, Esteve and Ferrer Internacional. Catalonia also leads the statistics on number of newly created companies, followed by Andalusia and Galicia, fast becoming one of the most strategically important regions in the biotechnology sector in Europe.

There are several reasons why Catalonia has become the biotechnology leader region in Spain and one of the most important in Europe, alongside BioTOP in Berlin, One Nucleus in Cambridge (London) or Medicen Paris Region, among others. It has 56 investigation centers with a biotechnology activity, 17 university hospitals, two big infrastructure centers (Barcelona Supercomputing Center[2] and Sincotrón ALBA-CELLS[3]), as well as 12 technology centres and 16 scientific and technology parks, which have greatly favored the setup of new companies and the attraction of investment.

The scientific and technology parks located in Catalonia have been a key factor in the development of the sector and the creation of new companies, as their mission has been to facilitate the step from R+D groups and departments to startups. They also offer common use facilities, which mean an important saving on the initial investment necessary to create a new biotechnology company. The possibility of interaction and synergies between startups, technology centers, big companies and R+D facilities have created a perfect space where to establish new companies and develop as a competitive business.

As a consequence, and if we take a look at the number of funds granted by the European Research Council[4], Catalonia is the destination of more than half of those collected by Spain and it is where more than 29% of the funds bestowed to Spain by the European Seventh Framework Programme[5] are located. Catalonia has also attracted specialized investors, including corporate funds (which right now amount to more than 136 million euro in resources) and investment banking, as well as venture capital funds. Between 2009 and 2013 the venture capital investment has multiplied by five, being one of the most recent examples the venture capital company “Caixa Innvierte BioMed II”, created by the Spanish financial entity “La Caixa” in partnership with the Spanish Economy and Competiveness Ministry and the Catalonian Financial Institute, and which will invest 35 million euro in developing biomedical companies.

However, the access to investment funding continues to be the biggest challenge that the Spanish biotechnology sector has to face in order to continue growing and being competitive within the European market. Much of the startups and small and medium companies that focus their activities in biotechnological R+D depend on public funding to subsist and this has dramatically decreased in the last few years due to the economic crisis: the resources and funding of the Spanish Industrial Technological Development Center (CDTI)[6] and of the Agency of Competitiveness for Companies in Catalonia (ACCIÓ)[7] have decreased more than 50% since 2012.

Another challenge of biotechnology companies is not only the adequate protection of their research results through patents (in 2012 more than 700 patent applications were published and only 294 were authorized), but also the necessity of continuing research and a reformulation of the business models once the patents have expired.

The biotechnology regulatory framework is also a barrier for companies that want to start manufacturing and commercialising the products resulting from their research. The Spanish Medicines Agency and Sanitary Products (AEMPS) and the European Medicines Agency (EMA) are the competent entities in charge of the approval of clinical research, manufacture and commercialisation of cosmetics, medical and sanitary products, while the Spanish Agency for Food Security and Nutrition (AESAN) and the European Food Security Authority (EFSA) are the competent authorities for the authorization of manufacture and commercialisation of functional foods and products which contain genetically modified organisms. All of these institutions require expensive clinical essays as well as bureaucratic procedures that are a hindrance for many small and medium companies due to their costs.

The last two challenges mentioned revert back to the first one mentioned: the difficulty of accessing public and private funds to develop the business is seriously affecting the sector. Therefore, and now that it seems that the worst of the economic crisis is over, it is time for the Administration to address the problem and again gradually increase the public funds destined to R+D and scientific innovation: with only a few exceptions of companies with a turnover of more than 100 million euro, such as Grifols or Almirall, the vast majority of the Spanish biotechnology businesses are small and medium companies that greatly depend on private or public funding for their subsistence and growth.

Last but not least, it is highly necessary to value and commercialise R+D and innovative investigation in order to encourage private investment, promoting a closer collaboration between the public and private sector. The number and funding of universities and public research centres with biotechnological projects has to increase and a sustained commitment by the Government of R+D is imperative if we want to remain competitive, now that the emerging countries such as China or Brazil are slowly becoming firm competitors in the worldwide market. The creation of more public and private entities would without doubt attract private investment, being able in this way to compete with our worldwide equals.

[1] Annual Report of ASEBIO (Spanish Association of Biotechnology Companies) 2013 (www.asebio.com)

[2] Barcelona Supercomputing Center:  www.bsc.es

[3] Sincotrón ALBA-CELLS: www.cells.es

[4] European Research Council (http://erc.europa.eu/)

[5] Seventh Framework Programme of the European Community for Research, technological development and demonstration activities: http://europa.eu/legislation_summaries/energy/european_energy_policy/i23022_en.htm

[6] The Industrial Technological Development Center (CDTI) is a public company dependent on the Spanish Economic and Competiveness Ministry, which promotes the innovation and technological development of Spanish companies (www.cdti.es).

[7] Agency of Competitiveness for Companies in Catalonia (ACCIÓ): http://accio.gencat.cat/

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Music Industry: comments on the Indies vs. Google controversy

In recent months we have followed with interest the controversy arising from complaints by independent labels against the practices of Google and its subsidiary Youtube, due to the introduction by this economic group of its expected streaming subscription service.

The independent labels, grouped together in the organization IMPALA (http://www.impalamusic.org/), have complained that Youtube has abused its dominant position, by attempting to force smaller record labels to join Youtube’s streaming platform under worse contractual conditions than the “majors”,  and by threatening to withdraw their videos from Youtube if they do not accept these conditions.

The contract allegedly imposed on independent labels by Youtube was leaked by specialized media (http://www.digitalmusicnews.com/permalink/2014/06/23/fk-heres-entire-youtube-contract-indies) and certainly contains some remarkable clauses. For example, a permanent “least favoured nation” clause, whereby independent labels are obliged to accept lower royalties if these are negotiated by the “majors”. The situation reached such a point that Youtube announced that within a matter of days, it would begin to delete the videos of labels which refused to accept the terms of Youtube’s licenses for its new streaming service.

Nevertheless, fuelling the controversy even more, some independent operators like BELIEVE DIGITAL (http://www.believedigital.co.uk/) stated that the economic conditions proposed by Youtube were in line with market conditions and no threats to withdraw content from the Youtube portal had been received. http://www.musicweek.com/news/read/youtube-why-one-significant-indie-music-group-has-signed-licensing-deal/058772-

IMPALA’s response in defense of its members was twofold: firstly, it took mass media action, which spread like wildfire on social networks and throughout the music industry, condemning what it viewed as an abusive practice by Youtube; secondly, a complaint was lodged before the Community competition authorities,  accusing Google’s subsidiary of practices that were abusive of its dominant position contrary to Community competition law  (http://www.impalamusic.org/content/dispute-between-youtube-and-independent-music-companies-%E2%80%93-formal-process-starts-brussels).

Finally, according to some media reports, Youtube decided to backtrack and withdraw its threat to remove videos from its platform, with this being interpreted as a small victory for the independent labels.

The conclusion to be drawn from this episode is that, for weaker operators in an industry such as the music industry, it is not just important –but essential- to have a strong sector association, with a suitable communication policy, efficient counselling and defense of the interests of its members. This is the only way to explain this small victory against Youtube or IMPALA’s other successes of the past, such as that in the case of Impala v. Commission (T-464/04) in which, for the first time in history, the Court of First Instance set aside an European Commission decision on an economic concentration (the Sony-BMG merger).

 

 

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The Right to be Forgotten and the Judgment of the CJEU

The Court of Justice of the European Union issued a ruling a few days ago on a Preliminary Question referred to it by the National High Court (case C-131/12), known as the “Costeja Case”, firstly, that Google is responsible for the processing of personal data in connection with the business activity it carries out, irrespective of the role played by the Web host whose content is indexed by Google; and secondly, that Google is bound by law, in this case, Spanish law, having established an affiliate which carries out promotional activities and the sale of advertising in Spanish territory, as processing is not done not through the establishment of the said affiliate but within the framework of its activities.

Thirdly, it is recognized that the Data Protection Directive guarantees the so-called “right to be forgotten”, that is, the possibility that the search engine may have to eliminate content with personal data although the said information may be true and is not eliminated from the website which contains it, albeit such a decision has to be reached taking into account the possible public interest in obtaining the said information, based on the role, public or otherwise, of the data subject.

The judgment commented on has been warmly welcomed in certain sectors, but one certainty is that it gives rise to a considerable variety of problems: on the one hand, it establishes a different system of responsibility for Web browsers and communication media, which is, to say the least, questionable. On the other hand, in addition to balancing the public interest, the balancing of other types of democratic interests and values should also be considered, these being freedom of expression or the right to information. The latter is, obviously, a technical problem: the weighing and balancing of competing values: Who has to do it? The search engine or third parties? Should the latter convert itself into a supervisory organ or an infiltrator? Should this be the case, could it do so legally? Would such supervision be effective, and, would it include the elimination of content by the Web browser? We have to consider that the information will remain, in any event, on the original website… although Google no longer indexes it in searches.

Finally, given all these questions, it remains to be seen how national courts carry out the possible implementation of this decision of the CJEU.