EU Biotech Act I: Parliament and Council back Europe’s biotech competitiveness agenda – SPC incentive now the key battleground

Momentum is building behind the European Biotech Act I. The European Parliament and the Council of the EU broadly back the competitiveness agenda, with strong cross-party support for faster clinical trials, strategic-project funding, and regulatory simplification, and Member States showing less resistance than expected. The supplementary protection certificate (SPC) extension is the main open point – and the clearest test of how far Europe will go to attract biotechnology research, development, manufacturing, and investment.

The Commission presented its proposal in December 2025 (see our initial Sidley blog post here). This update focuses on how the package has evolved since then and what the latest developments in Parliament and the Council mean for biopharmaceutical developers and investors.

The Biotech Act I proposal, adopted in December 2025 by the European Commission (Commission), seeks to close Europe’s competitiveness gap in biotechnology through two proposed laws. The main Regulation contains the measures of greatest relevance to industry, including clinical-trial reform, funding and strategic-project support, a proposed extension of supplementary protection certificates (SPC), and new measures concerning biotechnology manufacturing and biosecurity. A narrower accompanying Directive addresses genetically modified micro-organisms (GMMs) and organ processing.

This update sets out the current status of the file (Section 1), before taking a closer look at the measures of greatest practical relevance to developers and investors (Section 2), then turns to where the accompanying Directive stands (Section 3) and, finally, concludes with what the current file may imply about Europe’s broader competitiveness agenda and next steps (Section 4).

1. Status of the Biotech Act I: ongoing case for increasing competitiveness

In May 2026, the Commission published its long-awaited staff working document, setting out the evidence base for the Biotech Act I proposal that was previously adopted without a full impact assessment. The Commission’s case for reform is clear: according to its supporting analysis, the EEA’s share of commercially sponsored clinical trials fell from 22% in 2013 to 12% in 2023, while China’s share rose from 5% to 18%. The Commission also estimates that approval of a multinational clinical trial currently takes an average of 113 days in the EU, compared with fewer than 60 days in the U.S. and China.

Since our post in December 2025 (see here), the European Parliament (Parliament) co-rapporteurs for the two lead committees on the Regulation, Public Health (SANT) and Industry, Research and Energy (ITRE) – Vytenis Povilas Andriukaitis and Wouter Beke – published their joint draft report  on the Regulation, and Members of the European Parliament (MEPs) have tabled over 3,000 amendments in SANT and ITRE – many of them reflecting industry recommendations across several political groups. The debate has now moved into the compromise-amendment phase, with the lead committees expected to vote in December 2026 and a plenary vote around the turn of the year. In the Council, discussions on the Regulation started under the Irish Presidency, beginning with the clinical-trial framework, and a Council position is possible under the Lithuanian Presidency in the first half of 2027, which would allow trilogues to start.

The narrower accompanying Directive is further ahead: the Council reached a common position in June 2026, while Parliament’s committees have not voted yet.

See Factbox below for a high-level overview of the legislative process of Biotech Act I.

2. Key improvements for industry and where they now stand

2.1 Clinical trials: the most impactful improvement – and the broadest consensus

Of the measures in the Regulation, the clinical-trial reforms may have the broadest practical impact on biopharmaceutical developers. As discussed in our December 2025 update, the Commission proposed shorter and more coordinated approval of multinational clinical trials.

Clinical trial simplification enjoys the strongest cross-party consensus in Parliament and was the first topic taken up in the Council, where all Member States support it in principle – with less opposition than initially expected – although some regard the Commission text as the ceiling and stress the need for adequate resources and respect for national competences. The Parliament proposes to go further than the Commission in streamlining and accelerating clinical-trial approvals by:

• Moving the scientific and ethical assessment of Part I for multinational trials to a new EU Clinical Trials Expert Committee (CTEC): the Reporting Member State’s (rMS) CTEC representative would act as rapporteur, drafting the Part I report, and the CTEC would then adopt an opinion by majority vote (if consensus cannot be reached) across the Member States concerned, with objections possible only on narrow grounds.
• Introducing shorter assessment timelines: the initial assessment phase would be reduced from 28 to 21 days, Part II from 42 to 21 days, the sponsor’s response window for additional information from 14 to seven days, and the authorization notification from five days to one day.
• Speeding up orphan and rare-disease trials: a voluntary European Medicines Agency (EMA)-administered opt-in pathway for such trials would be introduced, where the authorization would be valid across all participating Member States without further national approval. An EMA decision would be issued within seven calendar days of validation, and participating Member States could raise objections only on narrow grounds.

For developers and investors, the potential benefit is real: fewer repeat national reviews and shorter, more predictable startup timelines for multi-country trials. The overall direction towards shorter timelines and stronger coordination appears more likely to succeed than the Draft Report’s more drastic institutional reforms.

2.2 SPC extension: the key investment incentive – and the main political fault line

As discussed in our Biotech Act alert from December 2025, the Commission proposed an additional 12 months of SPC protection for qualifying biotechnology medicines and advanced therapy medicinal products, subject to conditions concerning therapeutic innovation, clinical development in multiple Member States, and manufacturing in the EU. The incentive could be commercially significant, but only if the eligibility conditions are sufficiently clear and achievable.

The Parliament’s Draft Report retains the 12-month extension (one of the co-rapporteurs behind the Draft Report, Wouter Beke, has publicly argued for a 24-month incentive and more flexible eligibility criteria). By contrast, the ENVI and JURI rapporteurs’ draft opinions propose deleting the new extension, and several tabled amendments seek stronger biosimilar manufacturing and day-one-entry provisions instead. The tabled amendments are split along group lines: EPP and ECR propose up to 24 months with only one of the four eligibility criteria required; Renew would keep 12 months (requiring three of the four criteria, including both EU-based ones) and introduce an “SPC candidate status”; S&D generally favours six months with stricter criteria; and the Greens/Left would delete the extension. SPC incentives are therefore likely to be the most sensitive issue in the compromise negotiations.

Within the Council, the SPC extension has proven controversial, as well. Spain’s Health Minister publicly supported extending the SPC system as a means of incentivizing investment in Europe. Several other Member States raised cost, access, and biosimilar-competition concerns; the Council has not yet resolved that trade-off.

Industry has assessed the SPC impact. On cost, modelling by Copenhagen Economics indicates that a 12-month extension with broad biologic eligibility would raise EU pharmaceutical spending by around 0.11% (and total healthcare expenditure by 0.02%) while potentially unlocking over €20 billion in R&D investment, more than 80 additional EU clinical trials, and up to 4,380 direct pharmaceutical jobs. On access, the central concern is eligibility: cumulative conditions requiring multi-Member-State trials and EU manufacturing from the outset risk, excluding precisely the smaller and orphan-medicine developers the Act seeks to attract, for whom trials are necessarily concentrated in a few centres, sometimes in just one Member State, and early EU manufacturing is rarely viable or feasible for companies with a limited cash runway. Industry therefore advocates broadening eligibility to all health biotechnology products and applying the criteria flexibly (one innovation-related and one EU-based criterion), while stressing that the SPC is one tool in a wider portfolio signalling that the EU is serious about IP protection. For developers and investors with potentially eligible pipeline products, the eligibility design will matter as much as the duration.

2.3 Funding and strategic projects: broad political support

The Commission introduced “strategic projects” and “high-impact strategic projects,” which are eligible for various support, including fast-tracked permitting timeline, as well as administrative, technical, and financial support from local/EU sources. These concepts and their related support are further developed in the Draft Report:

• A new category of pan-European high-impact biotechnology strategic projects for initiatives with exceptional cross-border relevance has been added, with the EMA acting as the scientific and regulatory coordination body for health projects, facilitating early advice and a common roadmap across the relevant EU and national bodies;
• The Draft Report proposes to reduce the maximum permitting timeline from 10 months to six for strategic projects and from eight months to four for high-impact strategic projects, and shortens the application-completeness and information-request deadlines;
• The Draft Report introduces an “Advanced Biomanufacturing Technology Designation,” which would be an EU-wide designation giving prioritized access to scientific advice, coordinated and early-stage regulatory engagement, and protection against duplicative or inconsistent requests across authorities. It would cover novel manufacturing technologies that strengthen EU capacity, supply resilience, scalability, or resource efficiency.

These additions to the initial Biotech Act proposal enjoy broad political support. For investors, the proposed amendments by some political groups in the Parliament to mobilise more public and private capital – including through the Savings and Investments Union and a reinforced investment pilot – are the most relevant. Cross-party amendments also back ATMP centres of excellence and expanded EU biomanufacturing capacity, and most groups would retain the regulatory sandboxes. Improved access to capital was also among the objectives in the Member States common position, which was endorsed in June, so some form of enhanced support for cross-border projects and advanced manufacturing is likely to remain, although the tightened deadlines may be relaxed if Member States consider them unrealistic.

3. Accompanying Directive moving ahead of the Regulation

The accompanying Directive is further advanced than the main Regulation. The Council agreed its negotiating position in June, and the joint ENVI-SANT co-rapporteurs, Marta Temido and Adam Jarubas, published their draft report on 13 July 2026, with a first-reading plenary vote indicated for November 2026. The Council’s changes aim to make the GMM framework more flexible with an expedited-procedure category, narrow the Commission’s delegated powers and – of most relevance to medicines developers – clarify how the organ-processing rules interact with the pharmaceutical, medical-device, and substances-of-human-origin frameworks.

4. Europe’s competitiveness agenda: consensus on the destination, negotiation on IP

The Biotech Act I is emerging as a credible signal of Europe’s commitment to biotech competitiveness. The Parliament and Council both endorse the objectives of faster multinational trials, stronger European biomanufacturing, and better access to capital. On clinical trials in particular, Parliament wants to go further than the Commission. What remains to be negotiated is IP. The SPC extension is an explicit offer of additional protection in exchange for running development and manufacturing in the EU, and is the measure that two committees would delete and several Member States resist on cost and access grounds seemingly without taking into account the potential benefits in terms of preventing economic activity moving to the U.S. or China. With a centre-right majority in the Parliament favorable to incentives and the compromise-amendment phase leaving significant room for negotiation, the outcome on the SPC will be the clearest indicator of how far Europe is prepared to back its competitiveness agenda with concrete incentives – and the point developers and investors should watch most closely.

Finally, the Biotech Act will operate alongside the reform of the EU’s General Pharmaceutical Legislation (see Sidley’s summary here), on which the Parliament and Council reached a provisional agreement, and repeatedly cross-refers to it. Companies revisiting their pipeline strategies under the new Pharmaceutical Legislation should keep a close eye on the Biotech Act in parallel, because it layers additional considerations on top, including a potential SPC extension, re-architected and faster (but more centralized) clinical-trial routes, and new manufacturing and strategic-project incentives.

This blog was authored by Josefine Sommer, and Alix Vermulst.

This post is as of the posting date stated above. Sidley Austin LLP assumes no duty to update this post or post about any subsequent developments having a bearing on this post.