The state of European science and technology is assessed by the European Commission in the Third European Report on Science and Technology Indicators 2003, released this week. It is a major "health check," running to almost 500 pages, and contains some reassurance, some surprises, and some causes for concern.

The Commission hails the EU as the "world's biggest brain factory," as it produces more science and technology graduates and PhDs than either the United States or Japan. But Europe struggles to retain the talent it produces. The US is attracting increasing numbers of European researchers, 75% of whom choose to stay there rather than returning home. The Commission attributes this to the "more competitive career and employment opportunities offered in the US."

The data also show that the EU is the world's largest producer of scientific publications. In many fields of research and development, however, Europe's advantages in numbers of graduates, PhDs and publications are not being converted into commercial success. According to the Commission a major reason is the lower level of investment in research.

The investment gap is widening, with the EU currently spending 1.94% of GDP on research and development, compared with 2.8% in the US and 2.98% in Japan. The Commission blames this largely on the lower contribution private sector investment makes to research funding in Europe. Another telling statistic is the number of researchers in the labour force: 5.4 per 1000 in the EU compared with 8.7 in the US and 9.7 in Japan.

One major problem area is biotechnology, with the Commission expressing concern that Europe may be about to "miss the boat of the biotech revolution." Strong performance in fundamental research has been accompanied by weaknesses in patenting and conversion into products with industrial and economic benefits.

On March 5 the Commission published its progress report on the EU Strategy for Life Sciences and Biotechnology, which also warned that the biotech strategy was in danger of failing, with the diverging policies of member states highlighted as a cause.

The biotech entrepreneur Chris Evans, Chairman of Merlin Biosciences, told The Scientist "We definitely are falling behind. Investment in biotech from the public markets in Europe is dead. Venture capitalists like Merlin are still investing, but there are 1850 biotech companies in Europe and 1700 are going to struggle to raise any money at all. The vast bulk of companies must consolidate or die, there is no running away from that."

Evans was more cheerful about the UK, pointing out that "Britain is the number two biotech country in the world, but as a whole Europe is miles behind America. I do fear that in the next five years the American bioscience companies are going to grow stronger and stronger and will come shopping across Europe. The sadness from Europe's point of view is that we will lose real talent and intellectual property, all shipped back to America."

Speaking to The Scientist, Jeff Kipling, Director of R&D Policy at GlaxoSmithKline highlighted some legal and regulatory issues that the Commission could address to improve the situation. "We have concerns over the continued delays in the full implementation of the European Directive on the Legal Protection of Biotechnological Inventions across all member states."

Another issue for Kipling is that "the pharmaceutical and biotechnology sectors are already among the most regulated. The Commission should use the new Indicators in its understanding of the effect that the bureaucracy of the regulatory framework may be having on research."

When asked if there is much the European Commission could do about the situation, Chris Evans said, "Yes, but they are going to have to get a large pot of money and get behind the European biotech sector." He pointed out that Britain's comparatively healthy position is to a large extent due to many years of government support. He also emphasized the need for pan-European stock markets for biotech, and the removal of regulatory barriers. The much talked about European Patent initiative is, in Evans' view, "overblown." He said, "If you make a good discovery you can easily enough get some good patents in Europe, Asia and America all at the same time."

From the Commission's point of view, biotech is just one area of science and technology among many, all of which need more investment. In the next few weeks the Commission will propose a detailed "road map" aimed at increasing the overall level of investment in R&D and significantly increasing the private sector's contribution.

Chris Evans said he has recently advised the Commission to "stop pushing paper and memos around." Instead they should "address real issues such as how we can unify and deregulate the stock markets in Europe… and get the Commission involved in biotech at the start-up level again."

Time will tell if the forthcoming road map will be just another piece of paper to push around, or if it signals the action required for positive change.