Innovation Incentives in the Chemical and Pharmaceutical Industry
Arguments and Positions
Maintaining its top position in research and development (R&D) is getting increasingly difficult for the industry location Germany. Industrial nations competing with Germany massively invest in education and research and create innovation-friendly framework conditions. Emerging markets – particularly China – are catching up. The German chemical-pharmaceutical industry is facing this challenge. In 2018, the industry invested about 11.8 billion euros in R&D and worked consistently on eliminating company-internal obstacles to innovation. But industry alone cannot defend Germany’s leading position – support from politics is needed for this purpose.
Provide research incentives
The recently adopted fiscal incentives for all innovative companies were long overdue. Start-ups need easier access to venture capital. Furthermore, patent protection in the pharma sector by means of supplementary protection certificates (SPCs) is essential for successful research. With SPCs, drug manufacturers can extend the patent term by maximally 5 years, making up for the long development times of medicines.
With its High-Tech Strategy, the federal government is on the right track to strengthen the innovation location Germany.
Innovations are driven forward by checking existing and future legislations as to their impacts on new products and processes. This is lacking.
Highly qualified scientists, engineers, technicians and skilled workers boost the innovative strength of companies.
Backing from politicians and society
Innovative products and processes from chemistry and pharma are part of the solutions to great societal challenges (such as healthcare, demographic change, food, mobility, climate protection, resource conservation). Politicians and society should be open to innovation and thus facilitate progress.
- Increase spending and provide fiscal incentives for research
The political goal of raising the share of R&D spending in GDP to 3.5 percent is correct. The framework conditions for research and innovation need to be improved by way of an adequate federal budget and the now adopted fiscal research incentives for all companies.
- Consistently continue the German High-Tech Strategy, foster venture capital, safeguard property rights
The High-Tech Strategy should be linked with a cross-departmental innovation policy. In order to maintain the high level of research in Germany, adequately funded R&D promotion programmes are important for a sufficiently wide range of technologies – also within the European “Green Deal”. These should give due consideration to the needs of medium-sized enterprises too. Framework conditions for venture capital should be optimised. Adequate patent terms, supplementary protection certificates (SPCs) – also in the form of an EU-wide “unitary SPC” – and data protection are decisive for a reliable protection of intellectual property.
- Introduce an "innovation check" in the impact assessment of legislation
Political framework conditions should not render innovations more difficult or even stand in their way. Instead, existing and future regulation should undergo an innovation check.
- Create better conditions for natural science education
General natural science-technical knowledge should be introduced already in elementary schools, and one third of the total number of lessons in secondary schooling should be dedicated continually to STEM subjects. Excellent basic research is essential for the chemical-pharmaceutical industry. Universities should have more funding. Possibilities for further advanced education and qualification of employees need to be expanded.