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European Commission - Press release

State aid: the Commission clears 23 million EUR R&D aid to Novartis Italy for faster access to innovative vaccines in developing countries

Brussels, 8 May 2012 - The European Commission has concluded that €23 million public funding, which Italy intends to grant to Novartis Vaccines & Diagnostics S.r.l. (NV&D) for the research and development of innovative vaccines, is in line with EU state aid rules, in particular because it tackles a genuine market failure and stimulates research in the EU. The project aims at ensuring that developing countries gain quicker access to such innovative products at affordable prices.

Joaquín Almunia, Commission Vice-President in charge of competition policy, declared: "If successful, the project will bring new innovative products into the vaccines market without unduly distorting competition. It will also contribute to reaching the EU objectives for R&D while providing the necessary incentives for a faster and better targeted commercialisation of these products in poorer countries".

In November 2011, Italy notified its plans to support a research project, also supported by the Gates Foundation, aimed at developing innovative vaccines, including research on antigens to combat illnesses endemic in developing countries. All R&D activities will be carried out by Novartis over a period of five years. The public funding amounts to €23 million for expected R&D costs of €76.9 million to be incurred by Novartis.

The Commission assessed the project under the EU framework for research, development and innovation (R&D&I) aid, which allows public support for R&D projects provided that it is well designed, addresses relevant market failures and results in benefits that outweigh potential distortions of competition.

The Commission found that the research project due to the important technological and commercial risks connected with the required R&D activities, could not attract sufficient financing from private investors. The aid is necessary to incentivise the company to undertake additional R&D activities compared to its ordinary industrial practice. Moreover, the aid is proportionate and it will not entail undue distortions of competition in the internal market. In particular, there is no risk to crowd out private investment plans, in particular because of the limited market shares of the beneficiary, the presence of stronger competitors and the expected growth of the market concerned.

The Commission, therefore, concluded that the benefits of the project clearly outweigh potential distortions of competition brought about by the aid.

Background

The project had to be individually notified to the Commission because the amount of aid involved exceeded the threshold of €10 million, set by the R&D&I Framework for projects of predominant industrial research.

The non-confidential version of the decision will be made available under case number SA.33866 in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved. The electronic newsletter State Aid Weekly e-News lists the most recent decisions on state aid published in the Official Journal and on the website.

Contacts :

Antoine Colombani (+32 2 297 45 13)

Maria Madrid Pina (+32 2 295 45 30)


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