**Update: for updates and tips from the European Commission, see these 6 lessons learnt from the first evaluation and SME instrument statistics for the first cut-off date of phase 1**

Last week, BIA members met with MPs for a roundtable breakfast to discuss European funding with a particular focus on Horizon 2020 (H2020), the European Commission’s successor to Framework Programme 7 (FP7). H2020 is the biggest EU Research and Innovation programme ever with nearly €80 billion of funding available over 2014-2020.

The event was hosted by Rt Hon Michael Moore MP, EU Business Adviser to the Deputy Prime Minister Nick Clegg and former Secretary of State for Scotland. Ann McKechin MP, member of the Business Select Committee and MP for Glasgow North, also took part in the discussion. They were joined by Dr Harren Jhoti of Astex who chaired the discussion, Professor Bryan Hanley from the KTN who advises companies on H2020, and 15 BIA member companies representing a range of companies both large and small with a range of experience in bidding for FP7 and H2020.

For Michael Moore MP the discussion was an opportunity to engage with business leaders on the issue of how UK companies interact with Europe, to inform a report to the Deputy PM on increasing the competitiveness of UK industry. He was keen to meet companies directly, find out what support businesses need and learn about challenges of funding for medical research translation.

H2020 logistics

Professor Bryan Hanley leads for the Knowledge Transfer Network (KTN) on life science aspects of H2020 and has helped several SMEs to navigate the application process. The KTN works closely with Technology Strategy Board (TSB), who have designated  National Contact Points for H2020. Bryan outlined an overview H2020 and logistics of applying.

Compared to FP7, H2020 is more focused towards delivery and impact. There is also dedicated SME Instrument to direct funds to help existing SMEs to succeed, and via this route companies can apply as single entities rather than in a large consortium. However, there is a large volume of applications and attendees learned that the biotech success rate in the SME instrument is around just 2.5%. Some attendees compared this favourably to the likelihood of receiving venture capital funding however.

In H2020 as a whole there is a move away from large unwieldy consortia towards more effective consortia that will deliver impact, and Bryan noted that the Commission is looking to increase the proportion of awardees who are ‘strategic innovators’. The outline decision in H2020 is reached more quickly than in FP7, although the time taken to receive funds is still several months.

The company experience: lessons learned

Dr Hayley French, Commercial Director and General Counsel at Apitope, spoke from the company perspective of receiving FP7 funding earlier this year. Applying as a Belgian company, Apitope received €6 million to develop a therapeutic vaccine for Grave’s disease. Hayley recommended looking at H2020 as a whole rather than the SME instrument for a greater chance of success, and described the approach Apitope took. The company hired a specialist European consultant to assist in the compilation and subsequent management of their successful application and would advise other companies to do the same if possible.

A well-balanced and well-managed consortium is key. Hayley suggested planning the consortium early and having at least 3 members from different members states (minimum required by the Commission) but no more than 5, in order to be able to manage the group effectively. Hayley highlighted that the consortium should be well balanced in terms of geography and skills. Attendees agreed that good management includes ensuring that all the stakeholders understand the process, keeping in touch regularly and reiterating that it’s a business proposal and all members need to remain focused on the product. Hayley also advised treating the application like an exam – really focusing on the elements of the call and making sure it’s a good fit, and considering economic and social impacts.

Ultimately Apitope found the large effort to be worth it for the reward, which was fundamental to move the product and the company forward. They learned a lot from FP7 which made the process for their current H2020 bid easier. While Hayley advised not to underestimate the time involved, she strongly recommended companies to go for H2020 as the scheme is good for business and good for collaboration.

Dr Mark Lees added that Magnus Life Sciences have considerable FP7 experience and have multilingual staff members who are truly connected throughout their consortia. They see strength in being part of multi-disciplinary and international groups and are looking beyond the funding to future collaborations.

Gordon Lundie described UCB’s innovative backing from the European Investment Bank (EIB) which is looking to fund more innovative projects on a partnership model. In a first-of-its-kind ‘at risk co-development funding’ deal, the EIB has reached a milestone agreement on a selection of UCB products across a spectrum of risk in their development stages. UCB has worked with the EIB to diversify the funding of these research projects, and if all the products are successful then the bank will get a good return. Attendees showed considerable interest in the model and Gordon said that, as the ability to share risk and the fast timeline were great benefits over more traditional funding options, he hopes there will be more such EIB funding in the sector. This innovative deal fills a funding gap for companies struggling to get on to the market. He advised that as SMEs are more risky, it might be worth considering approaching EIB with a basket of products, perhaps from a consortium of SMEs.

UK competitiveness and the EU

Reflecting on the prospect of referenda, attendees asked Mr Moore about the potential effects of an EU referendum on funding schemes such as H2020. Liberal Democrat MP Mr Moore and Labour MP Ms McKechin agreed that because the funding programme is up and running, decisions on European funding will remain professional, not political, and UK  companies will not be disadvantaged. Ms McKechin also noted that the Business Select Committee has a watching brief and is aware that remaining in the EU is important for UK companies.

Although Mr Moore was not in a position to speculate on whether or not there will be an EU referendum, he recommended that it would be prudent anyway for companies to take that possibility into consideration when planning ahead by leaving some bandwidth and considering their positions.

Attendees agreed that UK innovation could be kick-started by accepting more risky ventures and that, far from thinking about whether or not to leave Europe, with our excellent universities and innovation the UK is in a position to lead Europe in healthcare and medical research.