INNOVATIVE EUROPE

The way forward. Taking stock and thinking ahead

Tuesday 18th February, 14:30 – 18:30Brussels, The Office, Rue d’Arlon 80

The menu of an innovative Europe

2

• Ecological transition, with a first assessment of the European Green Deal

• Digital transformation, data-driven innovation and AI

• EU Health Policy, coupling industrial policy and patient needs

TOWARDS THE EUROPEAN GREEN DEAL

Decoupling emission and energy consumption in the EU

Source: I-Com elaboration on IEA and Eurostat data

GHG emissions per unit of GDP (2008=100)

Primary energy consumption per unit of GDP (2008=1000)50

60

70

80

90

100

110

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

EU-28 Germany Spain France Italy United Kingdom

80

90

100

110

120

130

140

150

160

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

EU-28 Germany Spain France Italy United Kingdom

4

The rise of renewable energy sources

Source: Eurostat

Share of energy from renewable sources (%)

Renewable electricity mix in the EU by energy source (%)0

2

4

6

8

10

12

14

16

18

20

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

EU-28 Germany Spain France Italy United Kingdom

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

2013 2014 2015 2016 2017

Geothermal Solar Biomass Wind Hydro 5

But the EU contribution to fighting climate change is low and declining

Source: I-Com elaboration on IEA data

Share of CO2 emissions by region (%)

0%

5%

10%

15%

20%

25%

30%

35%

China North America European Union India Middle East Russia Asean Africa Central and SouthAmerica

Japan

2018 Stated Policies Scenario 2040 Sustainable Development Scenario 2040

6

European Green Deal scenario

Source: I-Com elaboration on IEA and European Commission data

European Union GHG emissions scenarios (1990-2050, 1990=100)

0

20

40

60

80

100

120

1990 2000 2010 2020 2030 2040 2050

GH

G (

19

90

=10

0)

GHG data (1990=100)

Clean Enegy Package scenario

Green Deal scenario

Stated Policies Scenario IEA

Sustainable Development Scenario IEA

7

Financing the transition

EU BUDGET

€503 billionfor Climate

and Environment

EU Emissions Trading System (ETS) Funds

€25 billion

InvestEUGuarantee

Just Transition Mechanism€100 billion

(€143 billion over 10 years)

National co-financing structural funds €114 billion

European InvestmentBank Group

National Promotional Banks and International

Financial Institutions

Private& Public

InvestEU towardsclimate and

environment targets=

Mobilised investments of €279

billion

At least €1 trillion

InvestEU

EU Budget

triggered by EU budget 8

DIGITAL TRANSFORMATION IN EUROPE

European countries show different degrees of digitalization.Moreover, the diffusion growth rate in Europe is low comparing to other large economies

10

0

10

20

30

40

50

60

70

80

SouthKorea

EU Top 4 Japan US EU 28 EU Bottom4

China

I-DESI

I-DESI 2016 I-DESI 2013

-10

0

10

20

30

40

50

60

70

80

90

100

Japan South Korea China US EU Top 4 EU 28

Variation in I-DESI score between 2013 and 2016, by country and component

Connectivity Human Capital

Internet use Business technology integration

Digital Public Services

Source: Digital Scoreboard

Data economy value is expected to grow by 83%, from € 377 bln in 2018 to € 680 bln in 2025

11

-

100.000

200.000

300.000

400.000

500.000

600.000

700.000

800.000

2018 2025*

Data economy value in the EU

Direct impacts Backward Indirect impacts

Forward Indirect impacts Induced impacts 0,0% 1,0% 2,0% 3,0% 4,0% 5,0% 6,0% 7,0% 8,0% 9,0% 10,0%

Greece

Poland

Romania

Croatia

Slovakia

Italy

France

Lithuania

Belgium

EU28

Malta

Finland

Denmark

Germany

EstoniaData economy impact on GDP, by Member State

2025* 2018

Source: European Data Market Monitoring Tool, IDC, 2019* Baseline scenario

EU role in AI looks rather peripherical

12

The most promising 100 AI startups,by country

77%

6%

6%

6%

1% 1% 1%

1%

1%

United States

UnitedKingdomIsrael

China

Sweden

India

Germany

Japan

Canada

Source: I-Com elaboration on CB Insight, 2019, and OECD, 2019

55%

14%

13%

3%

2%13%

Private equity investments in AI startupsbased in Europe, 2011 to mid-2018

United Kingdom

Germany

France

Spain

Ireland

Others

However, there is (and there will be) a substantial skills gap

13

0%

2%

4%

6%

8%

10%

12%

-

2.000

4.000

6.000

8.000

10.000

12.000

2018 2025

in t

ho

usa

nd

s

Data worker skills gap

Demand (left axis) Supply (left axis)Data workers skill gap (right axis)

0%

2%

4%

6%

8%

10%

12%

Spain Poland Italy EU 28 Germany France UK

Data worker skills gap in the Big Five countries and the EU

2018 2025

Source: European Data Market Monitoring Tool, IDC, 2019

TAKING CARE OF EU HEALTH POLICY: Coupling European Industrial Leadership with a Patient-

Centred Approach

Bringing innovation to patients

15

To implement value-based healthcare, changes need to occur for both health providers and patients. This involves:

• establishing true health outcomes;• strengthening primary care;• building integrated health systems;• implementing appropriate health payment schemes that promote value and reduce moral hazards;• enabling health information technology; • creating a policy that fits well with a community

• Fragmented assessments of healthcare systems among European countries (pay forperformance, cost effectiveness thresholds; HTA or REA etc. );

• Quality of care indicators is not standardized among countries and, moreover, indicatorrobustness varies for different diseases;

• Lack of data integration: health records and socio-economic data.

MAIN SHORTCOMINGS

eHealth advantages and challenges

16Source: HIMSS Analytics Annual European eHealth Survey, 2019

• Digital innovation in the healthcare sector is becoming increasinglyimportant in increasing the efficiency of healthcare systems.

• eHealth advantages and benefits:

✓ patients becoming more aware of their health and healthcare opportunities;

✓ better flow of information and interaction with health professionals;✓ faster diagnosis, improved monitoring, more effective treatment and

better health outcomes.

0% 10% 20% 30% 40%

Augmented reality

Blockchain

Provision of virtual care services

Data analytics

Population Health Management

Artificial intelligence

EMR implementation and adoption

Personalised medicine

Patient self-monitoring

Health information exchange with…

Provision of telemedicine services

Patient Health Records

The biggest eHealth trend in Europe in the coming years

0% 10% 20% 30% 40%

Archiving and documentation

Updating hardware or network resources

Mobile devices

Artificial intelligence

Healthcare analytics

Cost savings

Reorganisation of health systems

Patient-generated data

Improve clinician access to information

Data exchange with external partners

System usability

Improve patients' access to information

EMR implementation

IT security

The biggest eHealth priorities for healthcare providers at the moment

I-Com Index 2019

17

455454

565758585859

6262626364646565

67697071

7681

8889

9198100

0 20 40 60 80 100

BulgariaPoland

RomaniaGreece

LatviaSlovakiaSlovenia

LithuaniaItaly

CyprusHungary

IrelandPortugal

FranceCzechia

MaltaAustria

GermanyLuxembourg

BelgiumCroatia

United KingdomSpain

EstoniaSwedenFinland

NetherlandsDenmark

I-Com Index 2019 on the Level of Preparedness for eHealth in the Member States

• Top ranking Denmark, Netherlands, Finland, Swedenand Estonia have in common a high number of patientswho use mobile and Internet technologies forsearching health information and making appointmentsand a high level of digital skills among the populationand workforce;

• Moreover, these countries boast a large infrastructuraldevelopment and best practices in security andprivacy.

Life science industry in Europe

18Source: I-Com on OECD data

5,0

4,34,0

3,0

2,5

0,0

1,0

2,0

3,0

4,0

5,0

6,0

France Spain Italy Germany United Kingdom

Share of life science industry added value in manufacturing total (%, 2018)

• New technologies have revolutionized healthcare;• Innovation in pharmaceuticals, medical devices, diagnostic

technologies and, increasingly, digital health has transformed theway we deliver and manage treatments and organize healthcaresystems;

• Industrial and health policies need to be aligned. Foreigninvestors expanding throughout Europe benefit from a high levelof reciprocal recognition of shared standards between the EUMember States.

26,0

19,0

12,0 9,0

7,0 6,0 4,0

-

5,0

10,0

15,0

20,0

25,0

30,0

United States Spain Japan Germany Italy France United Kingdom

Share of R&D expenditure out of manufacturing total (%, 2016)

• Countries that have first understood the importance offuelling the virtuous circle innovation-productivity-growthare those that are better positioned in terms ofcompetitiveness and have shown greater resilience toeconomic crises.

Policy Recommendations

Ecological transition

20

• Fostering innovation by regulation.

• The mobilisation of adequate investments.

• Climate and energy policies taking into account European competitiveness.

• The role of digitalisation (especially but not only in the transport system).

Digital transformation

21

• Reducing the existing gap between EU countries on skills, digital technology integration intobusinesses, as well as regulation, creating a real single market

• The spread of data-driven innovation and AI requires setting up adequate data lakes, withmore cooperation between different players, tackling European fragmented AI ecosystems andretaining top talents.

• Upskilling/reskilling in the data economy require education and training in AI, as well asinter-disciplinary initiatives, promoting skills development, encouraging collaboration betweenhumans and machines, to improve and increase current and future job opportunities.

Health policy

22

• The digital healthcare transformation can be a major tool in enhancing the efficiency andintegration of healthcare systems.

• The fragmentation of healthcare systems among European countries need to be overcome

• A new general approach that focuses on the integration of R&D, IP protection, life cyclemanufacturing, healthcare system sustainability and innovation in the European life scienceindustry is needed.