Innovation over production – Europe in a balancing act

Companies around the world are increasingly relocating their production to Asia. Although final assembly often takes place in their own country, many of the components come from countries in Central or South-East Asia, where production costs are many times lower than in the USA and the countries of the European Union. To remain competitive, the EU has created various instruments to promote innovative ideas and modern technologies from which medical technology suppliers can also benefit.

Many European manufacturers have become dependent on imports from all over the world, primarily from Asia. This is because production costs there are many times lower than in the EU, where minimum wages generally apply as well as strict occupational health and safety regulations and where high bureaucratic hurdles can act as a deterrent to investors.

Since 2023, the EU Supply Chain Act has attempted to address human rights deficiencies in other countries and obliges companies with at least 1,000 employees to identify, assess and prioritize the risks to human rights in their supply chains. However, in order to significantly reduce the European market's dependence on Asia, avoid supply chain bottlenecks and ensure respect for human rights, entire production chains will have to be brought back to Europe. As a result, most products would become significantly more expensive. The willingness of consumers to bear these costs is likely to be low.

In 2023, EU Commission President Ursula von der Leyen described the EU's relationship with China as "one of the most difficult and important in the world. And how we deal with it will have a decisive impact on our future economic prosperity and national security." According to von der Leyen, Europe is facing a reorientation in the most important areas.

But what will this reorientation look like? Part of the answer could be to focus on its own strengths. In the case of the EU, one keyword is "innovation". The European Innovation Council (EIC), founded in 2018 and officially launched in 2021, is intended to promote European companies that drive technological innovation and play their part in ensuring that the EU does not fall behind, at least in terms of technology.

There are four funding instruments under the umbrella of the EIC:

EIC Pathfinder: funding early phases of scientific and technological research and development of future, ground-breaking, market-creating technologies and/or technologies from the "deep tech" sector.

EIC Transition: Further development of promising results from the EIC Pathfinder or the European Research Council (ERC).

EIC Accelerator: Growth financing for companies with highly innovative solutions if they do not receive appropriate financing on the market.

EIC Awards: Awarded for novel and ground-breaking solutions to global challenges.

One example of a successful project, funded with 3.9 million euros from the EIC Pathfinder, is Orbital Engineering for Innovative Electronics - OBELIX for short. The aim of the project is to develop new, efficient technologies while at the same time avoiding the use of materials that are difficult to access. The aim is to avoid dependencies and complex, disruption-prone supply chains. At the same time, the ecological footprint of the growing microelectronics sector is to be reduced. OBELIX researchers are currently working on generating and manipulating so-called orbital angular momentum and making it usable for various applications. In quantum mechanics, orbital angular momentum describes the movement of a particle on an orbit relative to a fixed reference point.

"We are specifically pursuing the idea of developing particularly efficient magnetic switching, for example of memories, by using the orbital angular momentum as a new source," explains Prof. Dr. Mathias Kläui, Professor at the Institute of Physics at Johannes Gutenberg University Mainz. Compared to the previous use of orbital angular momentum, this could achieve a tenfold improvement: ten times lower power consumption or ten times faster switching with the same energy requirement.

"As a second point, we are focusing on systems that require fewer rare materials," says Kläui. This primarily concerns materials such as rare earths, most of which are mined in China or Russia. "We want to generate the orbital angular momentum with materials that are not rare and not harmful to the environment." The physicist cites copper-based compounds as an example.

Some European projects, which could also be used in medical technology if successful, have already received long-term funding:

• HISOPE of the National Center for Scientific Research (CNRS), which deals with the development of organic high-speed photonics and opto-electronics.
• AROMA, a joint project of six European institutions, aims to enable non-invasive in vivo research into cognitive functions of the human brain at a mesoscopic level.
• CoNAN from the biotech company Depixus aims to develop a new generation of microchip-based instruments for genetic analysis.

Like most European sectors, the medical technology supply industry is also faced with the question of how it wants to be positioned and operate in the future. Should it retain established structures and rely on materials and components from countries that do not always operate under European norms but where many production and supply chains have been consolidated over the years? Or should it invest time and money in the development of technologies and components that are not necessarily dependent on imports and risk upsetting or losing long-standing partners?

Both options are legitimate alternatives, each with their own opportunities and risks. Which decision a company makes depends on many factors: Who are the investors, who are the customers? Which market should be strengthened? Which product has a future, which does not? What costs can a solution have? What risks are you prepared to take and what consequences are you prepared to bear? There is no universal answer to these questions - each company must answer them for itself.