Biotech associations from five European countries have joined an initiative aimed at creating and developing globally competitive R&D-driven companies.

Representatives from Sweden, Finland, Norway and Estonia believe that the Young Innovative Company (YIC) status scheme will encourage further development of biotechnology, and the move could help to counter entrenched opposition to GM (genetically modified) crops within Europe.

The project is supported by France Biotech, the French biotech association, EuropaBio, the European Association for Bioindustries, and is funded by the European Commission.

Europe represents a challenging environment for biotech firms. The development of GM ingredients, an important sector of the biotech industry, are regarded with some suspicion by consumers in Europe and as such are used infrequently in food formulations by food manufacturers who do not want to see sales fall.

The EU did however recently approve imports of the maize product 1507, jointly made by DuPont subsidiary Pioneer Hi-Bred International and Dow AgroSciences unit Mycogen Seeds. This is the fifth new GMO approval since the EU ended its informal biotech ban last year.

According to EuropaBio, 1507 maize meets all the latest EU regulatory requirements - part of the condition for the termination of the EU moratorium on new GMO approvals - and has been judged by the European Food Safety Authority to be as safe as conventional maize.

But this decision was only reached after ministers were unable to agree among themselves. An obscure facet of the law known as the 'comitology procedure', means that Brussels can actually push through laws if the council has failed to reach a majority decision.

In fact, despite last year's lifting of the GM moratorium, EU countries have not managed to agree by themselves on a GMO approval since 1998.

The achievement of YIC status could therefore help small ambitious companies operate in difficult circumstances. The initiative is based on social cost and tax exemptions, allowing companies to re-invest the savings in R&D.

The industry believes that higher investment in R&D will help to reduce the time-to-market of internally developed products and technologies.

The YIC scheme has proliferated rapidly. In 2004, France was the first country to adopt a YIC-based fiscal regime, exempting companies up to eight years old from all taxes and social contributions. Today, more than 1,000 French companies have opted for the YIC status, including 150 biotech companies.

Earlier this year, the Belgian government also decided to adopt a YIC-based status in mid-2006, and will consequently be the second European country to implement an initiative to support the development of young companies in this way.

Now, Sweden, Finland, Norway and Estonia could be the next to introduce the status.

"Tax incentives are very important for the development of new innovative biotech companies in Europe," said Per Vretblad, head of biotechnology at SIK - the Swedish Institute for Food and Biotechnology.

"We will work for a rapid introduction of such measures.

Per-Erik Sandlund, chief executive of SwedenBIO, pointed out that the Swedish life science industry employs more then 41,000 people. He believes that tax incentives are an important step to further increase and develop the business.

"This is a very global, competitive and growing industry and we need world class business conditions in Scandinavia.".