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Commission approves €800 million Italian scheme to support companies in context of coronavirus outbreak

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The European Commission has approved a €800 million Italian scheme to support companies affected by the coronavirus outbreak, active in Italy under “Development Contracts” for the implementation of priority projects. The scheme was approved under several sections of the State Aid Temporary Framework.

Executive Vice President Margrethe Vestager (pictured), in charge of competition policy, said: “This €800 million Italian scheme will ensure liquidity support to companies affected by the coronavirus outbreak. At the same time, it will contribute to much needed research activities and products to respond to the coronavirus outbreak. We continue working in close cooperation with member states to find workable solutions to mitigate the economic impact of the coronavirus outbreak, in line with EU rules.”

The Italian measures

Italy notified to the Commission a €800 scheme addressed to companies performing priority projects under so-called “Development Contracts under the COVID-19 Temporary Framework” (mainly COVID-related projects). The scheme supports companies affected by the coronavirus outbreak and provides incentives to companies for directing their activities to research and/or production of certain products that are crucial to address the coronavirus outbreak.

These “Development Contracts” will be administered by the National Agency for Inward Investment and Economic Development S.p.A. (Invitalia) and will be open to companies of all sizes, active in all sectors, except the financial, primary production of agricultural products, fishery and aquaculture, construction, insurance and real estate ones.

The aid will take the form of:

  • Direct grants and loans up to a maximum of €1.8m per company and with an overall maximum nominal value equal to 45% of the eligible costs;
  • direct grants for coronavirus-related research and development (R&D) projects, with a maximum allowable aid intensity equal to 80% of the eligible costs;
  • direct grants and repayable advances for testing and upscaling infrastructures that contribute to the development of coronavirus relevant products, with a maximum allowable aid intensity equal to 75% of the eligible costs, and;
  • direct grants and repayable advances for the production of coronavirus-relevant products, with a maximum allowable aid intensity equal to 80% of the eligible costs.

The Commission found that the Italian scheme is in line with the conditions set out in the Temporary Framework. In particular, (i) the aid granted under the first measure will not exceed €1.8 million per company, (ii) the aid granted under the other measures will cover a significant share of the necessary R&D and investment costs, iii) for the second measure in particular, any result of the research activities will be made available to third parties in the European Economic Area at non-discriminatory market conditions through non-exclusive licences, and (iv) all aid will be granted no later than 31 December 2021.

The Commission therefore concluded that all the measures are necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a member state, in line with Article 107(3)(b) TFEU or to fight the health crisis, in line with Article 107(3)(c). On this basis, the Commission approved the aid measures under EU state aid rules.

Background

The Commission has adopted a Temporary Framework to enable member states to use the full flexibility foreseen under state aid rules to support the economy in the context of the coronavirus outbreak. The Temporary Framework, as amended on 3 April, 8 May, 29 June, 13 October 2020 and 28 January 2021, provides for the following types of aid, which can be granted by member states:

(i) Direct grants, equity injections, selective tax advantages and advance payments of up to €225,000 to a company active in the primary agricultural sector, €270,000 to a company active in the fishery and aquaculture sector and €1.8m to a company active in all other sectors to address its urgent liquidity needs. Member states can also give, up to the nominal value of €1.8m per company zero-interest loans or guarantees on loans covering 100% of the risk, except in the primary agriculture sector and in the fishery and aquaculture sector, where the limits of €225,000 and €270,000 per company respectively, apply.

(ii) State guarantees for loans taken by companies to ensure banks keep providing loans to the customers who need them. These state guarantees can cover up to 90% of risk on loans to help businesses cover immediate working capital and investment needs.

(iii) Subsidized public loans to companies (senior and subordinated debt) with favourable interest rates to companies. These loans can help businesses cover immediate working capital and investment needs.

(iv) Safeguards for banks that channel State aid to the real economy that such aid is considered as direct aid to the banks' customers, not to the banks themselves, and gives guidance on how to ensure minimal distortion of competition between banks.

(v) Public short-term export credit insurance for all countries, without the need for the member state in question to demonstrate that the respective country is temporarily “non-marketable”.

(vi) Support for coronavirus related research and development (R&D) to address the current health crisis in the form of direct grants, repayable advances or tax advantages. A bonus may be granted for cross-border cooperation projects between member states.

(vii) Support for the construction and upscaling of testing facilities to develop and test products (including vaccines, ventilators and protective clothing) useful to tackle the coronavirus outbreak, up to first industrial deployment. This can take the form of direct grants, tax advantages, repayable advances and no-loss guarantees. Companies may benefit from a bonus when their investment is supported by more than one member state and when the investment is concluded within two months after the granting of the aid.

(viii) Support for the production of products relevant to tackle the coronavirus outbreak in the form of direct grants, tax advantages, repayable advances and no-loss guarantees. Companies may benefit from a bonus when their investment is supported by more than one member state and when the investment is concluded within two months after the granting of the aid.

(ix) Targeted support in the form of deferral of tax payments and/or suspensions of social security contributions for those sectors, regions or for types of companies that are hit the hardest by the outbreak.

(x) Targeted support in the form of wage subsidies for employees for those companies in sectors or regions that have suffered most from the coronavirus outbreak, and would otherwise have had to lay off personnel.

(xi) Targeted recapitalisation aid to non-financial companies, if no other appropriate solution is available. Safeguards are in place to avoid undue distortions of competition in the Single Market: conditions on the necessity, appropriateness and size of intervention; conditions on the state's entry in the capital of companies and remuneration; conditions regarding the exit of the State from the capital of the companies concerned; conditions regarding governance including dividend ban and remuneration caps for senior management; prohibition of cross-subsidisation and acquisition ban and additional measures to limit competition distortions; transparency and reporting requirements.

(xii) Support for uncovered fixed costs for companies facing a decline in turnover during the eligible period of at least 30% compared to the same period of 2019 in the context of the coronavirus outbreak. The support will contribute to a part of the beneficiaries' fixed costs that are not covered by their revenues, up to a maximum amount of €10m per undertaking.

The Commission will also enable member states to convert until 31 December 2022 repayable instruments (e.g. guarantees, loans, repayable advances) granted under the Temporary Framework into other forms of aid, such as direct grants, provided the conditions of the Temporary Framework are met.

The Temporary Framework enables member states to combine all support measures with each other, except for loans and guarantees for the same loan and exceeding the thresholds foreseen by the Temporary Framework. It also enables member states to combine all support measures granted under the Temporary Framework with existing possibilities to grant de minimis to a company of up to €25,000 over three fiscal years for companies active in the primary agricultural sector, €30,000 over three fiscal years for companies active in the fishery and aquaculture sector and €200,000 over three fiscal years for companies active in all other sectors. At the same time, member states have to commit to avoid undue cumulation of support measures for the same companies to limit support to meet their actual needs.

Furthermore, the Temporary Framework complements the many other possibilities already available to Member States to mitigate the socio-economic impact of the coronavirus outbreak, in line with EU State aid rules. On 13 March 2020, the Commission adopted a Communication on a co-ordinated economic response to the COVID-19 outbreak setting out these possibilities. For example, member states can make generally applicable changes in favour of businesses (e.g. deferring taxes, or subsidising short-time work across all sectors), which fall outside State Aid rules. They can also grant compensation to companies for damage suffered due to and directly caused by the coronavirus outbreak.

The Temporary Framework will be in place until the end of December 2021. With a view to ensuring legal certainty, the Commission will assess before this date if it needs to be extended.

The non-confidential version of the decision will be made available under the case number SA.62576 in the state aid register on the Commission's competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the Competition Weekly e-News.

More information on the Temporary Framework and other action the Commission has taken to address the economic impact of the coronavirus pandemic can be found here.

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Coronavirus: Commission signs contract to procure monoclonal anti-body treatment

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Yesterday (27 July), the Commission signed a joint procurement framework contract with the pharmaceutical company Glaxo Smith Kline for the supply of sotrovimab (VIR-7831), an investigational monoclonal antibody therapy, developed in collaboration with VIR biotechnology. It is part of the first portfolio of five promising therapeutics announced by the Commission in June 2021, and is currently under rolling review by the European Medicines Agency. 16 EU member states are participating in the procurement for the purchase of up to 220,000 treatments. Sotrovimab can be used for the treatment of coronavirus patients with mild symptoms who do not require supplemental oxygen, but who are at high risk for severe COVID-19. Ongoing studies suggest that early treatment can reduce the number of patients that progress to more severe forms and require hospitalisation or admission to the intensive care units.

Health and Food Safety Commissioner Stella Kyriakides said: “We committed in our COVID-19 Therapeutics Strategy to have at least three new therapeutics authorised by October. We are now delivering a second framework contract that brings monoclonal antibodies treatments to patients. Alongside vaccines, safe and effective therapeutics will play a pivotal role in Europe's return to a new normal.”

Monoclonal antibodies are proteins conceived in the laboratory that mimic the immune system's ability to fight the coronavirus. They attach to the spike protein and thus block the virus' attachment to the human cells. The European Commission concluded nearly 200 contracts for different medical countermeasures worth over €12 billion.

Under the current framework contract with Glaxo Smith Kline, member states can purchase sotrovimab (VIR-7831) if and when needed, once it has received either emergency use authorisation in the member state concerned or a (conditional) marketing authorisation at EU level from the European Medicines Agency. Further information can be found here.

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With vaccines lagging, treatments offer key to stemming India’s COVID death toll

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A report by the Washington-based Center for Global Development has revealed that, while official figures set India’s Covid-19 death toll at just over 420,000, the real figure could be up to ten times greater. According to the Center, that would make India the country with the highest coronavirus death toll in the world, far surpassing the United States and Brazil, and would also make the pandemic “arguably India's worst human tragedy since partition and independence", writes Colin Stevens.

Covid-19 deaths have likely been underestimated in Europe as well, with the World Health Organization (WHO) reporting deaths worldwide are likely to be “two to three” times higher than official figures. But in India, four in five deaths were not medically investigated even before the pandemic; now, due to a lack of hospital beds and oxygen, an unknown number of coronavirus sufferers are dying untested and unregistered at home. Widespread social stigma surrounding COVID-19 has compounded this phenomenon, with families often declaring a different cause of death.

While India’s coronavirus infections and deaths have sharply decreased from the peak of the second wave in May, the country has still lost over 16,000 people to Covid since the start of July. Public health experts warn India should brace for a third devastating wave by October, adding urgency to the hunt for tools to help patients who contract severe cases of Covid.

India’s vaccine drive misses targets

Vaccines are the main preventative tool to keep severe infections at bay, and India has already distributed some 430 million doses—more than any other nation after China. Even so, only 6.9% of the Indian population has been fully vaccinated so far, out of a population of 1.4 billion citizens. Since the emergence of the highly contagious Delta variant in October 2020, India’s immunisation drive has been plagued with vaccine shortages, broken supply chains, and vaccine hesitancy.

This month, the WHO announced India will receive 7.5 million doses of the Moderna vaccine via the COVAX facility, but India’s domestic vaccine rollout continues to hit stumbling blocks. Bharat Biotech – who produce the country’s only approved homegrown vaccine, Covaxin – this week projected further delays, making it impossible for India to meet its target of distributing 516 million shots by the end of July.

International disagreement on treatments

With herd immunity still far out of reach, India’s medical services still desperately need effective treatment solutions to help hospitalised patients. Fortunately, life-saving therapeutic options now being tried and tested in Europe could soon offer powerful weapons against the most dangerous infections.

While the number of Covid treatments available are growing as drugs complete clinical trials, global public health bodies are still divided as to which ones are most effective. The only treatment to receive the European Union’s greenlight is Gilead's remdesivir, but the WHO actively advises against that particular antiviral treatment, recommending instead two ‘interleukin-6 receptor blockers’ known as tocilizumab and sarilumab. Tocilizumab has also been proven effective by the wide-ranging RECOVERY trial in the UK, reducing time in hospital and the need for mechanically-assisted breathing.

Despite being a global hub for drug manufacturing, India is not always as quick to approve them. US pharmaceutical company Merck boosted India's manufacturing capacity for the antiviral medicine molnupiravir to help fight the second wave this past April, but local drug trials will not be completed until September at the earliest. In the interim, Indian authorities have awarded emergency approval to a different treatment for Covid-19, 2-DG, despite a lack of published trial data for the molecule.

New treatments like Leukine in the pipeline

This limited set of extant Covid-19 drugs will soon be bolstered by other promising therapies. One such treatment, Partner Therapeutics’ sargramostim – known commercially as Leukine – is currently undergoing testing in both Europe and the United States with a view towards rapid approval. In February, trials led by University Hospital Ghent and bringing together five Belgian hospitals found that Leukine “can significantly improve oxygenation in COVID-19 patients with acute hypoxic respiratory failure,” increasing oxygenation in the majority of patients by at least a third from baseline levels.

After noting Leukine’s potential, the US Department of Defence signed a $35 million contract to fund two Phase 2 clinical trials in order to supplement preliminary data. This past June, the results of the second randomized US trials of inhaled Leukine once again showed positive improvements in the lung functions of patients with the acute hypoxemia caused by severe Covid, confirming the Belgian findings that oxygen levels in patients who had received Leukine were higher than those who did not.

Effective Covid treatments would reduce pressure on Indian healthcare providers not only by improving chances of survival, but also by accelerating recovery times and freeing up hospital beds for other patients, including those dealing with other ailments. Faster treatments would also reduce the dangers posed to patients by contagious conditions such as black fungus, which has already been implicated in the deaths of over 4,300 hospitalised Covid patients in India. Greater clarity and accessibility surrounding treatments would also curb the worrying uptick in Indian families turning to the black market to purchase medical supplies of unknown provenance at hugely inflated prices.

Treatments that improve recovery rates and prevent fatal cases of Covid will remain crucial for as long as most Indians remain unvaccinated. Provided new drugs are approved in a timely manner, improved medical understanding of the virus means new Covid patients should have a better prognosis than ever.

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COVID-19 vaccines: Launch of the interactive map on vaccine production capacities in the EU

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The Commission has published an interactive map showcasing COVID-19 vaccine production capacities in the EU, along the entire supply chain. The mapping tool is based on data gained through the work of the Task Force for Industrial Scale-up of COVID-19 vaccine production, on data collected during the matchmaking event organised by the Commission in March, as well as publicly available information and information shared by member states. This data will be complemented and updated as further information becomes available.

Commissioner Breton, responsible for the Internal Market and head of the Task Force, said: “With more than one billion vaccine doses produced, our industry has helped the EU become the world's most vaccinated continent and the world's leading exporter of COVID-19 vaccines. This interactive map, featuring hundreds of EU-based manufacturers, suppliers and distributors, shows the breadth of the industrial ecosystem, as well as the potential for new industrial partnerships to further boost our health emergency preparedness.”

The Task Force categorized the companies based on their main area of activity, thus companies may have more capacities than those reflected in the map. The Task Force for Industrial Scale-up of COVID-19 vaccine production was set up by the Commission in February 2021 to ramp up production capacity for COVID-19 vaccines in the EU, acting as a one-stop-shop for manufacturers seeking support, and to identify and address bottlenecks in terms of production capacity and supply chain. The interactive map is available here.

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