Micro, small and medium-sized enterprises (“SMEs”) that are developing medicines for human or veterinary use can apply to the European Medicines Agency (“EMA”) for SME status. The EMA provides extra incentives and supports to companies with SME status to promote the development of new medicines and foster innovation.

SMEs are a major source of innovation in areas such as orphan diseases and advanced therapies. By supporting SMEs and removing or reducing certain administrative and financial hurdles the EMA hopes to promote innovation and the development of new medicines. This benefits the pharmaceutical industry through increased competitiveness, it benefits patients by increasing treatment options and it benefits the EU medicines ecosystem by ensuring that medicines are well designed and robustly assessed as a result of early scientific dialogue.

The benefits of SME status are threefold:

• Financial benefits: Companies with SME status are eligible for full or partial fee exemptions for the EMA’s pre- and post-authorisation regulatory procedures. In some cases, the level of a fee exemption depends on whether the SME’s product has an orphan designation; for example, SMEs developing non-orphan products can obtain a 90% reduction in the fees associated with pre- and post-authorisation inspections, while SMEs developing orphan products do not have to pay any fee for such inspections. In other cases, the level of a fee exemption depends on the size of the SME; for example, fees associated with pharmacovigilance are reduced by 40% for small and medium-sized companies, while micro-sized companies are fully exempt from these fees. When an SME applies for a marketing authorisation, the fee is deferred until the outcome of the application. Further, in the case of a negative or withdrawn application where EMA scientific advice is taken into account, SMEs can request a conditional fee exemption. SMEs developing an orphan product are exempt from the marketing authorisation application fee.
• Translation services: SMEs can avail of free translation assistance for product information for initial EU marketing authorisations.
• Guidance and support: The EMA’s SME office provides guidance and advice to SMEs. The SME office can assist SMEs in liaising with the appropriate scientific and regulatory contacts within the EMA. SMEs can request a briefing meeting with the SME office to discuss regulatory strategy and get information about procedures and incentives. The SME office also runs training sessions for SMEs from time to time . In Ireland, the Health Products Regulatory Authority (“HPRA”) offers similar guidance and support to SMEs as well as researchers, larger companies, or anyone else seeking to develop a health product or technology through the Innovation Office.

Non-EU/EEA companies can apply for SME via an EU/EEA subsidiary. Ireland offers a favourable environment for life sciences companies seeking to set up such subsidiaries, with a streamlined and efficient incorporation process.  Our Life Sciences Group has extensive experience supporting clients in incorporating Irish subsidiaries and applying for SME status, and we welcome the opportunity to provide further assistance.

SME status is granted for 2 years from the date of the accounts upon which the application is based. The status can be renewed before expiration where a company still meets the criteria on the basis of the most recent approved accounts.

The Annex to Commission Recommendation 2003/361/EC, the EU instrument which sets out the categories of SMEs, states as follows:

• A micro enterprise is a company with fewer than 10 employees and an annual turnover or an annual balance sheet total of less than €2 million;
• A small enterprise is a company with fewer than 50 employees and an annual turnover or an annual balance sheet total of less than €10 million;
• A medium-sized enterprise is a company with fewer than 250 employees and it has either an annual turnover of less than €50 million or an annual balance sheet total of less than €43 million.

A company can apply for SME status if it meets any of the above definitions. It is important to note when calculating the thresholds that anyone who worked full time for an enterprise during an entire reference year counts as one employee unit. Part-time staff, seasonal workers and those who did not work the full year are treated as fractions of one unit. The headcount and financials of any “linked” or “partner” enterprises will count towards the thresholds.

For more information, please contact our Life Sciences Group.