How to apply for SME status with the EMA

by | Mar 20, 2024 | European Medicines Agency, Regulatory Affairs

Highlights

  • How to classify your pharmaceutical or biotech company.
  • How to differentiate autonomous, partner and linked enterprises.
  • A quick guide on how to apply for SME status with the EMA.

We’ve discussed the SMEs face in drug development; the benefits of the SME initiatives offered by the European Medicines Agency (EMA), and what pharmaceutical SMEs think of the EMA’s SME initiatives.

Now, we will discuss the process for applying for SME status with the EMA in three steps.

  1. Define the type of SME you are.
  2. Apply to the EMA’s SME office. 
  3. Maintain your SME status.

Step 1: Defining your SME

The European Commission 2003/361/EC1 defines an SME as:

A company that employs less than 250 people and an annual turnover of no more than 250 million Euros or a balance sheet of no more than 43 million Euros.1

This definition can be further differentiated between micro, small and medium-sized enterprises.

Head Count1Annual Turnover1Balance Sheet1
Micro-sized<10 employees≤ 2million Euros≤ 2million Euros
Small<50 employees≤ 10million Euros≤ 10million Euros
Medium<250 employees≤ 50million Euros≤ 43million Euros
Definition of micro-sized, small and medium-sized enterprises

But it gets a bit more complicated when defining your company structure to gain SME status and access the SME incentives.

This is because, in addition to headcount and finances, you must clearly define which category your company fits into; autonomous, partner or linked. Its associations with other companies define this, and two aspects to remember are capital and voting rights.

Which SME category does your SME fit into?1

yellow boxes of SME categories
Categories that define pharmaceutical SME status

*A note on autonomous enterprises.

Per Article 3(2) 1 of the European Commission’s recommendation 2003/361/EC, there are certain instances when a company that would normally fall into the ‘partner enterprise’ category, can be categorised as an ‘autonomous enterprise’—even if investors in the company have >25% of capital or voting rights. However, this is dependent on the type of investors partnered with your company.

Why is categorisation important in the SME definition?

Not only will you have to report your company’s headcount and annual turnover/balance sheet information when applying for SME status, but you’ll also be required to report different proportions of the headcount and financial data of the enterprises you are partnered or linked with. This could mean that although your company individually fits the definition of an SME in terms of headcount and financial data, when you add the proportions from the enterprises you’re linked or partnered with, you could exceed the criteria and not be considered an SME.

Essentially, the % capital and voting rights the enterprise(s) that you’re linked to or partnered with have in your enterprise (or vice versa), determines the proportion of their headcount and financial data you must add to your own company’s headcount and financial data when you apply for SME status. 

Example: A link with two partners2

My enterprise (A) is linked to enterprise (B) because (B) holds 70% in my enterprise. 

But (B) also has two partners, (enterprises (C) and (D)), which respectively own 31% and 25% of (B).

To calculate my data, I must add 100% of my enterprise’s data (A) to 100% of (B’s) data plus 31% (C’s) data and 25% of (D’s) data. 

My total = 100 % of A + 100 % of B + 31 % of C + 25 % of D.

You can find detailed information on SME categories in the European Commission’s User Guide to the SME Definition.  

Step 2: Apply for SME status with the EMA’s SME office

Once you’ve determined which category of SME you are, the application process itself is straightforward. 

Complete the SME application form

Complete the ‘Declaration on the qualification of an enterprise as a micro, small or medium-sized enterprise’ form on the EMA’s website. The form automatically calculates headcount, annual turnover or balance sheet total based on the category of SME.3 

Include supporting documents

The SME office requires that you include the following documents with your application:

  • Your most recent annual accounts* AND the annual accounts of any enterprises you’re partnered or linked with,
  • proof that your company has a legal entity in the European Union/European Economic Area (EU/EEA), and
  • a chart showing your enterprise structure, including any partners or linked enterprises (e.g., shareholders and % holdings they have in terms of capital or voting rights). 

*If you’re a new enterprise and don’t yet have annual accounts, you can submit an estimate of figures for the financial year.3 

Then, email your application with supporting documents to the EMA’s SME office. If your application is successful, your company will be added to the EMA’s SME Register and you can start benefitting from the many SME initiatives the EMA offers to medicine developers.

Step 3: Renewing your SME status

You must renew your SME status every 2 years3 by completing and submitting the declaration form again.

You’ll only be required to provide supporting information again if certain aspects of your company have changed since your initial application, including:

  • Your SME status was granted based on an estimate of your company headcount or financial information (annual accounts weren’t available when you first applied),
  • your company exceed one of the SME thresholds (headcount or annual turnover), during one accounting period,3
  • there has been a change in the category of SME you fall into (autonomous, linked or partner), or
  • your SME status expired, and you haven’t provided the EMA with information on your accounts for one or more years since your last submission.

How to benefit from SME initiatives if you’re not based in the EU/EEA

Suppose you’re an SME that doesn’t have a legal entity in the EU/EEA, and it isn’t viable for you to set up a legal entity. In that case, you can work with a regulatory affairs consultancy that is a registered SME with the EMA.

This means that an SME-registered regulatory consultancy can receive the SME incentives on your behalf. A proviso is that both the SME-registered regulatory consultancy and the non-EEA SME both meet the criteria for SME. 

How does this work?

The SME-registered regulatory consultancy and the non-EEA SME will submit declarations to the EMA. The SME-registered regulatory agency will be listed as a registered SME and the non-EEA-based SME will be added in an annex as an ‘SME client company’. 

How Somerville Development Partners can help SMEs

We are a registered SME in Europe.

This means we can access SME benefits and fee incentives on your behalf if your organisation is not established in the EU/EEA.

We have decades of experience navigating regulatory agency interactions and regulatory submissions in Europe, and can confidently guide you through your regulatory milestones, including; 

Summary

Applying to become a registered SME with the EMA is straightforward if you have all of your company information ready to go.

To be classified as an SME, your company must meet the criteria concerning headcount and annual turnover (<250 employees and <EUR 50 million annual turnover or <EUR 43 million balance sheet).

However, during the SME application process, your company category becomes important (autonomous/linked/partner), and you will be expected to explain the structure of your company, to determine the amount of capital and voting rights investors or partner enterprises have in your company—and vice versa. To apply for SME status, your company must have a legal entity in the EU/EEA. However, you can work with a regulatory consultancy who is an EU-registered SME, to access SME benefits and fee incentives on your behalf. 

Get in touch

We welcome the opportunity to discuss scientific advice and regulatory strategy with you!

Nicole

Author

Nicole Brooks, Regulatory Consultant / Copywriter
Nicole@somerville-partners.com

References

1. Commission Regulation of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises. 2003/361/EC. Notifies under document number C(2003)1422). Official Journal of the European Union. L124/36-124/41. Available at: https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2003:124:0036:0041:en:PDF

2. European Commission (2020) User Guide to the SME Definition. ISBN 978-92-79-69902-3. DOI:10.2873/255862. Available from: https://ec.europa.eu/docsroom/documents/42921

3. European Medicines Agency (2016). User guide for micro, small and medium-sized enterprises: on the administrative and procedural aspects of the provisions laid down in Regulation (EC) No 726/2004, that are of particular relevance to SMEs. Available from: https://www.ema.europa.eu/en/documents/regulatory-procedural-guideline/user-guide-micro-small-and-medium-sized-enterprises_en.pdf