Abstract The European legal framework covering medicinal products was reviewed by the European institutions during the period from November 2001 to February 2004. The new legislation for registration of medicinal products was published on 30 April 2004 in the Official Journal of the European Union and will come into force towards the end of 2005. It seeks to reach a balance between encouraging innovation and facilitating the authorisation of generics. It also aims to reduce product maintenance costs (renewals) and strengthen pharmacovigilance. However, the overall regulatory burden is not reduced, and this affects the global competitiveness of the European industry. There will be greater emphasis on good manufacturing practice (e.g. for starting materials of active ingredients) and scientific advice. The role of the EMEA will be increased in the areas of pharmacovigilance and inspections, and its structures will be adapted to cope with EU enlargement. Transparency is increased in all areas. The mutual recognition procedure is reorganised to drive harmonisation and reduce the rate of withdrawal from some member states during the procedure (e.g. automatic arbitration of any unresolved issues). New variations regulations with harmonised and clearer procedures were published in June 2003. They will reduce the workload more for competent authorities than for companies. The legislation covering maximum residue limits and residue monitoring is currently being reviewed, with the objective of developing a more balanced and coordinated approach.