About 165 million Europeans or 38 per cent of the continent's population are suffering from mental ailments, according to a new study released by the Dresden University in Germany.

The brain disorders include depression, anxiety, insomnia and dementia.

Only about one third of the mental disease patients receive therapy or drugs needed, causing mental illness to become a major economic and social problem in Europe since those who are suffering from the ailments could not be employed and their personal relationships are broken down.

"Mental disorders have become Europe's largest health challenge of the 21st century," lead study author Hans Ulrich Wittchen told Reuters.

To worsen the situation, some large pharmaceutical firms are no longer investing on research on mental ailments and instead place the burden of funding studies on cash-strapped governments and health charities.

A report released in June by the European College of Neuropsychopharmacology warned that because of insufficient funding for mental health research, new treatments would be delayed and new neuroscience researchers will lack training.

Up to 80 per cent for funding for brain research in Europe used to be financed by the private sector, but it pulled out from funding commitment due to difficulties in launching new drugs to the market.

The drug firms complained that it takes them an average of 13 years to develop new medication for mental ailments, which also have higher failure rates. As a result, only one new anti-depressant drug, agomelatine, got regulatory approval in Europe in the past decade.

The report suggested that the continent establish a medicine chest in which drug manufacturers would donate their medicines which they no longer use for research so that other organizations could use it.

"With Europe's extraordinary tradition in neuroscience innovation relying so heavily on private-sector investment, the consequences for the region's research based and public-health agenda are of major concern," Imperial College London Professor David Nutt told BBC.