The latest key figures of the pharmaceutical industry compiled by the trade association, EFPIA (European Federation of Pharmaceutical Industries and Associations) illustrate the important role the research-based pharmaceutical industry plays in Europe. The industry invested approximately €30,500 million in research and development in 2014; however, according to the latest research, more investment is vital if we are to see continued growth in Europe.
Competing with emerging markets and the US
The report warns of a gradual migration taking place of economic and research activities to fast growing markets in Brazil, China and India. For example, in 2014 the Brazilian and Chinese markets grew by 12.6% and 11.6% respectively compared to an average market growth of 2.4% for the total European market and 12.5% for the US market.
According to IMS Health data, 57% of sales of new medicines launched during the period 2010-2014 were on the US market, compared with 25% on the European market (top 5 markets). Another point of concern is the fragmentation of the EU pharmaceutical market, which has resulted in a lucrative parallel trade. According to the report, this benefits neither social security nor patients and deprives the industry of additional resources to fund R&D.
The future of the industry in Europe
The research-based pharmaceutical industry is one of Europe’s major high-technology industrial employers, employing 707,000 people. However, recent studies in some countries showed that the research-based pharmaceutical industry generates three to four times more employment indirectly – upstream and downstream – than it does directly. In addition, many of these jobs are valuable skilled jobs, for instance in the fields of academia or clinical science: keeping these jobs in Europe ensures the expertise for new medicine development remains in Europe and prevents a European “brain drain”.
R&D is key
Investment in research and development can be a risky but necessary business. It costs over a billion Euros to research and develop a new chemical or biological entity and, on average, only one to two of every 10,000 substances synthesised in laboratories will successfully pass all stages of development required to become a marketable medicine (a process that takes over a decade). The top five investors in R&D in Europe for 2014 are Germany (€6,063 million), Switzerland (€5,048 million) UK (€4,807 million), France (€4,789 million) and Belgium (€2,493 million). German, Swiss and Belgian investment has increased in the past year; UK investment has decreased from €5,187 million to €4,807 million.
However, investment in R&D is crucial as it has a direct impact on the lives of patients through the development of new drugs and technology that can increase life expectancy and improve quality of life. The benefits we have reaped from the research-based pharmaceutical industry’s development of vaccines and other innovative drugs are immense. Vaccines have enabled the global eradication of diseases such as smallpox and the regional elimination of polio and measles, saving the lives of over 2.5 million children each year. Since 1928, scientists have discovered and developed 19 classes of antibiotics, leading to the treatment and cure of several thousand types of infection and saving over 200 million lives. With the help of major medical discoveries more than 20 antiretroviral treatments for HIV/AIDS have been developed and millions of lives have been saved with new medicines used to treat malaria. It is also worth emphasising how the introduction of innovative drugs can have a two-fold benefit for society: improving health alongside a reduction in hospitalisation and other healthcare costs.
Recent trends in the pharmaceutical market
An interesting trend seen in the production of generic drugs is that their market share is significantly higher in newer EU Member States with historically low levels of intellectual property protection. For example, 54.8% of the pharmaceutical market in Poland is made up of generics, compared to 11.5% in Switzerland. However, this trend could change over the coming years as the revenues from generics are predicted to increase by 2017 to reach $420–430 billion, approximately 70% of which will be outside developed markets.
Imports, exports and public spending
The report shows how for pharmaceutical exports, the top five EU countries are the same as for the previous year: Germany, Switzerland, Belgium, France and UK. For pharmaceutical imports, Italy managed to beat Switzerland to squeeze into the top five countries after Germany, Belgium France, and the UK. The figures show clearly that manufacturing and research are not directly linked; some countries do not carry out much research compared to their manufacturing capacity, while others have little manufacturing and but considerable research. In the EFPIA report, Italy is a good example of this, with production of pharmaceuticals at €27,461 and R&D at only €1,220 (3rd throughout Europe in production and 7th in R&D).
The paper also showed that the Netherlands still comes out on top for public spending on healthcare as a percentage of GDP (11.8%) – the lowest EU Country being Estonia (5.9%) (USA as a comparison is 16.9%). Interestingly, the overall European average (9.2%) has not increased from the previous year’s report and for many countries spending on healthcare has stayed the same.
The future is big (data)
The industry is entering into an exciting new era in the development of medicines, which includes the field of personalised medicine and the power of big data in healthcare to transform the way patients are treated. The EFPIA report names a few of the areas that remain a challenge, including Alzheimer’s, Multiple Sclerosis, many cancers, and orphan diseases. However, increased investment will continue to drive the evolution of research methods that will boost medical progress to give Europeans even longer and healthier lives.
 Taken from IFPMA (2014) The pharmaceutical industry and global health. Facts and figures 2014.
Ruth Knowles is a freelance science writer who has written articles and press releases on a range of life science and health topics. She received her MSc in Science Communication from the University of the West of England, Bristol.