Country Reports : France: The French Pharma Revolution

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Last October, French authorities sent a long awaited message of support to the healthcare industry. As decision makers from manufacturers, researchers, multinationals and local companies gathered for the 4th Strategic Council for Healthcare Industries (CSIS), French president Nicolas Sarkozy, who chaired the event for the first time, declared that the health industry was of premier strategic importance to France.

"Pasteur," by Albert Edelfelt Courtesy of Institut Pasteur in Paris

The French pharmaceutical industry received Sarkozy's pronouncement as an extremely positive sign. Indeed, like most of the nation's industrial sectors, pharma reels from the country's trademark government interventionism. According to Hervé Gisserot, president of GSK France, "This was the first time any French president has said this about our industry."

Philippe Lamoureux, Director General of LEEM

Sarkozy's symbolic keynote speech at the CSIS underscores the government's new understanding that there is more to pharmaceuticals than cost-containment. "We now live in a country where health industries are no longer regarded as a problem but as a solution to the end of the economic crisis," enthuses Philippe Lamoureux, general director of LEEM, an organization representing 98% of pharmaceutical industries in France.

Breakthrough measures include the creation of Innobio, a €130 million ($161 million USD) biotechnology fund utilizing a combination of funds from France's sovereign wealth fund (Fonds Stratégique d'Investissement) and multinational laboratories including Sanofi-Aventis, GSK, Pfizer, Roche, Ipsen, Lilly, Novartis, Boehringer Ingelheim and Takeda.

Pharmaceutical production of the first European producer countries (in millions of Euros)

Other highly anticipated, and long-awaited, changes include dual pricing for exportation, the possibility to start manufacturing generics before patent expiration, increasing public-private research cooperation, and announcing the national life and health science alliance AVIESAN's new role as the unique interlocutor for private companies willing to cooperate with public research institutions.

Pharmaceuticals contribute significantly to the French economy. In 2008, pharmaceutical revenues reached €47 billion ($58 billion USD), 45% of which are from exports generating a €7 billion ($8.7 billion USD) trade surplus. The industry is responsible for over 100 000 direct and 310 000 indirect jobs. Until recently, it was creating 2500 jobs per year.

As Europe's largest producer, and manufacturing powerhouse with over 210 production sites, France has long attracted investment in pharma. Market size, stability, and an exceptionally educated and productive workforce far outweigh concerns about high taxation, and price control that limit profitability (6.7% average in France compared to 15% in the US).

Between 1990 and 2008, retail prices of reimbursable drugs decreased by 18.4%

France is also a significant market for the international pharmaceutical industry. In 2008, France surpassed Germany to become the world's 3rd largest pharmaceutical market, despite having a headcount that is 20 million less than its neighbour. These numbers reveal, not wayward over-medication, but attest rather to the country's robust social healthcare system and strong tradition in the medical and innovation field. Indeed, French social health insurance (Assurance Maladie), established in 1945, currently finances up to 67.6% of all drug expenses, and universal health coverage was introduced in 2000.

In an industry boasting such performances, why were there so many worries and expectations?

Firstly, 2008 marked the end of a decade of strong and steady growth in the domestic market, due to a cocktail of patent-ending and cost-containment measures to minimize healthcare's chronic deficit, which hit €27 billion ($33 billion USD) in 2009. That's just for employees in the private sector.

Further, there are also fears that France may have lost its attractiveness as a production hub. The sector is indeed facing rough times ahead. Expiring patents will force factories, designed in the 80s-90s era of the "blockbusters" model, to shut, while the country hasn't developed sufficient bioproduction platforms to be able to replace them.

Lastly, in the country that saw Louis Pasteur discover immunology and Marie Curie medical applications with radioactivity, there are fears that the French public research infrastructure is no longer at the center of growth.

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Pros and Foes of the system

"France has kept up with the world market albeit with some notable differences, namely in terms of our social security and healthcare systems", explains Jean Pierre Cassan, honorary chairman of the LEEM: "French people have always received good healthcare: you can see your doctor when you want, we have access to the drugs we need, and our generous system caters for all, even the very poor."

While the Assurance Maladie and the Sécurité Sociale have guaranteed growth and stability in the healthcare industry, France, like many mature markets, is currently confronted with chronic deficits due to longer life expectancy, demographic imbalance, and rising treatment costs. With blockbusters' patents expiring and poor pipeline issues, newly introduced cost containment efforts are changing the market: stricter price controls, promotion of the use of generics and OTC products promotion.

Breakdown of turnover in France in 2007 + Export

As a result, French market segments are reacting unequally. While generics, OTC and hospital markets are still growing very fast (between 12% and 15%), the market for prescription drugs sold in pharmacies shrank in 2009 by 0.8% and the overall market slowdown should continue until 2012, directly impacted by a €400 million ($480 million) saving plan mainly targeting reimbursable prescription drugs. A direct consequence is the mutation of marketing organizations with drastic cuts in the number of medical visitors, and a market reorganization along the lines of high tech expensive drugs and "low cost" products.

Véronique Robours-Mory, General Director of Nordic Pharma France & Belgium

Valuing Innovation

In a context of regulated prices and cost containment, pricing is obviously significant. Finding the right balance between the system's sustainability and fair prices rewarding innovation is critical.

French authorities tried to put a pricing system that would focus on innovation and reward real improvement compared to past treatments. AFSSAPS, France's pharmaceutical equivalent to the USFDA, looks to provide a completely transparent view of their operations, which, according to its director Jean Marimbert, is "a necessary action if we want the outside world to trust [us]."

"It's simple to explain as the market place doesn't work for drugs for quite serious reasons. Primarily, the end-user does not have to pay in our market, so logically when you do not have to pay price does not have an influence. Somebody must interfere in a situation like this which is where CEPS comes in," explains Noel Renaudin, president of the CEPS (health products' economic committee) the organization in charge of setting the prices.

Renaudin explains: "We reward innovation by pricing through assessment that has been centralized under the High Authority for Health (HAS). When a drug looks to come to market, the company who produces it asks for an evaluation from the commission. There are three criteria in this discovery process, the first of which is satisfaction of medical demand in the market. Secondly, the improvement of medical benefit which we obtain by comparing the new drug against already available options. The grades for this level range from I-V where I means significant step forward for medicine and V indicates no improvement. Lastly, the distinguishing characteristics and size of the target population are examined."

"Thus for innovations that are considered to be important enough we accept to pay what we refer to as the 'European price' so that the developer is appropriately rewarded. The discussion in this scenario is not necessarily about the price as it lies within the European standard but rather the volumes and conditions. If the new drug does not offer anything interesting in comparison to those already on the market, then we should have to pay less."

Renaudin believes: "The best approach is to reward innovation through merit rather than allowing money to go indifferently to whatever drug comes to market." The system not only looks great on paper; it actually works and Renaudin has been praised by the industry for his innovative approach.

Véronique Rebours-Mory, general director of Nordic Pharma France and Belgium, points out the environment's challenges, which go beyond getting a fair price for your drugs but also include a negotiation on volumes and target population. "The competition in this market is becoming increasingly difficult each day and the authorities put a lot of pressure on the sector...for each product there is a strict price negotiation which is long and difficult. If we sell more than planned we have to give some money back.... Having said that, it's undeniable that the French market is still very attractive and the continuous growth of Nordic Pharma France proves that."

According to Rebours-Mory, France is now leading the group in terms of revenues and has become Nordic Pharma's most dynamic subsidiary. Since 2003 Nordic Pharma has launched more than 10 products in oncology, gynecology and rheumatology on the French market, "but not every new player is as successful as us", she notices.

Market access still a slow process

Nordic Pharma started with its main focus on the hospital market and its biggest business is with gynecology. But in 2007 it successfully launched Metroject, tapping into the rheumatology market, which was new to the company. "Getting the reimbursement of Metroject was a challenge," Rebours-Mory remembers. "But we were quite happy to get reimbursement at a reasonable price, because we are bringing an important novelty to patients".

Refundable drug regulatory circuit

Despite its core focus on innovation, the system's major drawback might be timing. "The process takes six to seven months which can be perceived as a long time to market. As a result, the first patient may not have it as quickly as in the UK or the US," acknowledges Renaudin. "We don't want drugs to come to market quicker. In France, for the most innovative drugs there is a Temporary Authorised Use (ATU) system which allows for the use of these drugs in hospitals even before registration and is free to the developer of the drug. Thus, all the new drugs and technology are available in hospitals. On the other hand, we are of the opinion that it is worth the assessment time before outpatient use. This allows for an examination into whether it deserves an innovative price or not," he explains.

For Olivier Daubry, general manager of Celgene France, the ATU is one of the best examples worldwide of early access to innovation, allowing patients to quickly receive innovative drugs for life-threatening diseases with high unmet medical needs. This was the case of Revlimid, which obtained a market authorization in France in June 2007 as a treatment for patients with multiple myeloma after prior therapy. It is now a leading therapy for this indication in France, and the #1 brand worldwide.

Hence the French system seems to fit perfectly with Celgene's overall strategy. "What we try to do at Celgene is to deliver absolute breakthrough innovative medicines. If we understand a project does not bring a significant clinical benefit that dramatically changes people's lives, we drop it," he says.

Celgene also benefitted from a system with Thalidomide, which for several years was available through the ATU process to patients in first line myeloma for elderly patients but also other rare diseases where patients are desperate to have an effective treatment. Thalidomide was eventually officially accessible to outpatients in October 2009, but within a very strict safety framework.

"For life-threatening diseases with high unmet medical needs and where patients have used all registered drugs the ATU system allows innovative drugs to be administered in a very controlled process before registration. It is a positive example for early access to innovation," says Daubry.

"France has a very good system in terms of access to market compared to many other countries so fundamentally, the system of assessing innovation is good. If we take an example in oncology, a study done by a Swedish team last year shows France at the head of Europe in terms of speed to market," concurs Hervé Gisserot, head of GlaxoSmithKline France. With investments reaching €850 million ($1.2 billion) in the past three years, GSK is the largest foreign investor in the sector.

"Instead of complaining, the health community has to work together to clearly define what we consider to be innovation. For instance, when it comes to clinical trials we should work not only with clinicians but with regulators and payers, in order to ensure that the design of our clinical trials and the profile of our drugs meet the answers to their questions. In the past getting an approval for your drug was sufficient because access to market was relatively easy so the entire process was focused at getting approval. Now, at the very least, you have to focus on getting access which is why within GSK we have taken to specifically developing a reimbursement file for a drug to make sure it meets these further requirements. In our industry, getting approval without access is basically like getting nothing at all", Gisserot concludes.

However you look at it

Of course, not everyone is entirely happy with the French system's strict regulations, longer processes for getting market access, and other administrative hurdles. "If you examine the market access process, there are more hurdles to get your drug approved, so it clearly eats away your protection period." complains Mohamed Chaoui, general manager of UCB France.

Olivier Daubry, General Manager of Celgene France

"France has improved from the past, but I believe more can be done. Moreover discussion would be easier and quicker if we were to obtain a price that is commensurate with the amount of R&D investment." he says.

Nevertheless, having lost most of its initial patents at an earlier stage but looking forward to the launch of three new products (Vimpat for epilepsy, Neupro for Parkinson's, Cimia for rheumatoid arthritis), Chaoui acknowledges: "France's advantage–however you look at it- is that it is one of the world's biggest markets."

Mohamed Chaoui, General Manager of UCB France

Even when compared with emerging star countries, France seems to retain its status as a priority market for players. "If you consider the prices that regions like Brazil or China will be willing to pay... French health expenditures per capita will remain more attractive for quite some time. Therefore, even if worse ranked in the future, this country will play an important role in the global pharma market," reckons Eric Fatalot, president and CEO of Chiesi France.

Mike Seeley, Senior VP Europe for BMS

"When you look at the entire health market one of the main drivers is the elderly population and if we look at the population of France in the coming 20 years it is no exception to the rule in Europe: percentage wise the population is getting older. It needs to be taken into account especially when you consider one of our up-and-coming therapeutic areas like chronic obstructive pulmonary disease (COPD) which is prominent in elderly populations," he concludes.

The importance of France is even more critical for an international giant like BMS. In 2008, BristolMyersSquibb's Plavix, then the largest molecule on the French market, went generic. It represented €600 million ($720 million) of revenues that dropped by 60% within ten weeks. Despite a number of new product launches in the pipe, Mike Seeley, senior VP for Europe at BMS, knows that 2010 should still be a year of contraction. He is, however, confident that growth shall return in 2011 and that France "should also remain the largest affiliate outside the United States."

Replacing blockbusters by new products is high on Seeley's agenda, but there is another challenging process he has had to supervise. "Our vision for manufacturing in France involves adapting to our future reality as a global, next generation biopharma company. BMS took the next step to focus all of our research on ten disease areas where we believe there is a serious unmet medical need. Of course, this reorientation impacts our industrial structure and we are adapting it to a portfolio that represents the company's future."

As a result, BMS is closing down two sites in France. But this is by no means the end of BMS's industrial story in France. Actually close to 50% of the BMS' global volumes output still comes out of its Agen factory, in South-Western France. "This is where the UPSA business is located...There is a center of excellence for pain products like paracetamol and effervescent, so we made the decision to develop this asset for France and as an important export business," explains Seeley.

When asked about the complexity of working in France, Seeley first jokes, "the first thing is to speak French," but on a more serious note adds, "I have had regional roles for a long part of my career. In the time that I have been here I have found that French culture can be very demanding, specifically because getting to a decision is not the linear Anglo-Saxon way. You need to learn to let a discussion process work its way through. My experience has been that you will start with one issue and end with ten before getting to a solution for the original problem. However, the good part of this is that you have dug deep on a number of tangents to the issue which develop into a more robust final solution."

Mind magnifying effects

France is also well known for its deterrent political and social environment. "We have the reputation for being a strictly regulated country where social tensions are frequent. That image, I am afraid, is too caricatured. Multinational companies settled in France are much less critical of the situation than foreign observers. Mind magnifying effects," replies Lamoureux, a strict advocate of the need for the sector to go through a re-industrialization phase.

Philippe Chêne, President of Baxter

Philipe Chêne of Baxter France also believes that the image of a problematic country is often overplayed. "The country has an image of labor complications, poor productivity and complex tax systems. In reality, the productivity level of our subsidiary versus the rest of the world is one of the highest in the organization. Moreover, while the tax system may be complex, it's highly attractive for research, which is why I have worked with my finance director to draft a position paper to communicate the opportunities of France to our external colleagues."

Krisja Vermeylen, Vice President France & BeLux - Novo Nordisk

"France is a centralized country, so you have to consider the impact of this structure on healthcare authorities. It helps to take the time to understand how it works and to empathize with the position of key stakeholders at the governmental level. Rather than complain about each decision that is made, work with authorities to find a compromise," advises Chêne. Baxter has been present in France for nearly 40 years where it distributes both drugs and medical devices.

Laurent de Narbonne, General Manager for Octopharm France, Belgium & Luxemburg

Unquestionable potential

While many are feeling the heat of a changing environment in France, with growth figures down, headcount downsizing, and facility closures or sell off, Novo Nordisk is thriving. In 2009, with an 8% increase in revenue, France was a driving force for the group's European growth, which only reached 4%. In the past five years, Novo Nordisk doubled its French headcount and invested €200 million ($240 million) to increase capacity in its Chartres insulin production facility near Paris.

While Novo Nordisk's main production facility remains in Denmark, Krisja Vermeylen highlights that Chartres is one of the group's top three facilities alongside Brazil and China. "France may have the 35-hour law, but it does not hamper the quality of work here and our results prove it," she says. "Moreover, our site operates a high level of productivity and the quality is highly recognized, which is why we were able to attract extra investment to France."

2010 should be another good year for NovoNordisk's French affiliate with the launch of the "first human GLP1 analogue to the market with Victoza." The product is already on the market today in several countries such as the UK, Ireland, Germany and Denmark "where the feedback from patients has truly been amazing," says Vermeylen.

Interestingly, the diagnosis rate for diabetes in France is above average, with 85% of the population aware of their disease compared to Europe's 60%. "This is likely linked to the obligation of French employees to visit the doctor annually", surmises Vermeylen, another reason to not forget France.

She won't be contradicted by Laurent de Narbonne, general manager for Octapharm France, Belgium and Luxemburg. Over the past 5 years, French sales doubled to reach €40 million ($44 million). France and Octapharm have a long common history as the independent Swiss based global plasma fractioning company was originally founded in France by Wolfgang Marguerre, the company's chairman.

Octapharm manufactures and markets high tech plasma derived products on the French market, but only 5% to 10% of the production from its Alsace biotech facility (on the border with Germany) is directed to the French market.

Located close to the Strasbourg University, famous for its chemistry department, and the Alsace biocluster, the Lingolsheim plant is one of France's 10 biological production sites. Seeing that the French market is not self-sufficient for certain type of plasma (IVIG, Albumin or fibrogen notably), Octapharm is increasing the level of its investment there. It has already injected over €100 million ($120 million) over the past 10 years (including acquisitions). "The French market's potential is unquestionable!" concludes de Narbonne.

Generics & OTC: The pharmacist strikes back!

Inevitably patents do fall and knowing what to do next is critical in a market as large as France. In the time leading up to their blockbuster Omix's expiry, Astella France's director, Patrick Errard, examined the local environment and created a plan to utilize the framework to the group's advantage. By creating a new gallenic formulation of their blockbuster, he was able to get a new product to market quickly and compete with the generic equivalents to come. The key according to Errard: "Accepting that a backup product is not an innovation and marketing your drug at the generic price." As a result, they have now recaptured half of their original revenue stream before expiry and the turn around has become a benchmark for the French industry.

Maurice Chagnaud, President of Teva France

France was very late to introduce a generic law, but as explains Catherine Bourienne-Bautista, managing director of the GEMMME (association representing generics) "When generic drugs were originally introduced in France, doctors were not quick to prescribe them automatically ... generic drugs only took off when the reins were in the pharmacists' hands. In 1999, a law was passed giving the pharmacists the authorization for substituting branded products with generic ones. After that, generic labs focused their commercial and advising efforts on the pharmacists and generics started picking up."

Emmanuel de Rivoire, Country Manager of Nycomed Franc

Yet she notices that doctors still resist the generification process. "In France, when a drug becomes generic its sales figures drop immediately and there is a transfer of prescriptions to products which are still patented," and that 10 years down the line "Generic drugs only represent 11% of the market in France." Bourienne Bautista points out the success of generics in scaling down the cost for the Social Security and the "€1.2 billion ($1.34 billion) worth of savings per year in a potential market representing €2 billion ($2.4 billion)."

However, if you look at the overall market penetration of generics, France has still a lot to catch up. Maurice Chagnaud, president of Teva France, explains why: "If you consider the full substitution list, you will find that France has a very good performance reaching 75% penetration rate...but one of the problems in France is that a big proportion of therapeutic areas are not considered 'eligible' for generic products by law."

Patrice Zagamé, CEO of Novartis

As a result, despite France's good product-by-product penetration rate compared to Germany, UK and USA, the substitution list covers only 22% of the market volume. Teva works with the French generic association GEMME to enlarge this list. "We need to grow the substitution list up to 30% and from there to 40% of the global volume in France," states Chagnaud. Not every day you have such a win-win challenge, since health authorities have interest to increase generics for the sake of sustaining France's universal healthcare system.

Chagnaud acknowledges that the key to increase the penetration rate in an area is to offer a complete product-portfolio per therapeutic area. In his words, "Teva built a very interesting portfolio in the respiratory area, creating a global respiratory franchise called Teva Respiratory and managing to reach our goal of having more than 40% of the market share in beclometason market (ICS). This was a very important achievement since we started from a 22% market share." With more than 100 products launched last year, Teva's complete-portfolio strategy is due to strengthen.

In a market where, each year from 2010 to 2015, branded products worth €647 to € 970 billion (or $800 million to $1.2 billion based on exfactory price) will lose their patents, growth for French generics will be tremendous. It's up for the fittest to take advantage of that.

Emmanuel de Rivoire, country manager for Nycomed France, felt the heat of patent expiry last year: "Losing exclusivity with Pantoprazole is huge as it was 70% of our revenue in France. On the other hand, in the coming years, we know we will have new products entering the marketplace, such as Roflumilast (Daxas®) for chronic obstructive pulmonary disease (COPD)... While we anticipate EU approval in the middle of 2010, we will likely not be able to launch until mid-2011. Therefore the big issue has been: how do we maintain our presence in France during this two-year gap between 2009 and 2011? This disparity is too short to make a definitive change to the model, but too big to do business as usual."

"Our last move of 2009 coincided with our Nycomed's headquarter decision to launch an OTC version of Pantoprazole on the French market... We received EU-centralized approval for the 20mg dose of the drug. Despite having no knowledge of OTC in the French market, we went ahead with the launch which required the establishment of a new local division. Currently, 6 500 pharmacists have already bought the OTC version out of the 22 000 or so pharmacists in France, which demonstrates a significant launch."

"Another big factor behind our move into OTC is my belief that pharmacists are becoming an increasingly important customer in the overall pharmaceutical business. An internal OTC business is the best way to ensure we have constant interaction with pharmacists and can control our image in the market."

"While it's true that the overall OTC market is much smaller than Rx, the growth rate is in the double digits while Rx is only in the 1.5-2% band. Clearly there is opportunity here which is why we felt it is an important business to enter. We also recognize that – while it will not be easy – we will be able to feed our OTC portfolio with Nycomed brands from other markets."

According to Daphné Lecomte-Somaggio of France's self-medication association – AFIPA – "The French healthcare system has to evolve and take into account pathologies which have a high cost while acknowledging for benign illnesses self-medication should be sufficient".

She also notices a change in practices to explain the success of OTC drugs. "The shift is also driven by a change in demography of healthcare professionals. In the past you would have your doctor visit at home, but nowadays it sometimes takes 4 or 5 days to see a doctor. Therefore, self-medication becomes a practical solution in benign cases."

The 2008 implementation of a Libre-Accès or Free-Access law allows for some OTC products to now be displayed on the customer-side of the counter at pharmacies. Directly accessible to patients, it is the government's latest move to promote out of the pocket expenses. It has been rapidly adopted in nearly 50% of the nation's pharmacies. Getting on the free-access list can mean up to 10% immediate sales increase.

Once among the most respected people in villages of rural France, the pharmacists are regaining their central role in France's healthcare environment. It's only fair if you consider that most of French industrial pharmaceutical success stories were born at the back of family pharmacies, unlike in Germany or the US where they were created on the backbone of chemical companies.

Biogaran, the hometown hero created in 1996 by Servier at the dawn of the French generics market, attributes its success partly to its considerable efforts "to train pharmacists to be accustomed to substitution," as company president Pascal Brière explains.

As Patrice Zagamé, CEO of Novartis France, remarks, "The potential alliance between the prescription industry and pharmacies is still poorly developed here and the reason behind it is that the local industry has only been focused on the physicians for decades. The new healthcare reform tries to change that. It gives a pivotal role to pharmacists and expands their potential scope of interface, although the law also prevents the industry from getting too close to the point of purchase (pharmacies)."

He concludes: "The self-medication market is not very developed in France. The local culture is not around self-medication, as opposed to other countries, but it will slowly change. We can foresee that this market will expand due to the increased transfer of healthcare towards patients that, with further education, will demand more of these products."

France for many years has lagged behind in over-the-counter (OTC) offerings. In regard to OTC medication, French doctors have long considered that patients did not have the ability to properly identify and analyze their symptoms for treatment. The rise of increased and improved information through the internet has provided more of the general population with the ability to discern their complications, thereby countering the main argument against OTCs.

Too Late for Biotechs?

"For the first time in French history, the French president pronounced the word biotech – just the fact that he can say this makes us happy." The enthusiasm expressed by André Choulika, president of France Biotech, following October 2009 CSIS is shared by many in the industry. France is now consciously seeking to catch up with biotech, and to retain its leading position in the pharmaceutical world.

When it comes to biotechnologies it's hard to dismiss the successful development of its European neighbors such as Germany, Ireland or the UK, which have begun to overshadow France. France's biotech infrastructure, both in terms of bioproduction and research, is clearly lagging, a worrying sign in a world where biotechs represent about 50% to 60% of new drugs.

Albert Saporta, CEO of Stallergenes

But those who believe France's endeavor in biotech waters is something new should think twice. Historically through its vaccine industry, France has been a pioneer in the use of living microorganisms for prophylactic purposes.

"The first biotech company was created by Jacques Monod at the time it was not yet called a biotech" jokes Alice Dautry, general director of Institut Pasteur. While often believed to be a public institution, Institut Pasteur is actually a private non profit organization and it has done much for France's reputation abroad. "If you look at the impact factor of publications our Institute, in terms of infectious diseases, it is usually the second worldwide after Harvard University; we are also the first in European immunology."

André Choulika, President of France Biotech

The institute sold its production unit to Sanofi-Aventis three decades ago and now only focuses on research on a contract basis with big pharmas, becoming an incubator of biotechs. "Recently we have created 14 biotech and we are continuing", says Dautry, adding "as a principle we create biotech only with the discoveries done at the institute and when there is a scientist who wants to take over the technology we deliver it."

France already counts success stories. In a June 2010 press conference, Albert Saporta, CEO of Stallergenes, was hoping that their sublingual grass pollen immunotherapy tablet, Oralair, could reach American patients in 2011, and that his company would find a strong partnership in North America. Saporta was happy to announce the positive results of Oralair's phase III study. He also pointed out that with a 2009 revenue of €192.8 million ($230 million), the company would be looking for acquisition possibilities.

Stallergenes boasts one of France's best performing stock. With profits up 17% in 2009 and the latest US success, there is no reason for the success story to end. Saporta reveals the company's secret: "These results are based on our method to allergy treatments using a long-term approach through allergen immunotherapy, in contrast to a symptomatic treatment of allergies. Stallergenes is looking to eliminate the disease through desensitization to the disease's root cause."

Christian Béchon, Chairman & CEO of LFB

Despite some successes, the panorama of France's biotech companies is far from rosy. French biotech companies are often underfunded, isolated geographically and too small. "Abroad investors will only consider your technology and what breakthrough you could represent for them. In France they see you as a young start-up trying to beg for money and they wave you out," regrets Choulika.

Hence, one of the more groundbreaking actions outlined in the CSIS is the creation of Innobio, a new biotechnology fund utilizing a combination of funds from the Fonds Stratégique d'Investissement (FSI) – France's sovereign wealth fund – and multinational laboratories including Sanofi-Aventis, GSK, Pfizer, Roche, Ipsen, Lilly, Novartis, Boehringer Ingelheim and Takeda. Such a fund is welcomed by risk-taking start-ups who continue to look for new ways to draw attention to their work.

The biotechnology surge is not only coming from the bottom up. Industry giants are also making moves. "Following the CSIS, Sanofi-Aventis and GSK invested €25 million each in the Innobio fund. In addition, Sanofi-Aventis is transforming a large chemical production site for biotech site in Vitry-sur-Seine. Sanofi-Aventis has also been investing in a dengue vaccine plant. For a large international company firmly established in France, it is our duty to work with small biotechnology companies," explains Christian Lajoux of the LEEM, who is also president of Sanofi-Aventis France.

In April 2010, LFB signed a partnership agreement with Sanofi-Aventis. LFB may not yet enjoy the same international fame as Sanofi-Aventis, but it is a very important player in France not only as the leader for plasma derived products, but also as the third largest supplier of drugs to hospitals. The company specializes in plasma derived protein and monoclonal antibodies. "Our goal is to focus on rare pathologies and currently unmet medical needs," describes Christian Béchon, who has been heading LFB since 2006.

The partnership agreement, explains Béchon, aims at "creating economic interest group called LFB Biotechnologies-Sanofi Chimie. This long-term cooperation is intended to facilitate and develop mutual, preferential use of production resources based on cell culture, biological product purification and pharmaceutical preparation. It will also lead to a joint bioproduction offering for third parties."

Béchon sees this as a first step: "This collaboration project is an important step towards the reinforcement of France's wealth in this area and comes on the heels of Sanofi-Aventis' announced launch of the Biolaunch project on the Vitry-sur-Seine (France) site in May 2009 and the extension of the capacity of LFB's bioproduction subsidiary (Mabgène) in Alès (France), slated to be operational by 2010. It is crucial that French pharmaceutical companies acquire their own bioproduction capacity. The development of adequate installations represents a strategic industrial milestone for France."

Despite being leader on the French market, LFB is only the 6th largest player in the plasma derivate products. By legislation and for ethical reasons, only plasma products from unpaid donations are allowed on the French market and LFB Biomedicaments is the only entity authorized to fractionate plasma collected by the French National Blood Organization. One of the decisions of the CSIS was to turn LFB into a joint-stock company.

Although he is conscious that LFB's size does not allow for immediate wide scale international expansion, Béchon is confident that LFB can export the know-how they have developed. "LFB S.A. was chosen by the Brazilian government to assist the local state-owned company, Hemobras, in building a fractionation plant in Brazil. In 2008, with the help of its subsidiary LFB Biomedicaments, LFB S.A. completed the upstream plant design and in 2009 provided technical support to Hemobras, which will carry out the plant in further stages."

If most people we interviewed acknowledge that France is 5-10 years behind when it comes to biotech, many also strongly disagree with the fact that it is too late for France to catch up and are confident that France will find its own way. Lajoux is sure that France will triumphantly overcome its current lag through phenomenal innovation that will break all existing models. "Sanofi-Aventis's story has demonstrated over the past 30 years that it was possible to compete with existing international giants. Sanofi-Aventis was the anti-model". He surely hopes France can replicate this success and catch up.

Building world class clusters

France has long been a centralized nation. One need only look at the auto routes to see that all roads lead to Paris. In fact, when you look at the numbers, 29% of France's total GDP comes from the Ile-de-France region, where Paris is located, so it's no surprise that most multinational companies are based there.

Jean de Szlonok, president for Boringer Ingelheim's Southern Europe's operations, explains that centralization is why the company decided to move their operation to Paris, after years of operating from Reims, France's Champagne production capital: "We have acknowledged that the Paris area is indisputably the key region for public private research cooperation with both institutes and universities. You also have to take into account that most of the job market is in the Paris are."

Nevertheless the government has been active in reshaping the industry's structure to facilitate a better partnership between public research and private industry. Recognizing the prowess of specialty clusters like Cambridge, Massachusetts where research between private and public sectors flourishes, France decided in 2005 to implement the Pôles de Compétitivité. While these "competitive clusters¨ apply to multiple sectors of the French economy, the pharmaceutical industry has six established.

Lyonbiopôle is a great example of how these clusters are reshaping the local landscape to consolidate research capabilities and prepare for the future. Based on the rich traditions of the vaccine business in Lyon, in east-central France, the biopole has been able to bring big players such as BioMérieux and Sanofi-Pasteur or MSD alongside start-up institutions and public research to create a worldwide hub for immunology and vaccination development. Philippe Archinard, President of Lyonbiopôle and Transgene, feels that their success is based on the philosophy of "utilizing innovation for economic development rather than research for research's sake."

Rethinking Research Organization

"France has a tradition of investigating health problems and developing solutions. I cannot say whether this led to a good protection system or if the protection system led to this drive to research, but in either way it has brought a strong pharmaceutical industry and health sector. However, year by year we are losing our range of innovative talent which is a pity. France has a lot of quality researchers but the governing and financial system is constraining to the point that it restricts the ability to work together. As a result, rather than being a leader we are going backwards and losing the drive to innovate," regrets Christian Rodier, president of the FEFIS, an organization grouping together all major actors of the healthcare industry, such as drug companies, API, and medical devices manufacturers.

Valerie Pécresse, the Minister for Higher Education

But according to Pierre Lesourd, former president of the LEEM and of BristolMyersSquibb France, authorities are now fully aware of the situation. "We convinced members of parliament that, if France did not choose therapeutic progress, it would no longer be able to guarantee equality of access to innovation." Lesourd pointed out the fact that until now the "new complexity in the innovation process, one that not only implies stronger collaboration between public and private research institutions, between applied and practical research, but also between drug companies and medical devices or technologies," has now been fully integrated by the highest decisions makers.

Judith Greciet, President of Eisai France

According to Roche France president Sophie Kornowski-Bonnet, France's specificity "lies in the creativity of its researchers and its history of scientific excellence." Roche believes so strongly that they have over 200 people employed in Phase I-IV studies in Paris, as well as the group's only translational research center for Phase I applications.

But French excellence in life science research was long overshadowed by the complexity and fragmentation of its public research. Professor André Syrota, the newly appointed general director of the National Institute of Health & Medical Research (INSERM), recalls: "There were a plethora of research organizations involved in life sciences and health such as the INSERM, the CNRS, the Institut Pasteur, the INRIA, the CEA, the INRA, in addition to a number of universities. I was not only asked to manage INSERM, but also to find a way to simplify and better coordinate research on life sciences and healthcare in France."

As the umbrella association for member groups, the INSERM is now endowed with a new role as a funding agency for life sciences research. Syrota is optimistic that under this new organization "with the same level of funding, but better coordination with the different players, we can greatly improve and facilitate research."

Syrota also called for the April 2009 of the AVIESAN (the life-science and health national alliance) that he now presides. "This is an extremely flexible entity which includes and coordinates the researchers of 9 partners: INSERM, CNRS, CEA, INRAA, INRIA, IRD, Institut Pasteur, University President Association, and Union of CHU (public hospitals) presidents."

"One of the Alliance's great interests is its flexibility, and that really improves cooperation between institutions. For example, 24 hours after the outbreak of the H1N1 influenza in Mexico, we managed to organize a meeting with all the experts in this domain, including both researchers and manufacturers", he explains.

Following the 2009 CSIS meeting, the Alliance has also been appointed as the unique interlocutor for public/private research cooperation programs. This should not only help reinforce private/public cooperation in a country where there traditionally is a lot of defiance between different stakeholders (be it researchers, high administrations or private companies), but also help bring innovations done in the public sphere to market. "We also needed to accelerate the flow of the transfer of knowledge and skills among private and public research to facilitate the patenting and more rapidly transform discoveries into innovative therapies." explained Valerie Pécresse, the Minister for Higher Education.

Top fiscal incentives for research

Pécresse points out one of France's inarguable advantages. "In order to be more competitive, France has decided to simplify, amplify and secure the French research tax credit, known as the "Credit Impôt Recherche" (CIR). Thanks to this reform carried on in 2008, a company can get back 30% of its R&D investment in tax credits and even 60% when the R&D work is subcontracted to a public research laboratory. And eligibility of the R&D can be secured prior to begin work, within less than three months. Thanks to this reform, France is now recognized as one of the most competitive places for doing research in the OECD."

There are other signs that France is developing cooperation between public and private sectors. In 2008, Sarkozy launched the 2008-2012 Alzheimer Plan backed by a €1.6 billion ($1.92 billion) envelope. The plan promises to focus on medical, social and scientific aspects of the disease that affects one out of five men and one out of four women aged 85 and over.

Judith Greciet, president of Eisai France, a Japanese company present in France since 1990, recalls: "At the very beginning there was an inclination not to involve major pharmaceutical companies in the plan and make it an independent measure. The plan has succeeded in building up a very comprehensive approach to social and research issues in addition to epidemiological understanding of the disease. Today, the plan is obviously efficiently driven with operational objectives and we have seen concrete measures being taken, which is not always the case in such initiatives."

"While I understand the initial desire to keep it independent, I also feel we have a lot to offer in terms of practical research on the subject and real understanding on the disease. The fact that we have been running an institute for nearly ten years, in which many educational programs have been developed by the French major experts, makes us a strong partner, supporting the implementation of education measures in the area where we have expertise."

Launched by Sarkozy, the "Alzheimer Plan" is akin to the "Cancer Plan" launched by former French president Jacques Chirac. These national health priorities seem to be successful in attracting R&D development centers to France. Following the CSIS, Novartis announced the opening of an onco-development center in France, which will be the third largest worldwide in the group. According to Novartis France's Zagamé, "(the center) will also play the role of a European hub for research, bringing together researchers from all over the world. We will start with about 30 of them and eventually increase the number to between 50 and 80."

Very strong in France, present on most of the markets, prescription, vaccines, OTC or generics, Novartis has also been "one of the pioneers on biotech development and manufacturing," adds Zagamé. Today the Swiss company is expanding the product range of these facilities and developing a "center of excellence that will."