Global Report: Please Come Back

The european-based pharma industry has been worried for years about the growing drift of R&D away from its home countries—first toward the United States and now, increasingly, to the Far East. Although pharma is the only technology sector in Europe that consistently has shown a positive trade balance, Europe's position as the world's leading manufacturing location for medicines is under threat, as R&D activities are prioritized elsewhere.

Sarah Houlton

In 1990, major European pharma companies spent 73 percent of their worldwide R&D budgets in the European Union. By 1999, this had fallen to 59 percent. Total spend on R&D in Europe grew by a factor of 2.8 between 1990 and 2005, compared with an increase of 4.6 times in the United States. In 1992, six of the 10-biggest-selling drugs originated in Europe. By 2002, the ratio dropped to just two in 10.

In an attempt to address this deterioration, the European Commission earlier this year set up a High Level Pharmaceutical Forum. Its aim is to identify the major issues, and implement solutions in response to the G10 Medicines High Level Group on Innovation and Provision of Medicines, which made recommendations in 2002—many of which have yet to be acted upon.

In 2000, the European Union set out the Lisbon Agenda, intent on becoming the world's most dynamic and competitive knowledge-based economy by 2010. Yet, according to the Creating an Innovative Europe report published by an independent group chaired by former Finnish prime minister Esko Aho, current trends indicate that by 2010 China will be investing a greater proportion of its GDP in R&D than the European Union.

The pharma industry has a key role to play in achieving the Lisbon objectives, and the European Federation of Pharmaceutical Industries and Associations (EFPIA) believes a number of policy issues must be addressed if Europe is to remain a competitive location for pharma R&D. First and foremost, patients must be able to access new medicines quickly after they are licensed. Otherwise there is little incentive for innovation. A recent report from IMS Health shows that in 20 of the 25 EU member states, many of the medicines licensed in the past five years remain unavailable. And availability differs from one state to another because of the complex, lengthy pricing and reimbursement procedures that exist. The report also says that medicines should be available across Europe, on a non-reimbursed basis, as soon as they are approved.

EFPIA also believes that new medicines must be recognized and rewarded. While health authorities are increasingly looking for ways to prioritize their increasingly pressurized budgets, they believe that health technology assessments can be used to create evidence-based guidelines for the use of new medicines—but only if they are not merely used to limit patient access as a cost-containing measure.

"It's a case of how can we introduce another hurdle to reduce cost," said EFPIA president and Roche CEO Franz Humer, at the organization's annual meeting, held last summer in Prague, "not as a true reflection of its effectiveness."

Another EFPIA priority is to enhance the region's research environment, as evidenced by the Innovative Medicines Initiative (IMI). This pan-European public- and private-sector collaboration is designed to boost the biomedical R&D base. It includes pharma and biotech companies, large and small, as well as governments, academia, and patients. It has been set up in response to the realization that many of the scientific challenges facing the pharma sector are too complex for companies and organizations to address alone.

Through the IMI, a number of bottlenecks that slow down the research process have been identified, and set out in a Strategic Research Agenda. Recommendations include improving the predictability of the evaluation of safety and efficacy, improving knowledge management, and improving education and training. Because of the importance of the pharma sector in achieving the aims of the Lisbon Agenda, supporters are proposing that the IMI receive substantial funding from the European Commission. (A decision is expected before the end of 2006.)

Ultimately, according to Aho, it is imperative that global companies invest in R&D. "They can survive without Europe," Aho said in the Creating an Innovative Europe report. "But Europe cannot survive without the major players in the global economy."

Industry is hopeful. "The forum is the way to start to regain competitiveness," said Hubertus Erlen, CEO of Schering AG, at the EFPIA conference in Prague. "European global players have to get competitive by investing...outside Europe. When you see what has happened in China, it's a blueprint. But we also want to be good citizens in Europe."

Sarah Houlton is Pharmaceutical Executive's global correspondent. She can be reached at sarah@owlmedia.co.uk