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Encouraging Europharma Euphoria

Encouraging Europharma Euphoria


The pharmaceutical and biotech industries are important contributors to the economies of European countries and are also major employers. If companies in these sectors are to continue to base themselves in Europe they must be seen as positive forces in the field of technology and healthcare rather than a negative drain on a country's finances.
Last Updated: 27-Aug-2010

A healthy environment for R&D is essential for the pharmaceutical and biotech industries to successfully bring new products to market. In recent years, the general R&D environment in Europe has become less attractive to companies than that in the US and a number of companies have preferentially shifted investment across the Atlantic (1). The European pharmaceutical industry's own figures demonstrate how dramatic this shift has been. In 1990, pharmaceutical R&D investment in the USA represented less than 70% of that in Europe, but R&D investment in the USA has now overtaken that in Europe (2).


The European dilemma

The pharmaceutical and biotech industries are important contributors to the economies of European countries and are also major employers. If companies in these sectors are to continue to base themselves in Europe they must be seen as positive forces in the field of technology and healthcare rather than a negative drain on a country's finances (1). Unfortunately, because of the current narrow focus on the costs of medicines and negative media coverage, an objective viewpoint of how the pharmaceutical and biotech industries' activities contribute to the health of society and the economy has been lost (1).


Many European countries have brought in cost containment policies aimed at slowing increases in healthcare expenditure, but this has had the effect of dissuading pharmaceutical companies from further investment in these countries. An example of this situation has occurred in Germany, where the government has been attempting to reduce healthcare costs by €23 billion by 2007, through a package of reforms (1). Several pharmaceutical companies have publicly announced the halting of further investment and some have shifted staff overseas (1).


As the German situation shows, the problem for European governments is that if they continue to heavily target the pharmaceutical industry, companies will move elsewhere in the world to where conditions are more favourable for them to operate (1, 3). The emerging biotech sector will suffer too, as there will be little incentive for companies to invest in the region when the conditions are already seen as unfavourable for their bigger counterparts. If companies continue to view Europe as a hostile environment for R&D investment, the shift in investment out of the region could become much more serious. Unfortunately, only at this late stage would the contribution of these companies to the economies of the region and their role as major employers be recognised (1).


The UK leads the way

Despite the negative signs for the pharmaceutical industry, particularly from Germany, all is not lost for the industry in Europe. A number of countries have recognised that they must act now to save their domestic pharmaceutical industries and must implement policies that will lead to a mature biotech sector. The leader in this field is the UK, whose government has worked with representatives of the industry to create better conditions for R&D (1).


In 2002, the Pharmaceutical Industry Competitiveness Taskforce (PICTF) was set up which brought together representatives from industry and government to examine the steps that could be taken to make the UK more attractive for pharmaceutical R&D investment (1). An important outcome of PICTF was an agreement to collect and publish annual data using a set of UK competitiveness and performance indicators. This allowed a more reliable assessment of the UK's progress in enhancing its R&D environment.


In November 2003, the Bioscience Innovation and Growth Team (BIGT), led by the UK's Bioindustry Association (BIA) in conjunction with the Departments of Trade & Industry and Health, launched a wide-ranging report which focused on the UK environment for biotech R&D (3). The report followed months of consultation with over 70 industry experts and featured recommendations for programs to increase the scientific and managerial talent base available to the biotech sector (4). At present, British biotech companies account for 43% of all biotech drugs in advanced clinical trials in Europe and the industry is second only to the US, with 18 profitable bioscience companies and over 40 marketed products (5).


France follows suit

In early 2004, the French government launched a major initiative to safeguard its pharmaceutical and biotech sectors. The R&D environment continues to show promise, with numbers of pharmaceutical staff having tripled in 20 years with 1,000 new posts being created by the French industry (1). However, there has been concern that the profitability of the pharmaceutical sector is dropping and that this will eventually lead to a reduction in R&D investment and new staff (1).


As part of the government initiative, a report entitled PharmaFrance 2004 was published which examined the state of the R&D environment in other countries and suggested ways in which France could reinvigorate its R&D-based biomedical industries (1, 6). The French government has also attempted to encourage emerging biotech companies through its 'young innovative company' scheme. To qualify for this status, a company has to meet a number of criteria such as spending at least 15% on R&D. In return they can get a substantive waiver on tax for a period of up to 8 years (7).


Renewed hope for Europe

Following several high profile examples of companies shifting investment out of Europe, a number of countries have begun to respond to prevent further erosion of their R&D environment. The UK has been at the forefront of such efforts and its approach has been followed by countries such as France. At the European Union level, the G10 Medicines Group, has been bringing together top European industry and public health decision makers to consider ways of improving competitiveness in line with social and public health objectives (1). The European R&D environment for the pharmaceutical and biotech sectors may appear uncertain, but countries such as the UK and France are showing that the region continues to exhibit exciting potential.



1. Kermani F. (2004). Pharma R&D in Europe: Past, Present and Future. Chiltern International.

2. The Pharmaceutical Industry in Figures (2002). European Federation of Pharmaceutical Industry Associations.

3. Kermani F. (2004). Unlocking Asia's Pharmaceutical Potential. Chiltern International.

4. Bioscience 2015. Bioscience Innovation and Growth Team (BIGT).

5. UK Bioscience Industry Fast Facts. Bioindustry Association.

6. Masson A. (2004). PharmaFrance 2004 - S'inspirer des politiques publiques étrangères d'attractivité pour l'industrie pharmaceutique innovante. Conseil Général des Mines.

7. Kermani F. (2004). There's something about biotech. Contract Pharma magazine.