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Can Pharma Reign in Spain? – Part 2

Spain Posted on: 12 Jan 04


Spain has a buoyant pharmaceutical market, but it is also a growing centre for pharmaceutical R&D. Industry figures show that there has been a rapid rise in R&D investment in the country since the early 1990s.

Increasing Pharmaceutical R&D in Spain

Spain has a buoyant pharmaceutical market, but it is also a growing centre for pharmaceutical R&D. As has been the case elsewhere in the world, patient demand for advanced healthcare has meant that the general global economic downturn has affected the performance of the pharmaceutical industry to a lesser degree than other industries.

Figures from the European Federation of Pharmaceutical Industries (EFPIA) and Farmaindustria, the National Association of the Pharmaceutical Industry in Spain show that there has been a rapid rise in R&D investment in the country since the early 1990s (1, 2). In 1990, pharmaceutical R&D investment was below €150 million but by 1999, this had increased to over €350 million (1, 2). By the end of 2004, R&D investment is predicted to rise to €485 million (2).

A growing contributor to the economy

The growing importance of pharmaceutical R&D to the Spanish technology sector and thus the national economy is illustrated by comparisons with R&D for other industries. Whilst R&D appears to have stagnated in other technology sectors, the Spanish pharmaceutical industry has flourished. Between 1999 and 2002, there was a 31.5% increase in R&D activity for the Spanish pharmaceutical industry (2). However, over the same period, R&D activity for the aerospace industry decreased by 2.4%, there was a nearly 11% decrease in R&D activity for the automotive industry and R&D activity for radio, television and communications dropped by nearly 31% (2). As a result of the general economic downturn that has troubled other industries in Spain, the pharmaceutical industry’s share of the total national R&D activity in the manufacturing sector rose from 13.7% in 1999 to 17.9% in 2002 (2).

Another important economic consideration is that the pharmaceutical industry in Spain is a major employer in the technology sector. At present there are around 270 pharmaceutical companies with production activity in Spain and approximately 375 laboratories (3). These companies employ 38,700 people. In 2001, approximately 9% of staff were employed in R&D functions, representing just over 12% of total research employees of industrial companies (2).

According to the Spanish Economics Ministry, almost 90% of pharmaceutical companies are located in the Madrid and Catalonia autonomous communities (4). Most of the companies surveyed by the Ministry in 2002 were considered as “small to medium” enterprises, with about 35% of them employing from 100 to 250 people and only 2% having more than 1,000 employees (4).

Multinational companies look to Spain

Since 1985, the country has seen increasing investment from the large multinational pharmaceutical companies. The influx of investment from multinational companies was partly due to Spain having joined the European Union and having implemented full patent protection on branded drugs.

It is estimated that foreign companies now represent 75% of pharmaceutical producers in Spain (4). In 2002, eight multinational companies featured amongst the top ten leading companies in Spain and accounted for over 50% of the national market (5). Only two Spanish companies, Almirall and Esteve, featured in this list (5).

A major attraction for the multinational companies is Spain’s location, which enables good access to a combination of European and Mediterranean countries. As part of the EU, where there is a free circulation of goods, Spain represents an ideal location for distribution to neighbouring Member States and beyond. This has been a key part of the strategy of the multinational companies that have invested in Spain. In 2001, over 30% of pharmaceutical production was devoted to exports, with antibiotics accounting for the majority of this figure (2, 3).

However, Spain’s connections with other countries and its lower prices have also led to a rise in pharmaceutical parallel trade within the EU, which the pharmaceutical industry is opposed to. The pharmaceutical industry believes that the practice, which involves the purchase of medicines at low prices in one Member State and their subsequent resale at higher prices in another Member State deprives it of valuable profits to fund R&D for new products. It is an issue that features frequent legal battles between the pharmaceutical industry and parallel traders (6).

Another reason why the pharmaceutical industry has invested in the Spanish market has been the availability of experienced and talented staff. Spain is considered to have a well-qualified and highly educated labour force. In 1999-2000, there were more than 1.5 million students enrolled in universities, and there are currently 66 universities and 140 schools of engineering that provide advanced education (3). In fact, Spain has the second highest percentage of higher education students within the EU (3), making it an important resource pool which the pharmaceutical industry can utilise. An added benefit for multinational companies is the competitive labour rate.  It has been estimated that the labour cost of scientific personnel is approximately 35% lower in Spain than in the USA (3). These factors will be further reasons for pharmaceutical companies to invest in Spain and carry out R&D there.


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

  1. The Pharmaceutical Industry in Figures (2002). Farmaindustria.

  1. Lidden J (2003). The Global Pharmaceutical Revolution. Business Facilities. Aug 2003.

  1. The Pharmaceutical Industry in Spain. Prepare for the General Directorate for Trade and Investment. Ministry of Economy. March 2002.

  1. Anon (2003). Spain takes the bull by the horns. IMS Health. October 2003.

  1. Kermani F. (2000). Global Pharmaceutical Pricing: Strategic Issues and Practical Guidelines. Urch Publishing

Dr Faiz Kermani

Last updated on: 27/08/2010 11:40:18

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