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European Commission outlines priorities for pharma sector in new report

By Zachary Brennan , 07-Jul-2014
Last updated on 07-Jul-2014 at 10:25 GMT2014-07-07T10:25:39Z

The report warns of a rising tide of foreign API manufacturers
The report warns of a rising tide of foreign API manufacturers

In a sweeping report on the industry as a whole, the European Commission says that with an annual output of €220bn, and nearly 800,000 employees, the pharma industry is vital for the EU economy, though more needs to be done to meet its full potential.

The report from last week oozes with platitudes about the industry as a whole – hitting all of the main concerns, from antibiotic resistance to a growing elderly population to the rising costs of development, and pricing schemes, which seem to be in flux across the region. Pharmaceutical expenditures accounts for a considerable percentage of total health spending in some areas of Europe, with percentages ranging from 6.8% in Denmark to 33.4% in Hungary, which is followed by Greece at 28.5% and the Slovak Republic at 27.4%.

The report doesn’t delve into what accounts to this range, though it hits a note of pragmatism when mentioning that the industry “suffers from a lack of confidence, market uncertainty and budgetary problems which are currently preventing it from developing its full potential.”

Due to the relatively weak economic growth in the EU following the economic crisis in 2008, “the demand for medicines in mature markets is likely to be outpaced by the growth in sales in emerging and developing countries.”

API Sourcing

The Commission highlights the rising tide of foreign manufacturers, which raises other risks for the region.

The growing reliance of European manufacturers on non-European sources for Active Pharmaceutical Ingredients (APIs) raises concerns with regard to the security of supplies and the quality of finished pharmaceuticals which are still manufactured in Europe. In case of supply disruptions, difficulties in accessing sufficient quantities of essential finished medicines such as antibiotics could be faced. Quality-related concerns have notably led to the Falsified Medicines Directive, which aims at improving the quality of medicinal products in the legitimate supply chain,” according to the Commission.

Countries like China, India, Singapore and Israel “have already emerged as major manufacturers and markets for pharmaceuticals in recent years with expanding manufacturing capacities,” although 1.8% of the total manufacturing workforce remains in Europe.

Financing

The issue of sustainability of public finances “is a key challenge relating to pharmaceutical expenditure” and has gained increased attention across European institutions, the Commission explains, outlining some of the ways the public and private sectors can collaborate.

One such form of enhanced public-private cooperation can be found in innovative pricing and reimbursement mechanisms going beyond niche products like orphan drugs. Due to stretched health care budgets national authorities – similar to in the US -- request from manufacturers who seek inclusion in reimbursement lists, “proof of value for money and additional benefit compared with available therapies.”

Progress towards ensuring effective intellectual property protection and, at the same time, its implications for the viability of the European industrial manufacturing base and the competitiveness of our industry with third country producers, particularly with regard to high income emerging economies, will require constant review and continued attention,” the Commission says.

The report also identifies policy areas where actions have been already undertaken and which are worth exploring in more detail, including:

  • Setting priorities with regards to the development of new therapies;
  • Ensuring transparency and ethical behaviour in the sector; and
  • Reinforcing the presence of the European pharmaceutical industry in the global market.

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