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The research-based pharmaceutical industry – a key actor for a healthy Europe

Brian Ager
Director General
European Federation of Pharmaceutical Industries and Associations

For over 100 years, a large number of new and innovative medicines were developed in Europe and made available to patients to alleviate their suffering and improve their health. Through intensive, lengthy, highly complex and dedicated research efforts, carried out by R&D-based pharmaceutical companies, new generations of therapies have been introduced that have revolutionised healthcare, making once life-threatening diseases uncommon, and allowing millions of people to be treated and lead longer, better or more normal lives.
Major achievements have been made in the treatment of infectious diseases and childhood illnesses, some forms of cancer, nervous disorders, stomach ulcers, asthma, hypertension and diabetes, to name but a few. Consequently, whereas just surviving childhood was a challenge in 1900 and the average life expectancy in Europe was then only 55, a child born today can expect to live until almost 80.

Breakthrough treatments and complex bureaucracy
Today, in European laboratories, 103,000 industry scientists are researching and developing new cures and better treatments for cancer, heart disease, HIV/AIDS, Alzheimer’s, Parkinson’s, arthritis, osteoporosis, cystic fibrosis and many other diseases. Only within last decade, pharmaceutical companies have developed three new classes of HIV/AIDS drugs, three classes of cardiovascular drugs and two new classes of medicines against Alzheimer’s disease. Many breakthrough treatments have been developed for other indications.
Through its massive R&D investment, the research-based industry represents our society’s best hope to fight, defeat and eventually eradicate a wide range of illnesses that are costing a fortune – not to mention pain and suffering. In 2005 alone, the pharmaceutical industry in Europe invested over €21 billion in R&D, which accounts for 18% of the whole EU business R&D expenditure. Huge as industry’s R&D investment is, however, it is by no means a guaranteed path to success. Due to the growing understanding of the scientific basis of diseases, the complexity of regulatory requirements and “administrative” delays, it now takes an average of 12–13 years to turn a new promising compound into an approved medicinal product. The average medicine has then about 8–10 years of effective patent protection left by the time it reaches the pharmacy shelves before facing stiff generic competition. The result is that each new medicine now costs in the range of €900 million to develop, that half the medicines that reach the final stage of clinical trials fall at that hurdle and that only three out of 10 marketed medicines produce revenues that match or exceed average R&D costs.
Statistics indicate that of every 5,000 molecules tested, only 250 promising new medicines will enter preclinical testing, and only one will be approved by regulatory authorities and granted market authorisation.

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Europe vs the US
A cause for special concern is that Europe, over the last decade, has been gradually losing ground as a research base, with a steady transfer of its R&D to the US – where the environment is more attractive for R&D investment and more supportive of pharmaceutical innovation. Key benchmarking indicators show that in 1990, the global research-based pharmaceutical industry still invested roughly 50% more in Europe than in the US. But today the same industry is investing 40% more in the US compared with investments in Europe. Even the major EU pharmaceutical companies have changed the distribution of their R&D spending to the benefit of other regions.
Against this background, our main challenge in Europe is to reverse these negative trends in order to be able to continue to innovate. So what are the priorities? The way forward for Europe is to strengthen its science base and to improve the competitiveness of its research-based pharmaceutical industry by setting up a regulatory and political environment, which above all stimulates R&D and rewards innovation.
First, as part of its Research Framework Programme 7 (RFP7) the EU needs to rapidly implement the Innovative Medicines Initiative (IMI), which is a unique pan-European public and private sector collaboration for boosting biomedical research in Europe. The IMI provides practical paths to accelerate the discovery and development of more effective innovative medicines with less side-effects that reach patients faster. For IMI to succeed, it is essential that it receives Joint Technology Initiative (JTI) status.

Second, we must improve stakeholders’ understanding of the value of innovation for patient and society and secure sustainable funding mechanisms for innovative drugs. In the context of the High Level Pharmaceutical Forum – the current strategic policy dialogue on European competitiveness with respect to the pharmaceutical industry – the European Federation of Pharmaceutical Industries and Associations (EFPIA) is putting forward concrete recommendations for an optimal balance between enhanced competitiveness and improved public health.
Third, European patients should have faster access to new innovative therapies. Today, patients across Europe are not getting speedy and equal access to innovative medicines, essentially because of delays in pricing and reimbursement decisions, which take place at national level. Consequently, more than two years may elapse from the awarding of a marketing authorisation before a new medicine becomes available on some national markets. This is clearly unacceptable. The time needed for setting reimbursement prices at national level must be shortened, in line with the time limits set by the Transparency directive. In addition, co-payment models and competitive generic prices should create headroom for financing innovative medicines.

These important policy steps are needed to sustain the unique contribution which the pharmaceutical industry can offer. For this to happen, the EU and national authorities must set up a regulatory and political environment, which above all stimulates R&D and rewards biopharmaceutical innovation, enabling patients to access new therapies, while also enabling the biopharmaceutical industry to pursue its research activities, in particular in the fields where therapies or new healthcare solutions are insufficient or inexistent.

With a strategy that above all stimulates R&D in Europe and rewards innovation, the research-based industry will not only be able to improve healthcare in Europe, bring new innovative medicines faster to European patients, it will also contribute to the Lisbon objective of economic growth, to more and better jobs, and therefore guarantee high living standards for current and future generations of European citizens.