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PHARMACEUTICAL ENGINEERING®

The Official Journal of ISPE

January/February 2004, Vol. 24 No. 1

Country Profile - Germany and Switzerland

2 PHARMACEUTICAL ENGINEERING JANUARY/FEBRUARY 2004 ©Copyright ISPE 2004

This new feature inPharmaceuticalEngineering is

designed so thatyou can tear it out,

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Profiles as they arepublished.

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Brazil in the March/April issue of

PharmaceuticalEngineering.

Dear ISPE Members,

On behalf of the ISPE Germany-Switzerland Affiliate, I am proud topresent this overview of the pharmaceutical industry in our countries.You might ask why both countries are grouped in one profile, but thishas something to do with the organization of our Affiliate. Within theglobal ISPE family, we offer essential benefits to industry profession-als within the entire German-speaking region. Thus, the members ofour Affiliate are located in the mother-countries of the pharmaceuti-cal industry - mainly in Germany and Switzerland, but also in Austria.But when looking at the history and status of this pharmaceuticalindustry, we see two distinct stories, each with its own highlights.Hence, this profile is presented in two sections.

Our Affiliate is representing a region with the largest population inEurope and globally the third largest economy, giving immediateaccess to a vast domestic market for manufacturers as well asvendors and suppliers. The availability of this market also has leadcompanies to grow and thrive, promoting a stage for excellent R&Dand export.

Both Switzerland and Germany are renowned for their thoroughnessin design and manufacturing in all industries. This is also the reasonwhy many of the world’s most famous equipment suppliers for thepharmaceutical industry are located in this area. The excellenteducation systems deliver well-trained professionals guaranteeing astable and highly qualified workforce. A close collaboration betweenprivate and academic research institutions provides an innovativeclimate, attracting new investments in an ever-growing pharmaceu-tical industry.

ISPE Germany-Switzerland started activities in 1992 and is today –with more than 800 members - an active contributor to the ongoingeducation of life science professionals, through the organization ofseminars, training courses, site visits, and active cooperation withISPE in the publication of German-language versions of technicaldocuments. More information about ISPE D/CH can be found onhttp://www.ispe.org/germany-switzerland/.

I hope you will enjoy reading these pages and that they will contributeto completing your knowledge about the pharmaceutical industry inthis part of the world. Welcome into our region in the heart of Europe.

Mit besten Grüssen,

Werner H. OesterleChairman, ISPE D/CH


JANUARY/FEBRUARY 2004 PHARMACEUTICAL ENGINEERING 3©Copyright ISPE 2004

Figure 1. Global versus German pharmaceutical market.

Despite strong regulationand federal budgets, theGerman pharmaceuticalmarket is still one of the

strongest with nearly 8% of globalsales, considering it only comprises1.3% of the world population. Inthe EU, the German market leadsin sales as well as in the produc-tion of medicines. Sales increased7.8% in 2002 due to an intensifiedprescription of innovative drugsafter a period of strong budgeting.

With a market participation of27%, generic drugs are pressuringprices of innovative products afterthe end of patent protection. Con-tinuously increasing re-importshave caused a significant sales lossfor the national pharmaceuticalindustry.

The market covers “public” andhospital pharmacies. In 2002, pub-lic pharmacies, (nearly 50,000which are actually all privately-owned and which have a monopolyover drug dispensing except tohospitals), sold drugs for €18.7billion while hospitals purchaseddrugs with an ex-factory volumeworth €2.5 billion. Distributionby drugstores is 7%, and does notplay an import role in the marketof OTC products.

Pharmacy surcharges andthe taxes are among the high-est in west European coun-tries. In Germany, full VATis applied for drugs, butseveral consumer goods

like food, books, etc., have areduced VAT rate. For themarket, 9,500 drugs are regis-

tered, but only 2,300 generate90% of total sales.

With 79% and €18 billion, pre-

scription drugs comprise the mostimportant part of the market. In1997, the average number of pre-scriptions per patient was 12.1,with an average of 18.6 prescribedpacks. General practitioners, 18%by internists and 7% by pediatri-cians, prescribed more than 55%of all prescriptions.

As a result of continually risingeconomic barriers in the nationalhealth system, many substancesare no longer reimbursable andself-medication has become moreimportant to the population. In thefuture, patients will try to treatless severe diseases with OTC prod-ucts first, before consulting a phy-sician, due to a relevant change inthe health system where patientsare obligated to pay up front.

In the area of self-medication,patients are favoring brand nameOTC products even though physi-cians have a broad portfolio ofdrugs they can prescribe.

The increase of 66% in the pre-scription drug market is based onthe introduction of new innovativesubstances for severe and lifethreatening diseases. Approxi-mately 30 drugs per year get ap-proval.

For the purposes of interna-tional comparison, the health sta-tus of the German population canbe illustrated using certain healthindicators. Cardiovascular andnon-malignant lung disease mor-tality rates in Germany are wellabove the European average. In1991, unified Germany had a lifeexpectancy that was slightly be-low the EU average. Currenthealth concerns are mainly relatedto diseases associated with the agestructure and demographic trendsof the German population. Impor-tant demographic and health-re-lated trends that are currentlyobserved include an increase inthe number of one-person house-holds, and an increase in long-term chronic-degenerative dis-eases.

Future changes in the struc-ture of the population will lead toa moderate increase in the elderlypopulation’s need for therapy, re-habilitative care, and nursing carewhereas the morbidity transitionwill result in less need for curativemedical intervention. It is alsoexpected that there will be an ad-ditional need for health servicesresponding to obstructive lung dis-

A Look at the Pharmaceutical Industryin Germanyby Andreas Bahne, ISPE GermanyE-mail [email protected]



eases, diseases of the cardiovascu-lar system, urogenital diseases,and cancer diagnosis and therapy.A large preventive potential forcoronary and circulatory diseases,respiratory diseases, and accidentsis also foreseen.

National HealthCare System

The modern German health caresystem started with the introduc-tion of mandatory health insur-ance on a national level in 1883.Germany is recognized as the firstcountry to have introduced a na-tional social security system. Theprominence and structural conti-nuity of social insurance is one ofthe key features of the historicaldevelopment of Germany’s healthcare system to the present day.Contributions and expenditureincreased substantially during the119 years of statutory health in-surance. This was the result of the

extension of benefits – often fol-lowing decisions by the civil courts– through state intervention, butmainly by the self-administeredfunds themselves or by joint com-mittees between funds and physi-cians. While initially the statu-tory health insurance schemeaimed primarily at preventingimpoverishment by compensatingincome in cases of illness, sicknessfunds increasingly funded servicesand the prescriptions of special-ized professionals.

Health insurance is providedby autonomous sickness funds,which are organized on a regionaland/or federal basis. In mid-1999,there were 453 statutory sicknessfunds with about 72 million in-sured persons (50.7 million mem-bers plus their dependants) whichrepresent 88% of the population.Fifty-two private health insurancecompanies covering around 7.1 mil-lion private health insured people.

Contributions are dependenton income and not risk, and in-clude non-earning spouses andchildren without any sur-charges. By law, sickness fundshave the right and the obliga-tion to raise contributions fromtheir members which includesthe right to determine whatcontribution rate is neces-sary to cover expenditure.Currently, they cover between 12%to 15% of gross salary of the in-sured persons. Contributions areshared equally between the in-sured and their employers.

Germany’s health care systemis expensive by international com-parison, both in absolute figuresand, even more visibly, as a per-centage of GDP.

The basic principle behind “Ger-man-style” cost-containment wasan income-oriented expenditurepolicy to guarantee stable contri-bution rates. This was an impor-tant objective in a time of eco-nomic restructuring and growinginternational competition sinceemployers and employees jointlypay the contributions. Therefore,increases in contribution rateswere (and still are) perceived to bea question of international com-petitiveness.

The drive for cost-containmentwas realized through a long seriesthat employed various measuresincluding:

• the introduction of legally fixedbudgets or spending caps forthe major sectors of health care

• reference-price setting for phar-maceuticals

• restrictions on high cost tech-nology equipment

• increased co-payments on pre-scribed drugs- small packs N1 €3- medium packs N2 €4- large packs N €5

Figure 2. Distribution channel and price structure.

Figure 3. Self medication versus prescription.



this evolution. From that time ithad its name “Apotheke der Welt”(Pharmacy of the World), becausewith the increase in pharmaceuti-cal production, exportation startedshortly thereafter. At end of the19th century, the first Germansales representatives were sellingdrugs even in Chinese deserts.After World War I, most Germancompanies lost their foreign sub-sidiaries and, even more painful,their trademarks. The pharmaceu-tical industry could not advance

Figure 4. Drugs with major change in sales.

• the exclusion of young peoplefrom certain dental benefits

The idea behind reference priceswas to establish an upper limit forthe costs reimbursable through thesickness funds. Due to loweredprices for drugs formerly abovethe reference price, these regula-tions led to decreasing prices forreference priced drugs.

Health care service is providedby approximately 30,000 physi-cians, 45% office-based, 41% hos-pital, 11% care services and reha-bilitation, and 3% state preven-tion services.

There are around 3,600 hospi-tals with approximately 750,000beds (6.2 beds per 1000 inhabit-ant) and an average occupancy rateof a little more than 80%. All am-bulatory care, including both pri-mary care and outpatient second-ary care, has been organized al-most exclusively on the basis ofoffice-based physicians. The ma-jority of physicians have a solopractice; only around 25% share apractice. Germany has no gatekeeping system, instead patientsare free to select a sickness-fund-affiliated doctor of their choice,but this will probably change inthe future.

PharmaceuticalIndustry

The profession of the pharmacistwas established in Germany about800 years ago by a written regula-tion of the German emperorFriderich II. It was the first timethe profession of physician and

pharmacist were divided.These laws influenced the de-velopment of pharmaceuti-cal manufacturing thatpharmacists dedicatedpurely to the manufactur-

ing and distribution of drugs.Pharmacists could increasetheir manufacturing scale

from simple pharmacy labs(Uffizin) to industrial productionby discovering the scientific based

synthesis in the 19th century. Or-ganic chemicals were being morewidely used for pharmaceuticals.New formulations like tablets, cap-sules, and ampoules were devel-oped. Now drugs were reachablein terms of finance for the majorityof the population. The majority ofthe pharmaceutical companiesstarted with fine chemical activi-ties. Only a few were dedicatedmerely to pharmaceutical produc-tion.

Germany was the spearhead of

Figure 5. German healthcare expense statistics.



of Germany. The foundation forthis positive business trend wasnot only the reestablishment ofoperations, but also researchand development - as it hadbeen at the end of the the 19thcentury. New products such as car-diovascular medicines, dermalantifungals, and broad-spec-trum antibiotics emergedfrom the pharmaceuticallaboratories. During that period,new pharmaceutical companieswere founded by strong entrepre-neur characters. Although the ex-pansion across the frontiers of Eu-rope was done originally by repre-sentations, the companies emergedin the fifties by developing foreignproduction sites or acquisitions.

At the end of 1980s, the con-tinuously increasing cost and thelimitation of the budget in thehealth care system resulted in thefirst cost cutting measures tempo-rarily slowing down the growth ofthe pharmaceutical industry. Butin the wake of the radical politicalchanges that took place in Ger-many and Eastern Europe after1989, the companies could increasetheir focus on these promisingmarkets.

A crucial change has taken placeduring the 1990s in orientation ofthe major players in the Germanpharmaceutical industry, includ-ing:

• some companies focused alltheir activities on pharmaceu-ticals and separated theirchemicals, while others soldtheir pharmaceutical branch

• new generic companies enteredthe market due to changes inlegislation supporting genericsand re-imports

In Germany, the same big players,as in most OECD countries, areleading the industry. The leadingpharmaceutical company of na-tional origin is BoehringerIngelheim. Generic manufactur-

during the turbulent years of eco-nomical crisis. And leaving thiscrisis, the pharmaceutical indus-try was integrated in the prepara-tion for World War II.

After the war, the Allied Forcesplaced most companies under thecontrol of the allied officers. Someof the companies were to be dis-solved and the assets made avail-

able for war reparations, but soonthey allowed production to resumeas well, as the chemical industry’sproducts were essential to supplythe population.

The reconstruction of the phar-maceutical industry was closelylinked with theWirtschaftswunder, or “economicmiracle” in the Federal Republic

Sales/Mill.€ Marketshare/% Development Units/Mill.PFIZER 1,510 6.8 7.3 3,810AVENTIS 1,190 5.4 4.4 2,310NOVARTIS 1,090 4.9 2.2 6,710MERCKLE 1,060 4.8 13.5 10,710ROCHE 900 4.1 12.2 2,960KOHL MEDICAL AG 810 3.7 17.1 1,220ASTRAZENECA 790 3.6 4.0 1,510MERCK & CO 750 3.4 8.2 1,060HEXAL GROUP 750 3.4 20.5 4,710GLAXOSMITHKLINE 720 3.3 -1.0 1,330SANOFI-SYNTHELABO 560 2.5 2.6 2,650BOEHRINGER INGELHEIM 520 2.4 8.3 3,210JOHNSON & JOHNSON 510 2.3 5.8 760BAYER 450 2.0 -8.1 1,900SCHERING AG 420 1.9 5.5 660STADA 420 1.9 20.4 3,080BRISTOL-MYERS SQB. 390 1.8 0.3 420LILLY 380 1.7 13.7 310ALTANA 370 1.7 8.5 670NOVO NORDISK 320 1.5 2.7 300Subtotal 13,910 63.1 7.2 50,290Rest of market 8,123 36.9 54,030Germany incl. Hosp. 22,033 6.9 104,320

Figure 6. Leading pharmaceutical companies in Germany - MAT/2Q.2003.

Figure 7. Regional distribution of 20 leading pharmaceutical companies.

ers or re-importers are gainingmarket share due to German leg-islation. In total, there are 600pharmaceutical manufacturerspresent on the national market.The pharmaceutical industry isemploying about 115,000 workers,where more than 83,000 are withR&D based companies. But only3.7% of all expenses of the na-tional health security system arerelated to innovative drugs.

Another reason for recession ininternational competitiveness isthe political initiated promotion ofre-imports with a fixed sales quotaof 5.5% in 2002 and up to 7% in2003 for reimbursed drugs by GVK.Due to the political instruction,the prices of re-imported drugs hadthe chance to approach the pricesof original products. This createdfinancial gains for the distributoronly but not for compulsory healthinsurance, the pharmaceuticalmanufacturer, or the patient.

Another problem on the hori-zon is that for the first time ever

the importation of drugs has sur-passed exportation. Exportationdecreased in 2002 by 15.5% due tothe negative general pharma-eco-nomical conditions in a high costlabor country.

The pharmaceutical industry ismainly concentrated in the south-west of Germany. Along the riverRhine, the traditional chemical –pharmaceutical industry has itsorigin. Also there is strong contactwith the Swiss pharmaceutical in-dustry situated in Basel, as well asthe Rhine river valley. Pharma-technology suppliers are concen-trated in this area, especially en-gineering firms. After reunifica-tion of Eastern Germany somestate owned facilities were sold bythe government to West Germanor international companies. Afterrenovation of obsolete equipmentand buildings, they have reachedhigh competitive level in GMP andefficiency. Most known is the largescale Aspirin factory of Bayer inBitterfeld.

Research andDevelopment

About 14,500 professionals areengaged directly in research anddevelopment in Germany. The in-volved pharmaceutical companiesare investing €3.6 billion in R&Dannually, that means more than€10 million per day. They spend inaverage of about 16% of sales forR&D activities.

Companies with R&D activi-ties have invested during the lastfew years an average of more than€1.3 billion annually, which meanstheir investments increased fasterthan sales.

In the year 2000, the FederalInstitute for Drugs and MedicinalProduct (BFArM) received 431Phase I, 292 Phase II, and 492Phase III study applications. Withimproved political-economical con-ditions, it would be possible to con-duct much more studies than now.A change could result with theupcoming amendment of the Ger-man drug law, by which the ECregulation regarding the harmo-nization of clinical trials in Eu-rope has to be adapted to Germanlaw.

BiopharmaceuticalsIn Germany, biotech has two as-pects: the research and develop-ment and production with export.In the German market, there are102 genentechnical-produceddrugs based on 74 molecules regis-tered. The share of genetic pro-duced drugs is increasing continu-ously with sales of €1.53 millionand participation of total market(pharmacies) of 8.3% in 2002. Ad-

Figure 8. Market of recombinant produced drugs.

Drug Main Indication Company Trade NameInsulin, human diabetes mellitus type 1 Aventis Insulin Aventis Insuman; LantusErythropoietin beta renal anemia Roche RecormonInterferon gamma 1b chronic granulomatosis Boehringer Ingelheim ImukinInterferon gamma 1b chronic granulomatosis Schering Betaferontissue plasminogen activator, t-PA coronary thrombosis, thrombosis Boehringer Ingelheim ActilyseTenecteplase coronary thrombosis, thrombosis Boehringer Ingelheim MetalyseGewebe-Plasminogen-Activator, r-PA coronary thrombosis, thrombosis Roche Reteplase

Figure 8. Recombinant drugs produced in Germany.



ditionally, there are sales in thehospital segment, but currentlythere is no data available.

Today, Germany is the mostimportant location for productionof geneticly modified drugs in Eu-rope. With fermentation produc-tion capacity of more than 470,000liters, mainly in the most modernfacilities in the world, Germanypasses its European concurrentand reaches the second positionafter the US.

Currently, 15 genetic modifieddrugs are produced and exportedworldwide. Those are medicationsfor the treatment of diabetes,anaemia, hepatitis C, cancer, rheu-matic arthritis, and myocardialinfarction.

Last year Germany conductedfor the first time a statistical sur-vey for biotechnical activities bythe German federal statistical sec-retary. The data available are forthe year 2000. The survey identi-fied five categories:

• Category I - biotech core com-panies with modern biotechni-

cal processes according to OECDdefinition

• Category II - suppliers of tech-nical products and services forbiotech companies

• Category III - combination ofCategory I and II

• Category IV - major companiesfrom the Life Science Industrywith significant biotechnical ac-tivities

• Category V - consultants andfinancial services of the Biotechbranch

OECD definition: the applicationof science and technology to livingorganisms, as well as parts, prod-ucts and models thereof, to alterliving or non-living materials forthe production of knowledge, goodsand services.

The survey includes all types ofBiotech activities, but the “red”Biotech, with human, veterinarymedical, or pharmaceutical activi-

ties is dominating, reaching 70%in the number of Category I com-panies in the Biotech area. Thefocus of this article are the com-panies of Category I and IV, butin the table “general numbers”are also listed for the other catego-ries.

From the 313 companiesin which Biotech is the corebusiness (Category I), about50% of the 9,906 employees areworking in 21 companies with morethan 100 employees. That meansthe rest of the 290 companies aremedium size with about 20 em-ployees. In these smaller compa-nies, the participation of employ-ees in R&D reaches nearly 66%,whereas the average in Category Iis 34%.

Analyzing the ratio of sales(€594 million) to the expenses forR&D (€368 million) in this cat-egory, it can be assumed that mostof the companies in 2000 were stillstart-up companies, far away fromgaining profits.

The major companies from theLife Science Industry are contrib-uting mainly to economic power ofthe biotech branch in Germany.The six leading companies are re-sponsible for €3.150 million, inother terms 90% of all sales in theBiotech Life Science Industry.Each of them reach sales above€100 million annually. TheBiotech activities in Germany areconcentrated in the states of:

• Baden-Wuerttemberg - withlocal spots of BioValley in thetrinational region (Germany/F r a n c e / S w i t z e r l a n d ) ,BioRegion Ulm and the sur-rounding of the university placeHeidelberg

• Bavaria - with the local spot ofMartinsried near Munich

• Hessen - concentrated aroundthe city of Frankfurt

• Nordrhein-Westfalen

CompaniesAttributes I II III IV VNumber of companies 313 209 24 24 96Employees 9,906 17,786 1,332 8,933 327Employees in R&D 3,337 - 247 2,401 -Sales in € million 594 1,200 136 3,500 37R&D expenses in € million 399 - 19 368 -

Figure 10. General numbers Biotech Germany.



Biotech is made up of about 60% ofthe investments of venture capitaland private equity related to healthorientated industry (Biotech, smallmolecules pharmaceuticals, me-dicinal technique, consumer thehealth care). Although the invest-ments decreased with the stockcrisis in 2001/2002, biotechachieved €8,500 million in 2002.

In the future, the next solid ba-sis for venture capital inbiopharmaceuticals is given by thesolid pipeline of new drugs. Ven-ture capital is not only relayinganymore to brilliant ideas and busi-ness models of pioneers, but moreand more to developed moleculespassing through the phases of clini-cal studies to the market.

References1. Statistics 2003 - Die

Arzneimittelindustrie inDeutschland VFA.

2. Pharma-Daten 2002 KompaktBPI .

3. European Observatory onHealth Care Systems.

4. Statistisches Bundesamt , Stat.Jahrbuch 2002.

5. Aponet.de.

6. VFAPressemitteilung 007/2003.

7. VFA Jahresbericht 2002.

8. Statistisches BundesamtUnternehmen der biotech-nologie in Deutschland -Ergebnisse einer Pilotstudiefuer das Jahr 2000.

Visit the ISPE Germany/SwitzerlandAffiliate Web site at

www.ispe.org/germany-switzerland/for local events, updates, and to read

these other articles:

Pharmaceutical Engineering Know-How in Germanyand SwitzerlandInterview of Klaus Köhler, Pharma IndustryManager, Endress+Hauser Germany

An Overview of German/Swiss EquipmentSuppliersA general overview of pharmaceutical industrymachinery suppliers in the German-Swiss region.



A Country Profile of Switzerland

The Swiss Paradox

Switzerland could be con-sidered as a country ofparadox, as a small coun-try with an insignificant

domestic market for pharmaceuti-cals, though, it is one of the majordrug manufacturers of the world.Scientists in Switzerland have con-tributed substantially to expandthe frontiers of biomedical researchfor the benefit of mankind.

In comparison with similar de-veloped countries, the Swiss in-habitant devotes less money fordrugs. For example, in the USA,France, Italy or Germany, the ex-penses for drugs per inhabitantare 1.5 times higher than in Swit-zerland. However the major1 Swisspharmaceutical companies repre-

sent 7.5% of the world wide phar-maceutical market with a turn-over of $30 billion.

Public Health CareThere are a large number of pro-viders of health care products andservices in Switzerland. The qual-ity of the health care system isacknowledged to be excellent, butcosts are correspondingly high.Between 1970 and 2001, the num-ber of practicing physicians morethan doubled, from 5,500 to 14,178. While the number of pharma-cies was still rising up to 2000,more than 300 drugstores closeddown between 1970 and 2001.

Table A shows the evolution ofresources in public health care be-tween 1990 and 2001.

At the same time, this in-creasing of health care re-sources is associated with asignificant increasing of thehealth care costs, as shown in Fig-ure 1.

Since 1995, total health carecosts rose from CHF 36.2 billion toCHF 43.3 billion between 1995and 2000, an increase of 20%. In2001 there was no increase in theprice index for medical treatment.The price index for drugs was thelowest at 99.8, below the 100 markset in 1993. Despite only a slightincrease of 0.8 percentage points,the price index for hospitals wasstill the highest (115.6).

As in previous years, outpatienttreatment by physicians, hospitals,physiotherapists, home care(Spitex) and chiropractors ac-

counted for thehighest grosscosts within com-pulsory healthcare insurance in2000: 47%. Thiswas followed byinpatient treat-ment in hospitalsand nursinghomes, account-ing for 32% ofcosts, and bydrugs, accountingfor just under21%. Outpatienttreatment in hos-pitals posted thegreatest growthin 2000 (12%), fol-lowed by drugs(11.6%). The to-tal cost of compul-sory health careinsurance rose by5.9% in 2000, 1.6p e r c e n t a g e

1990 1995 1999 2000 2001Practicing Physicians 10,398 12,327 13,622 13,935 14,178– per 10000 inhabitants 15.3 17.5 19.0 19.3 19.5General Practitioners 3,858 4,364 4,604 4,849 4,877– per 10000 inhabitants 5.7 6.2 6.4 6.7 6.7Specialists 6,540 7,963 9,018 9,086 9,301– per 10000 inhabitants 9.6 11.3 12.6 12.6 12.8Dentists working in their own practice 3,788 3,790 3,933 3,941 3,929– per 10000 inhabitants 5.6 5.4 5.5 5.5 5.4Physiotherapists 2,016 2,801 3,400 3,400 3,670– per 10000 inhabitants 3.0 4.0 4.7 4.7 5.1Chiropractors 153 188 205 213 215– per 10000 inhabitants 0.2 0.3 0.3 0.3 0.3Pharmacies 1,536 1,641 1,654 1,677 1,669– per 10000 inhabitants 2.3 2.3 2.3 2.3 2.3Drugstores 978 883 839 829 796– per 10000 inhabitants 1.5 1.2 1.2 1.2 1.1Hospitals1 530 555 585 565 592– per 10000 inhabitants 0.8 0.8 0.8 0.8 0.8No. of people employed in public health 317,0003 358,000 395,000 399,000 408,000care, approx.2

– per 10000 inhabitants 466 506 551 554 5621 Hospitals with in-house pharmacy only 2 Incl. social care 3 Figure for 1991

Table A. The evolution of resources in public health care between 1990 and 2001 (Source: PharmaInformation, Basel; Swiss Medical Association (FMH), Berne; IHA-IMS Health, Hergiswil; SwissPhysiotherapists Association (SPV), Zurich; Swiss Chiropractors Society (SCG), Berne; “StatistischesJahrbuch der Schweiz”, various years; and Federal Statistical Office, Neuchâtel).

by Yves Samson, ISPE SwitzerlandE-mail [email protected]



points more than in1999.

One third of thecosts of health carewere paid directlyby private house-holds, its actualburden however,was twice as high,66.9%. The healthinsurance costsrepresent 5.8% ofthe expense foreach Swiss privatehousehold.

ThePharmaceutical

MarketCurrently in mostOECD countries,more than 10% ofthe health care ex-penses are devotedto drugs. In Franceand Italy, this ratio is greatherthan 20%. In Switzerland, thisratio is around 11%. Indeed eachSwiss inhabitant spends 1.5% ofhis income for drugs. This shouldbe considered in comparison withother expenses like housing rent(14.5%), income taxes (11.9%), car(5.4%), restaurant (5.0%) or phone(1.5%).

Registered DrugsAll drugs available in Switzerlandfrom Switzerland are registeredby a federal public agency for thera-peutic products: Swissmedic, inBerne. In 2001, the Swissmediclist contained a total of 7,890 drugsfor human and veterinary use. In

1985, the number of regis-tered items was 3,137 higher(11,027 drugs and medicaldevices).

Since 1998, medical de-vices have ceased to figure

on the Swissmedic registrationlist. On the basis of the rel-evant risk/benefit ratio, Swiss-

medic divides human drugs intovarious lists, which also provideinformation on who is authorized

to dispense them. In 2001, the drugson lists A and B (prescription drugs)accounted for approx. 53% of allregistered drugs.

Drugs Covered by HealthInsuranceNot all drugs are covered by com-pulsory health insurance. Thedrugs subject to cover are containedin the “List of Proprietary Medi-cines” (“Spezialitätenliste”, SL)published by the Federal SocialInsurance Office (“Bundesamt fürSozialversicherung”, BSV). The cri-teria for inclusion in this list re-late not only to the efficacy andsuitability of a drug but also to itscost-effectiveness. This decision ismade by the BSV, normally at therequest of the Federal Drug Com-mission (“Eidgenössische Arznei-mittelkommission”, EAK).

In 2001, the list contained ap-proximately 2,499 drugs in 6,502different packaging units. 79.9%of the items were prescriptiondrugs (sales categories A and B)and 20.1% were non-prescriptiondrugs (sales categories C and D).In contrast, there were 4,547 drugs

Figure 1. The increasing of health care resources isassociated with a significant increasing of the healthcare costs (Source: Pharma Information, Basel).

(64.5%) which were not covered bythe health insurance organization(obligatory sick funds or privateinsurance companies).

Distribution ChannelOwing to the liberalization of thepharmaceuticals market and theintroduction of the new service-based compensation model (“LOA”)for pharmacies, an accurate sur-vey of sales in the different distri-bution channels is difficult. Themost adequate way for compari-son is therefore at the level manu-facturers’ prices.

In 2002, CHF 3,644 million wasspent on pharmaceutical products,6.6% more than in the previousyear. The average annual growthduring the last three years comesto 7%.

Prescription DrugsIn 2002, prescription drugs, atmanufacturers’ prices, accountedfor 78.8% of total drug sales(CHF 2,870 million). Prescriptiondrugs are classified as types A andB on the sales lists of Swissmedic,and are distributed by pharma-cies, hospitals, and SD physicians.2

Non Prescription DrugsNon-prescription drugs can be pur-chased over the counter (OTC) atpharmacies and drugstores, or canbe prescribed by SD physicians orin hospitals. Non-prescriptiondrugs include medicines bought inpharmacies and drugstores with-out a prescription and medicinesprescribed in medical practices andhospitals. In 2002, non-prescrip-tion drugs accounted for 21.2% ofthe total drug market in Switzer-land.

Generics MarketBetween 1990 and 2002, the vol-ume of the generics market grewfrom CHF 27.2 million toCHF 102.7 million at manufactur-ers’ prices. In 2002, they accountedfor 3% of the market, which corre-sponds to sales of CHF 102.7 mil-



lion at manufacturers’ prices.Patent-protected original brandsaccounted for 60.4% of the market.Thus the sector offering potentialfor generics amounted to 37.2% ofthe market. This sector consistedof off-patent original brands(27.5%) for which no generics ex-isted, and of off-patent originalbrands (9.7%) for which genericsexisted.

Rise in ImportsAbout 28% of drugs sold in Swit-zerland in 2001, representing salesof CHF 962 million (at manufac-turers’ prices), are manufacturedin Switzerland itself. Of these, theInterpharma companies Novartis,Roche and Serono (and their sub-sidiaries) account for 60%, or 16.9%of the total Swiss pharmaceuticalmarket. About 72% of the drugs

sold in Switzerland are im-ported.

The Swiss Association ofImporters of ProprietaryMedicines (“Vereinigung derI m p o r t e u r eP h a r m a z e u t i s c h e rSpezialitäten”, VIPS) com-prises 70 companies activein Switzerland. They aresubsidiaries of foreign phar-maceutical companies orSwiss pharmaceutical im-porters.

VIPS members and otherimporters account for about72% of the Swiss pharma-ceutical market. In 2001,their retail sales came toCHF 2,423 million (at manu-facturers’ prices).

The SwissPharmaceutical

IndustryThe pharmaceutical indus-try and its employees repre-sent an important factor inthe economic life of Switzer-

land, as well as of Basel and itsneighboring areas. In the can-ton of Basel City alone, Novartisand Roche account for one thirdof total revenue from taxation,and it is the source of one fifth ofincome in the Basel region. Thisindustry is also responsible for52% of regional net product.

Switzerland numbersabout 420 companies whosechief business is the manufactureand trade of pharmaceutical prod-ucts. Of these 420 companies, only130 have manufacturing facilitiesand only ten employ more than 500people. However, the structure ofthe pharmaceutical industry in thecountry is dominated by the twomajor enterprises Novartis andRoche, both located in Basel (seemap below).

Why Basel? A number of fac-tors coincided towards the close ofthe 19th century to make Basel afavorable site for the establish-ment of the chemical industry,which is the base of the pharma-ceutical industry. The prominenceof Basel as an economic and cul-tural center can be traced back tothe Middle Ages. At that time, theRhine Bridge in Basel (built 1226)was the only one, looking down-stream, until well into the lowerreaches of the river at Cologne. Asa result, the city became a majorcommercial and trading center, aswell as a station on the importantnorth south transalpine route. Thefoundation of the university in1460 brought a new dimension tothe city: it became an influentialcenter of learning and culture.Apart from the city’s trade links,good communications and its roleas a university town, there was afurther factor favoring the growthof the chemical industry in theregion; namely the local silk-rib-bon and cotton industry, whichhad developed in neighboring partsof Switzerland, the French Alsaceand German Baden in the 18thcentury.

The oldest firm within the

Figure 2. (Source: Pharma Information, Basel).

Distribution At Manufacturers’ PacksChannel Packs PricesPharmacies CHF 2,024 m 110.5 mSD Physicians CHF 807 m 29.7 mHospitals CHF 671 m 23.5 mDrugstores CHF 142 m 20.6 mTotal Sales CHF 3,644 m 184.3 m

Table B. (Source: IHA-IMS Health, Hergiswil/Pharma Information, Basel).

Distribution At Manufacturers’ PacksChannel Packs PricesPharmacies CHF 1,501 m 40.7 mSD Physicians CHF 733 m 20.8 mHospitals CHF 636 m 18.6 mTotal Sales CHF 2,870 m 80.1 m

Table C. (Source: IHA-IMS Health, Hergiswil/Pharma Information, Basel).

Distribution At Manufacturers’ PacksChannel Packs PricesPharmacies CHF 522 m CHF 69.8 mDrugstores CHF 142 m CHF 20.6 mSD Physicians CHF 74 m CHF 8.9 mHospitals CHF 35 m CHF 4.9 mTotal Sales CHF 773 m 104.2 m

Table D. (Source: IHA-IMS Health, Hergiswil/Pharma Information, Basel).



chemical industry at that time -J.R.Geigy Ltd. - began in 1758 as adealer in chemicals, dyestuffs anddrugs of all kinds. Shortly beforethe start of the Second World War,Geigy achieved a breakthroughwith the discovery of DDT. Its dis-coverer, Paul Mueller, wasawarded the Nobel Prize. Geigymarketed its first drug in 1938,but its first real breakthrough inpharmaceutical research camewith the development ofButazolidin, an anti-rheumaticagent. In 1859 Alexander Clavel’sfactory and in 1886 Kern & Sandoz,also began producing new dyestuffsin Basel. Clavel turned its nameinto Ciba in 1884. As early as 1889,Ciba showed its first pharmaceu-tical products at the InternationalExhibition in Paris. Antipyrine,an agent to reduce febrile tem-peratures, was particularly suc-cessful. After two years as a phar-macy, Hoffmann-La Roche beganto develop and manufacture phar-maceutical specialties in 1896.Roche made use of the innovationto publicize one of its first prod-ucts, Siroline, a cough syrup thatremained on the market until 1964.Roche was also the first European

company to publish its ownscientific journal. In 1917,Sandoz established a phar-maceutical division. In1921, Gynergen, an impor-tant preparation in the field

of obstetrics, appeared on themarket. The period before theSecond World War also saw

the formation of the first sub-sidiary companies and branches

abroad (England, France, USA) of

these important enterprises. Thedevelopment of the pharmaceuti-cal industry in the post war yearsmight almost be described as ex-plosive. In 1971, Ciba and J.R.Geigy initiated the first Basel fu-sion within the chemical/pharma-ceutical industry. 25 years later,in 1996, Ciba-Geigy and Sandozmerged and founded Novartis.

To complete the chemical andlife sciences position of Basel, thefoundation of Syngenta in Novem-ber 2000 should be mentioned.Syngenta was founded by themerger of Novartis Agribusinessand Zeneca Agrochemicals. It isthe world’s largest dedicatedagribusiness, employing more than20,000 people and operating acrossall important areas of crop protec-tion and seeds.

From the outset the fact thatthe chemical-pharmaceutical in-dustry was located in a countrywith few raw materials meant thatthe companies had to producehighly processed, high qualitygoods. The main fields of researchand development of the major com-panies are, cancer, cardiovascular

Figure 3. (Source: IHA-IMS Health, Hergiswil/Pharma Information, Basel).

and geriatric diseases, immunol-ogy, rheumatism, central nervoussystem, infections, and dermatol-ogy. Today, biotechnology and ge-netic engineering are the most im-portant tools in R&D. About 26,000people work in this industry, world-wide the Swiss pharmaceuticalcompanies employ 82,000 personsapproximately.

Strong Export PositionIn 2002, according to the interna-tional drug market statistics com-piled by Information Medical Sta-tistics3 (IMS), the three biggestSwiss pharmaceutical companies- Novartis, Roche and Serono -represent 7.5% of the global phar-maceutical market and contributesignificantly to the very positivepharmaceutical balance of trade.

Drugs are high-tech qualityproducts and, in 2001, once againproduced excellent trade results.Pharmaceutical exports were val-ued at approximately CHF 27.7billion. This corresponds to 66% ofSwitzerland’s total chemical ex-ports or 20% of the country’s totalexport volume. Switzerland earnedan export surplus of CHF 14 billionon pharmaceutical products in2001. More than 90% of the drugsmanufactured in Switzerland aredestined for export. Europe is thelargest buyer (CHF 18.1 billion),followed by America and Asia. 82%of imported pharmaceutical prod-ucts are manufactured in Europe.In terms of value, this is equivalentto CHF 11.3 billion.



Research and DevelopmentThis strong position of the Swisspharmaceutical industry on theglobal market is the result of anactive research strategy. The threeInterpharma companies –Novartis, Roche and Serono – spent

around CHF 7.0 billion on re-searching and developing newdrugs worldwide in 2002. This fig-ure is equivalent to 17.3% of theirtotal pharmaceutical sales.

In 2002 the three companiessold drugs worth CHF 507 million

in Switzerland,just 1.2% of theirglobal sales. None-theless, Novartis,Roche and Seronospent some CHF3.0 billion on phar-maceutical re-search and devel-opment in Switzer-land in the sameyear. This repre-sents 44% of theirglobal outlay onpharmaceutical re-search and devel-opment.

In 2002, the to-tal expenses for re-search and devel-opment in Switzer-land were CHF 10billion. Around69% of these aresupported by pri-vate companies,23% by the Confed-eration and theCantons, non-profit organiza-

tions and engineering institutesbrought 3.4%.

Innovation atInterpharma CompaniesTable E lists some importantdrug products developed in the re-search laboratories of theInterpharma companiesworldwide in the last 10years. All these products arenew chemical entities (NCEs) andare therefore classified as “inno-vative drugs”. The Interpharmacompanies’ research laboratoriesdevelop an average of three newactive substances each year whichare submitted for registration.

BiotechnologyThere is a long history of Swisscontributions to the evolution ofmodern biotechnology whichstarted with Friedrich Miescher’sdiscovery of DNA in the late nine-teenth century, continued withWerner Arber’s Noble Prize win-ning discovery of the restrictionenzymes (the so-called gene scis-sors), Noble laureates Jerne,Tonegawa and Köhler from theBasel Institute for Immunology,and the Nobel laureate in medi-cine, Rolf Zinkernagel and KurtWüthrich. Swiss scientists havebeen in the forefront of expandingscientific knowledge for the ben-efit of mankind. Whether it is inthe search for the causes of “madcow disease” (BSE), where theEuropean Community turned foradvice to Charles Weissmann inZurich and highly innovative re-search groups working in Zurichand Geneva, or the quest for anunderstanding of Alzheimer’swhere scientists from Novartis inBasel were able to develop an ani-mal model for the study of thedisease. Research in Switzerlandcan compete with the world’s lead-ing science laboratories.

The Swiss role in modern bio-technological research is some-times undervalued. Even usually

Figure 4. (Source: Federal Customs Administration Statistics, 2001, Berne/Pharma Information, Basel).

Year Product Company Indication1992 Hivid Roche AIDS

Lentaron Novartis Breast cancerLeucomax Novartis Neutropenia during cancer

chemotherapyNavoban Novartis Emesis during cancer

chemotherapy1993 Lescol Novartis Cholesterol lowering1994 Vesanoid Roche Acute promyelocytic leukemia1995 CellCept Roche Kidney transplants

Cymevene Roche Viral infections (CMV)Gonal-F Serono Follicle-growth disorders

1996 Diovan Novartis HypertensionFemara Novartis Breast cancerInvirase Roche AIDSSerostim Serono AIDS cachexia

1997 Exelon Novartis Alzheimer-type dementiaMabthera Roche Non-Hodgkin’s lymphoma

1998 Rebif Serono Multiple sclerosisSimulect Novartis Organ transplantsXeloda Roche Breast cancerXenical Roche ObesityZenapax Roche Organ transplants

1999 Comtan Novartis Parkinson’s diseaseHerceptin Roche Breast cancerTamiflu Roche Influenza

2000 Luveris Serono InfertilityOvitrelle Serono InfertilityStarlix Novartis DiabetesZometa Novartis Malignant hypercalcemia

2001 Zelmac Novartis Irritable colonPegasys Roche Hepatitis CGlivec Novartis Leukemia (CML)

Table E. Major achievements in pharmaceutical researchbetween 1992 and 2001 (Source: Pharma Information,Basel).



well-informed observers of theSwiss economy often erroneouslybelieve that most of Swissfundedresearch is carried out in theUnited States where most of mod-ern biotech companies reside. How-ever, whereas it is true that thethriving US biotech industry withits more than 1,000 start-up com-panies is unmatched in Europe,the existing strength and poten-tial of biotechnology in Europe and,in particular, in Switzerlandshould not be misjudged. Almosthalf of the research jobs of Swisspharmaceutical research compa-nies Novartis and Roche are basedin Switzerland, 2,200 out of 4,600.A study done by the Zurich Poly-technic (ETH), based on 1994 fig-ures, showed that Swiss compa-nies spent 17% of their CHF 4billion research budget on geneticresearch, with an above averageamount spent in Switzerland. Butmodern biomedical research is nota reserve of industry. Noteworthythat some 70 percent of researchprojects applying gene technologyin Switzerland were done withinuniversity and hospital laborato-ries.

Sales of the 63 genetically manu-

factured products (55 drugs and 8vaccines) which had been approvedin Switzerland up to February 2002accounted for CHF 159 million in2001 (at manufacturers’ prices). Thehighest sales figures were for medi-cines for the treatment of disordersof blood formation (e.g. for treatingmyocardial infarction), with 25% ofthe market in terms of value, fol-lowed by anticancer drugs (19%).Vaccines accounted for 8% of totalsales in this area.

References1. Members of Interpharma:

Novartis, Roche, Serono.

2. Doctors with their own dispen-sary.

3. In 2002, the consolidated IMSfigures covered about 70% of thetotal market in prescriptiondrugs (excluding hospitals) atmanufacturers’ prices and maytherefore diverge from the fig-ures published by the compa-nies. The global market is esti-mated at about $400 billion.

Additional SourceInterPharma, Basel, OECD HealthData, 2002.



Approval of Drugs Subject to Coverage byHealth Insurance CompaniesBundesamt für Sozialversicherung (BSV)Federal Social Insurance OfficeEffingerstrasse 20CH-3003 BerneTel: +41 31 322 90 11Fax: +41 31 322 78 80E-Mail: [email protected]

Health StatisticsBundesamt für Statistik (BFS)Federal Statistical OfficeEspace de l’Europe 10CH-2010 NeuchâtelTel.: +41 32 713 60 11Fax: +41 32 713 60 12E-Mail: [email protected]

Drug RegistrationSwissmedicSwiss Agency for Therapeutic ProductsErlachstrasse 8CH-3003 Berne 9Tel: +41 31 322 02 11Fax: +41 31 322 02 12E-Mail: [email protected]

Information on the Research-Based PharmaceuticalIndustry in SwitzerlandInterpharmaPetersgraben 35CH-4003 BaselTel: +41 61 264 34 00Fax: +41 61 264 34 57E-Mail: [email protected]

Pharma InformationPetersgraben 35CH-4003 BaselTel: +41 61 264 34 34Fax: +41 61 264 34 35E-Mail: [email protected]

Information on Health Insurance and the HealthInsurance Act (KVG)santésuisseRömerstrasse 20CH-4502 SolothurnTel: +41 32 625 41 41

Fax: +41 32 625 41 51E-Mail: [email protected]

The Pharmaceutical and Chemical Industryin GeneralSchweizerische Gesellschaft für ChemischeIndustrie (SGCI)Swiss Society of Chemical Industries (SSCI)Nordstrasse 15Post BoxCH-8035 ZurichTel: +41 1 368 17 11Fax: +41 1 368 17 70E-Mail: [email protected]

Vereinigung der Importeure pharmazeutischerSpezialitäten (VIPS)Association of Importers of Proprietary MedicinesBaarerstrasse 2Post Box 4856CH-6304 ZugTel: +41 41 727 67 80Fax: +41 41 727 67 90E-Mail: [email protected]

Drug ManufacturersSchweizerischer Fachverband der Herstellerrezeptfreier Arzneimittel (ASSGP)Swiss Association of Manufacturers ofNon-Prescription MedicinesEffingerstrasse 14CH-3011 BerneTel: +41 31 381 89 80Fax: +41 31 381 90 01E-Mail: [email protected]

Generics ManufacturersIntergenerikaIntergenericsHaus der WirtschaftAltmarktstrasse 96CH-4410 LiestalTel.: +41 61 927 64 08Fax: +41 61 927 65 50E-Mail: [email protected]

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