The Pharmaceutical Industry in Europe

Key data

INDUSTRY (EFPIA Total) (*) 1990 2000 2002 2003

Production 63,127 121,311 158,647 170,000 (e)

Exports 23,180 89,443 144,022 170,000 (e)

Imports 16,113 62,810 108,063 130,000 (e)

Trade balance 7,067 26,633 35,959 40,000 (e)

R&D expenditure 7,941 17,661 20,164 21,100 (e)

Employment (units) 500,762 540,106 588,091 588,000 (e)

R&D employment (units) 76,287 87,625 100,503 100,500 (e)

Pharmaceutical market value at ex-factory prices

43,005 86,696 104,180 111,500 (e)

Values in € million unless otherwise stated(*) Excluding TurkeySource: EFPIA member associations (official figures) – (e): EFPIA estimate

European total pharmaceutical exports, imports & trade balance 1980-2003 (€

million)

Note: Data 2003: EFPIA estimateData based on SITC 54

Source: EFPIA Member Associations (official figures)

23180

44053

89443

144022

170000

14854

108063

62810

30453

161139724

130000

4000035959

26633

13600

70675130

0

20000

40000

60000

80000

100000

120000

140000

160000

180000

1985 1990 1995 2000 2002 2003

Total exports

Total imports

Trade surplus

EU Trade balance – High technology sectors (€ million) – 2002

Source: Eurostat, SITC 54

25234

6129

-33236

5467

-9131

-1437

-40000

-30000

-20000

-10000

0

10000

20000

30000

SITC 54 Pharmaceuticalproducts

SITC 71 Pow er generatingmachinery and equipment

SITC 75 Office machinesand computers

SITC 76 Telecommunication,sound, TV, video

SITC 77 Electricalmachinery

SITC 87 Professional,scientif ic, controllingmaterial

Source: IMS World Review 2004

Breakdown of the world pharmaceutical market – 2003

sales

49,2%

27,8%

11,3%

8,0%3,7%

North America (USA,Canada)

Europe

Japan

Africa, Asia(excl.Japan) & Austr.

Latin America

Breakdown of the world pharmaceutical market

1990 - 2003

North America (USA, Canada)31,1%

Europe37,8%

Latin America5,7%

Africa, Asia & Australasia

25,4%

Total pharmaceutical market value 1990:135,900 million Euros173,000 million Dollars

Total pharmaceutical market value 2003:412,290 million Euros466,300 million Dollars

Source: IMS World Review 2004

North America (USA, Canada)

49,2%

Europe27,8%

Africa, Asia & Australasia

19,3%

Latin America3,7%

Total pharmacy market (at ex-factory prices)

Average annual growth rate 1992-2002

Source: EFPIA member associations, PhRMA, JPMA

Europe(weightedaverage)

USAJ apan

7,0

11,8

4,04,6

9,3

3,8

0,0

2,0

4,0

6,0

8,0

10,0

12,0

At constant prices(Adjusted for inflation)

At current prices

New Molecular Entities 1989-2003

Source: SCRIP Publications - EFPIA calculations (according to nationality of mother company)

9389

62

44

74 73

62

53

28

4 6 4

0

10

20

30

40

50

60

70

80

90

100

1989-1993 1994-1998 1999-2003

Europe

USA

Japan

Others

Pharmaceutical R&D expenditure in Europe, USA and Japan, 1990-

2003

€ million, 2002 constant exchange rates

Data 2003: estimate EFPIA & PhRMASource: EFPIA member associations, PhRMA, JPMA

7941

11423

17661

2016422584

27167

43695436 6317

8177

21100 (e)

7191

12552

28964 (e)

n.a.0

5000

10000

15000

20000

25000

30000

35000

1990 1995 2000 2002 2003

Europe

USA

Japan

Pharmaceutical R&D expenditure in Europe, USA and Japan, 1990-

2003

Million of national currency units*

* National currency units: Europe: € million; USA: $ million; Japan: ¥ milliion x 100Data 2003: estimate EFPIA & PhRMASource: EFPIA member associations, PhRMA, JPMA

7941

17661

20164

6803

21364

25700

51616422

74629657

11423

21100 (e)

11874

27400 (e)

n.a.0

5000

10000

15000

20000

25000

30000

1990 1995 2000 2002 2003

Europe

USA

Japan

73% 69%59%

26%26%

34%

1% 5% 7%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1990 1995 1999

Year

Rest of the World

USA

EU

Source: EFPIA, 2000

Location of R&D spending by EU companies1990-1999

BiopharmaceuticalsEurope versus USA (2002)

Europe USATurnover (€ million)

8,733 31,994

R&D expenditure (€ million)

5,274 17,201

Net loss (€ million)

2,921 9,913

Number of public companies (units)

102 318

Number of employees (units)

33,304 142,900Source: Ernst & Young, ‘Beyond Borders, The Global Biotechnology Report 2003’ (data relate to publicly traded companies)

Share of Global Biotechnology Revenues

Publicly traded companies (2002)

Note: Global revenues of € million 43,730 (USA: 31,994; Europe: 8,733; Canada: 1,550; Asia/Pacific: 1,453)Source: Ernst & Young, ‘Beyond Borders, The Global Biotechnology Report 2003’

73,2%

20,0%

3,5%

3,3%

USA

Europe

Canada

Asia/Pacific

Share of Global Biotechnology R&D Expenses Publicly traded companies

(2002)

Note: Global R&D expenses of € million 23,269 (USA: 17,201; Europe: 5,274; Canada: 586; Asia/Pacific: 208)Source: Ernst & Young, ‘Beyond Borders, The Global Biotechnology Report 2003’

73,9%

22,7%

2,5%

0,9%

USA

Europe

Canada

Asia/Pacific

Source: CMR International

Number of new molecular entities (NMEs) and biotechnology products first launched worldwide 1990-

2003

17 6 2 5 7 6 5

10 94

112 4

35

4437

38 35 3430

41 27 32

2820

26 22

0

10

20

30

40

50

60

Year

To

tal N

ME

's

Biotechnology products

R&D as a percentage of sales

1985-2003

Source: EFPIA Member Associations (official figures) – (e): EFPIA estimate

15,618,5 19,3 20,4 19,4 18,9 (e)

0

5

10

15

20

25

1985 1990 1995 2000 2002 2003

%

6,046 5,995

6,198

6,416

6,994

5500

6500

1999 2000 2001 2002 2003

Number of Drugs in active R&DNumber of Drugs in active R&D

1999-20031999-2003

Source: SCRIP, May 2003

EU / US ‘Global’ Environment

USA• Basic patent (20 years)• Patent Term Restoration – max 5

years, 1984• Biotech Patent, 1983• Orphan Drug Act, 1984• Same levels of IPRs across all

States• Bayh-Dole Act + National

Institutes for Health• Economic environment (direct

access to a large unified market; competitive market pricing)

EUROPE• Basic patent (20 years)• SPC – max 5 years, 1992• Biotech Patent 2000-yet to be

applied in 8 MS• Orphan Drug Reg., 2000• Lower IPRs in some EU MS (+

EU enlargement)• European Framework Research

Programme• Economic environment (no

direct market access; price controls; free movement of goods)

R&D Expenditure as a percentage of GDP

(2002)

Note: Greece, Italy, Japan, The Netherlands, Switzerland: 2000 data; Belgium, Denmark, Germany, Ireland, Portugal, Spain, Sweden, Acceding countries: 2001 data

Source: EUROSTAT & DG Research, ‘Statistics on Science and Technology in Europe: data 1991-2002’, February 2004; SwissFederal Statistical Office (Switzerland)

2,402,17

2,802,98

0,841,99

1,842,63

4,270,96

0,841,62

1,94

1,071,17

0,672,49

2,203,49

1,94

0,00 0,50 1,00 1,50 2,00 2,50 3,00 3,50 4,00 4,50

United States

J apan

Acceding countries (10)

EU-15

U.K.

Switzerland

Sweden

Spain

P ortugal

Norway

Netherlands

Italy

Ireland

Greece

Germany

France

Finland

Denmark

Belgium

Austria

%

70 %USA

18 % Europe

4 %Japan

8 % ROW

Innovation – Market penetration

Geographical breakdown (by main markets) of sales ofnew medicines launched during the period 1998 - 2002

Source: IMS, 2003

Product life cycle in US and Europe

Time

Sales EuropeUS

Delay in Market Access

Utilisation and Price Level

Generic competition

Source: GSK

European policies do not reward innovation but neutralise generic competition

Share of Parallel Imports in Pharmacy Market Sales (%) -

2002

12,2

7,1

10,5

6,3

10,2

17,6

02468

1012141618

DK DE NL N S UK

%

Note: Denmark, Germany, The Netherlands, Norway, Sweden, UK: Data 2002 Norway: share of total market sales (estimate)

Source: EFPIA Member Associations

Total market sales (at ex-factory prices) in EU acceding countries (2002 – €

Million)

Note: Bulgaria, Estonia, Latvia, Lithuania: pharmacy sales onlySource: IMS Health

216

952

82

1274

90214

3058

434340

0

500

1000

1500

2000

2500

3000

3500

EU Acceding & Candidate Countries

GDP per capita (PPS) - € 2002

Source: Eurostat, Statistics in Focus 47/2003

5500

17700

11400

5900

9500

11700

9400

8500

13600

10000

14400

17400

5900

8000

24000

0 5000 10000 15000 20000 25000 30000

EU15

Acceding/candidate countries (13)

Turkey

Slovenia

Slovakia

Romania

Poland

Malta

Lithuania

Latvia

Hungary

Estonia

Czech Republic

Cyprus

Bulgaria

Delays From Pricing And/Or ReimbursementApplication To Reimbursement

0 100 200 300 400 500 600 700 800

Belgium

Greece

Portugal

France

Austria

Finland

Italy

Norway

Spain

Netherlands

Switzerland

Sweden

Denmark

Ireland

Germany

UK

(Days)

Increasingoverall delay

P&R

Pricing Reimbursement

Publication

180 days90 days

•In Belgium - until January 2002, the transparency commission process had to be conducted before a company could apply for reimbursementof a given product. In France, only ambulatory care products have been included in this analysis. In Italy and Sweden the pricing and/or reimbursementprocedure can start as soon as CPMP opinion is available (for centrally approved medicines). This analysis does not reflect the impact of recent reformsin Italy. In Spain anecdotal evidence suggests that delays have increased recently. In Switzerland a more comprehensive study concerning 191 filesshows an average delay over 180 days. Finland has a two-tier reimbursement system, with a slower process for treatments of chronic diseases(reimbursed at 75%) and serious or life-threatening diseases, and a faster one for acute diseases. Delays shown in this study do not reflect thisdistinction, and actual pricing and reimbursement delays are typically longer for medicines in the 75%/100% reimbursement categories