The research based pharmaceutical industry in Europe is entering an exciting new era in medicines development and the industry can play a critical role in restoring Europe to growth and ensuring future competitiveness in an advancing global economy.
Some major steps in biopharmaceutical research, complimented by many smaller steps, have allowed for reductions in mortality, for instance from HIV/ AIDS–related causes and a number of cancers. High blood pressure and cardiovascular disease can be controlled with antihypertensive and cholesterol lowering medicines; knee or hip replacements prevent patients from immobility; and some cancers can be controlled – or even cured – with the help of new targeted treatments. Yet, major hurdles remain, including Alzheimer’s, Multiple Sclerosis, many cancers, and orphan diseases.
The major disease areas in Europe includes Diseases of the circulatory system (37.5%), Malignant neoplasms (25.9%), Diseases of the respiratory system (8.0%), Diseases of the digestive system (4.3%), Diseases of the nervous system and the sense organs (3.7%), Mental and behavioral disorders (3.5%), and Endocrine, nutritional and metabolic diseases (2.9%)
On average, only one to two of every 10,000 substances synthesized in laboratories will successfully pass all stages of development required to become a marketable medicine. The cost of researching and developing a new chemical or biological entity was estimated at €1.9 billion in 2016. During 2011-2015, 75 number of new chemical or biological entities were marketed in Europe, compared to 81 in United States, and nearly 62 entities in rest of the world.
In 2015, the pharmaceutical industry invested an estimated €31.5 billion in R&D in Europe with an average market growth of 5.9% for the total European market. In EU5 countries, the share of R&D investment in the pharmaceutical industry accounted for 19%, 15%, 4%, 3%, and 16% in Germany, France, Italy, Spain and U.K., respectively.
There has been rapid growth in the market and research environment in emerging economies such as Brazil, China and India, leading to a gradual migration of economic and research activities from Europe to these fast growing markets. Besides the additional regulatory hurdles and escalating R&D costs, the sector has been severely hit by the impact of fiscal austerity measures introduced by governments across much of Europe since 2010. The geographical balance of the pharmaceutical market and ultimately the R&D base is likely to shift gradually towards emerging economies such as Brazil and China. Earlier, a decade of strong US market dominance led to a shift of economic and research activity towards the United States, and now, Europe is facing increasing competition from emerging economies due to rapid growth in the market and favorable research environments moving economic and research activities to non–European markets (DiMasi et al, Journal of Health Economics, 2016).
Out of the €716 billion global pharmaceutical market in 2015, North America (USA and Canada) accounted for 49% of world pharmaceutical sales compared with 22% for Europe. About 58% of sales of new medicines launched during the period 2010–2015 were on the US market, compared with 23% on the European market (EU 5 countries – Germany, France, Italy, Spain and United Kingdom). In EU5 countries, the share of generics in European pharmaceutical market sales accounted for 32%, 19%, 47%, 21%, and 28% in Germany, France, Italy, Spain and U.K., respectively.