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Improving the competitiveness of the pharmaceutical industry

Improving the competitiveness of the pharmaceutical industry. Dominique Limet Senior Vice-President and Area Director Southern and Eastern Europe. G10 - recognising the need for a competitive pharmaceutical industry. G10 Recommendations: the end of a process or the beginning of a change?.

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Improving the competitiveness of the pharmaceutical industry

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  1. Improving the competitiveness of the pharmaceutical industry Dominique Limet Senior Vice-President and Area Director Southern and Eastern Europe

  2. G10 - recognising the need for a competitive pharmaceutical industry • G10 Recommendations: the end of a process or the beginning of a change?

  3. Pharmaceutical R&D expenditure - a comparison 1990-2001 €million (e): estimate Source: EFPIA member associations, PhRMA, JPMA

  4. R&D investment - driver of the pharmaceutical industry Research-driven pharmaceutical companies invest up to 14% of their sales in R&D, which represents a higher percentage than any other industrial sector Pharmaceuticals 16% Telecomms IT Electronics 14% Cars Aeronautics 12% Services Interm. goods Consumer Goods 10% Share of R&D (%) Agro-food Petro-Chemicals 8% Media/Comms 6% 4% 2% 0%

  5. Location of R&D spending by EU companies 1990-1999 Source: EFPIA, 2000

  6. A call for Action A competitive environment: key to a thriving pharmaceutical industry in Europe • Competitive pricing for non-reimbursed medicines • Benchmarking for competitiveness • Principles of the Transparency Directive are key in finding solutions to accelerate market access • Transparency and predictability in Health technology assessments

  7. The importance of pharmaceutical competitiveness for Europe • A knowledge-based economy • Provision of high-skilled jobs • Driver for innovation and investment • Provision of medical advances

  8. Drug discovery is a high-risk process Attrition is High in the R&D Process Millions of Compounds Screened ~100 Discovery Approaches High Risk Process 12 - 15 years Cost of development +800 Mo euro on average Preclinical Pharmacology Preclinical Safety 1 - 2 Products Clinical Pharmacology & Safety Discovery Exploratory Development Full Development Phase I Phase II Phase III 0 15 10 5 Idea Drug 12 - 15 Years

  9. Our investment in R&D is a reflection of a high-risk development process Estimated full cost of bringing a new chemical or biological entity to market- €million Note: Data have been expressed in € million at current exchange rates - Original data in $ million: 231 (1991), 359 (1993), 429 (1997), 610 (1999), 802 (2001) Source: Di Masi J. et al., Tufts University, 1991; Office of Technology Assessment (OTA), 1993; Myers and Howe, 1997; Office ofHealthEconomics & Lehman Brothers, U.K., 1999; Di Masi J., Tufts University - Centre for the Study of Drug Development, 2001

  10. Comparison of product portfolios launched and in development (from 35 companies - source LEHMAN - BROTHERS) on the basis of size of targeted populations in OECD markets Current and future profile of pharmaceutical innovation

  11. Stimulating research into new medicines Pharmaceutical industry R&D investments - 1962-1996

  12. The pharmaceutical industry’s investment in the life-science sector

  13. Increasing competitiveness: a dual approach • Meeting the pharmaceutical sector’s needs: • Rewarding innovation and improving the science base • Addressing structural issues • Improving market access • Creating the right conditions for a competitive industry

  14. Increasing competitiveness: a dual approach • Meeting society’s health objectives: • Bringing innovative approaches to healthcare • Addressing health gaps and priorities • Operating in a manner that responds to Europe’s health needs

  15. Europe’s ageing population Source: Economic Policy Committee (2001) “Budgetary challenges posed by ageing populations”

  16. The limits of cost-containment • An increase in pharmaceutical spending largely due to ageing and the launch of innovative medicines • Pharmaceutical spending is an easy target but only represents a part of overall healthcare spending • A continuous focus on short-term cost-containment will not resolve long-term structural issues and challenges of healthcare systems in Europe

  17. Avoiding the vicious circle Budgetary pressures Healthcare rationing Ad hoc emergency measures short-termism Access delays Pharmaceutical industry must take measures to deal with abrupt changes Less access for patients to innovative treatments Higher costs in other healthcare budget silos, i.e.hospitalisation

  18. Renewing the ‘social contract’ R&D investment in medicines that count Business Planning for long-term supply of medicines Recognising the benefits of innovation Ensuring access for patients to innovative treatments Predictability, communication, transparency Optimising healthcare intervention Managing healthcare budgets

  19. Next steps • Cost considerations are key • Long-term value is critical • Balancing the relationship to ensure that European pharmaceutical industry meets Europe’s needs in a changing world

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