One of the drivers behind the European Commission's efforts to reform European pharmaceutical law is to increase innovation by European companies. The European Federation of Pharmaceutical Industries and Associations (EFPIA), a Brussels-based trade organization representing branded pharmaceutical companies, cites the pressing need for increased drug output and new research to keep pace with counterparts in the US.

"It would be too simplistic to attribute the deterioration of the European pharmaceutical environment to a single factor,'' says Tom Mc Killop, chief executive of AstraZeneca and the newly elected president of EFPIA. "As a whole, Europe remains less attractive for R&D investments than other regions, the US in particular. The economic and health care environments, the science base, the investment conditions, the regulatory framework, and societal attitudes towards new technologies all contribute to this."

The pharmaceutical industry remains one of Europe's best performing high-technology growth sectors, says a 2002 EFPIA report "However, data for 2000 and preliminary figures for 2001 confirms the vulnerability of the pharmaceutical industry in Europe with respect to its main US competitors," it continues "Indicators show that the US has increased its relative position as a locus of innovation."

Certain key measures offer evidence for the eroding pharmaceutical innovation base in Europe. Between 1990 and 2001, R&D investment in the US rose five-fold, while in Europe it grew only 2.4 times. Between 1990 and 2000, the US pharmaceutical market grew by 11.4 per cent, well ahead of Europe, which had weighted average growth of 7.3 per cent.

Since 1997, 62 per cent of new medicines marketed have been generated on the US market, compared with 21 per cent on the European market, according to IMS Health data. "The loss of return on investment on R&D investment resulting from the fragmentation of the European Union pharmaceutical market and consequent parallel trade flows was estimated at [euro]3.5 billion in 2000," says EFPIA.

To improve the innovation gap, EFPIA's McKillop says, "We definitely need to set up a pro-research environment in Europe which truly nurtures, promotes and rewards innovation. We need to maintain a high level of intellectual property protection worldwide, as well as an efficient and world-class regulatory system in Europe allowing patients to reap the benefits of our innovative medicines more quickly, immediately the marketing authorization is granted," he says. "We also need less bureaucratic government intervention, which stifles competition, discourages innovation and creates significant inequity among European patients' access to medicines which could most help them. These are the primary obstacles to innovation which Europe must tackle in the first place."

In particular, the European pharmaceutical industry expects the review of pharmaceutical legislation and the G10 process now underway to open on a number of key deliverables on some priority issues. It wants to safeguard high levels of intellectual property protection at European and international levels and improve the current legislation on data protection. The European pharmaceutical industry further supports the development of paediatric medicines and favours implementing Directive 98/44/EEC on the legal protection, of biotechnological inventions. EFPIA is also seeking to modify regulations to better take into account normal business practices and supports the development of a European Union network of research competence centres. EFPIA has also targeted the fragmentation of the EU market and its negative consequence on R&D. It is seeking to liberalize pricing policies, which includes rewarding innovation through premium prices, and to monitor EU enlargement through transitional solutions to economic and public health disparities existing between candidates and EU member states.

Chemical Market Reporter