The Pharmaceutical Industry in Figures

The Pharmaceutical Industry in Figures 2006 Edition 1035225_Efpia 2006 cover.indd 1 07-06-2006 14:08:10 EFPIA (The European Federation of Pharmac...
Author: Ferdinand Cain
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The Pharmaceutical Industry in Figures

2006 Edition

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EFPIA (The European Federation of Pharmaceutical Industries and Associations) represents the research-based pharmaceutical industry operating in Europe.

Founded in 1978, its members comprise 28 national pharmaceutical industry associations and 44 leading pharmaceutical companies involved in the research, development and manufacturing of medicinal products in Europe for human use. Its mission is to promote pharmaceutical research and development and the best conditions in Europe for companies to bring to market medicines that improve human health and the quality of life around the world. Through its membership, EFPIA represents the common views of 2,100 large, medium and small companies including the entire European research-based pharmaceutical sector whose interests also include an important part of the generics segment. Two specialised groups have been created within EFPIA to address specific issues relating to vaccines (EFPIA/EVM – European Vaccines’ Manufacturers) and the needs of biopharmaceutical companies (EFPIA/EBE - European Biopharmaceutical Enterprises).

Further details about the Federation and its activities can be obtained from: EFPIA Leopold Plaza Building, Rue du Trône 108 - B-1050 Brussels - Belgium Tel: +32.(0)2.626.25.55 - Fax: +32.(0)2.626.25.66 www.efpia.org

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S

CONTENTS

Summary............................................................................................... 3 Main trends........................................................................................... 4 Key Figures ........................................................................................... 9 EFPIA membership ................................................................................10 Structure of the pharmaceutical industry .................................................13 Pharmaceutical output ..........................................................................15 Pharmaceutical sales .............................................................................17 VAT rates applicable to medicines ...........................................................19 Pharmaceutical Research & Development (R&D) ........................................21 Biopharmaceuticals ...............................................................................26 Vaccines ..............................................................................................27 Pharmaceutical trade.............................................................................29 Pharmaceutical employment ...................................................................35 Pharmaceutical reimbursement ...............................................................37 Pharmaceutical spending (as a share of health spending) ..........................39 Health care expenditure ........................................................................ 41 Health status & value of medicines .........................................................43 Health care systems ..............................................................................45 GDP, population, inflation, Euro rate .......................................................46 Notes ..................................................................................................47

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SUMMARY

E

urope has a great deal to gain in health and economic terms from a strong and competitive indigenous research-based pharmaceutical sector. The research-based pharmaceutical industry is one of the remaining leading high technology industries in Europe, amounting to about 18% of all business R&D investments and about 3.5% of the total EU manufacturing value added. Since the early 1990s, the research-based pharmaceutical industry in Europe has been losing competitiveness with respect to its main competitors, in particular the US. Data for 2004 and preliminary figures for 2005 confirm Europe’s lack of attractiveness as a location for pharmaceutical R&D investments. ■

Between 1990 and 2005, R&D investment in United States grew 4.6 times while in Europe it only grew 2.8 times. Today there is rapid growth in the research environment in emerging economies such as China and India.



The United States still dominates the biopharmaceutical field, accounting for the three quarters of the world’s biotechnology revenues and R&D spending.



In 2005 North America accounted for 47.0% of world pharmaceutical sales against 30.0% for Europe. According to IMS Health data, 66% of sales of new medicines marketed since 2001 are generated on the US market, compared with 24% on the European market.



Between 1994 and 2004, the US market grew by 12.5% per annum, well ahead of Europe’s (non weighted average growth of 7.0%). These market evolutions have particularly benefited US-based companies, which have significantly increased their share in development and sales of new medicines. However, in 2005, the European market outpaced the US market in terms of growth, for the first time in more than a decade.



The fragmentation of the EU pharmaceutical market results in a lucrative parallel trade which benefits neither social security nor patients but deprives the industry from additional resources to fund R&D. Parallel trade was estimated to amount to € 4,200 million (value at ex-factory prices) in 2004.

It would be too simplistic to attribute the relative lack of attractiveness of Europe for pharmaceutical R&D to one single factor. Contributing to this problem are the economic and regulatory framework, the science base, the investment conditions, and societal attitudes towards new technologies.

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MAIN TRENDS BREAKDOWN OF TOTAL HEALTH EXPENDITURE IN EUROPE – 2003

THE ADDED VALUE OF MEDICINES IN HEALTHCARE

T

he research-based pharmaceutical industry in Europe plays a critical role in both the industrial and health fields. It invests billions of euros each year to develop innovative medicines that will meet patients’ needs. 15.6%

40.3%

44.1%

In-patient care (hospital) Out-patient care Pharmaceutical products

Source: OECD Health Data 2005, Statistics and Indicators for 30 countries, October 2005 – EFPIA calculations (non-weighted average for 19 EU & EFTA countries)

The mainstay of the European pharmaceutical industry’s long-term competitiveness is its ability to pay for R&D. This ability largely depends on the success of products already on the market, and in particular on the attitude that Europe takes with respect to new products. Medicines remain the prime target of health cost containment policies, despite the fact that, on average, pharmaceutical spending accounts for only 15% of total health expenditure in Europe. In most European countries, healthcare policies do not sufficiently take into account the therapeutic and economic value of medicines. However, there is growing evidence at macro and micro-economic level regarding the added value of medicines in the health care context, not only in terms of global cost savings but also in terms of increasing the quality of care. Medicines not only provide the best treatment for many diseases, but also generate savings by substantially reducing costs in other branches of health care (hospital stays, invalidity, etc.).

THE ANNUAL IMPACT OF INADEQUATE DIABETES TREATMENT IN GERMANY Diabetes is one of the most common diseases of Western civilisation affecting more than 19 million people in the European Union. At least thirty percent of the 4 million patients suffering from diabetes in Germany are not treated with medicines at all. The inadequate treatment of diabetes in Germany results in: 6,000 cases of blindness, 8,000 patients becoming dependent on dialysis, 27,000 heart attacks, almost 28,000 amputations of limbs and 44,000 strokes annually. Medicines account for 27% of all costs in diabetes treatment, whilst hospital 44,000 stays represent almost 60%. A large part of the hospitalisation costs – as with most other serious illnesses - could be avoided with proper outpatient treatment (especially by regulation 28,000 of the blood sugar level). 27,000

Source: CODE 2 study (Costs of diabetes in Europe, type 2), 1999

6,000 cases of blindness

8,000

dialysis patients

heart amputations strokes attacks of limbs

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CHANGING GLOBAL MARKET DYNAMICS

O

ver the past decade, the US pharmaceutical market has grown twice as fast as the European market in real terms. The year 2005 ended a decade of US market dominance, which led to a significant shift of economic and pharmaceutical research activity towards the US territory over the period. In many respects the US pharmaceutical market has demonstrated that competitive market forces can drive research & development by providing the necessary rewards for innovation. According to IMS data, 66% of sales of new medicines marketed since 2001 are generated on the US market, compared to 24% on the European market.

TOTAL PHARMACY MARKET (AT EX-FACTORY PRICES) AVERAGE GROWTH RATE FOR THE PERIOD 1994-2004 (%) 12.5 12 10 10.0

GEOGRAPHICAL BREAKDOWN (BY MAIN MARKETS) OF SALES OF NEW MEDICINES LAUNCHED DURING THE PERIOD 2001-2005

8

7.0

6 4

4.8

2.9 2.9

2 0 Europe (weighted average) 66% USA

24% Europe

USA

Japan

at current prices at constant prices (adjusted for inflation)

6%ROW 4% Japan

Source: EFPIA member associations, PhRMA, JPMA

Note:

New medicines cover all new active ingredients marketed for the first time on the world market during the period 2001-2005 Source: IMS Health MIDAS MAT December 2005

The European pharmaceutical market is highly fragmented and remains driven by governments’ forever-changing cost containment plans, resulting in a lack of predictability for companies’ medium and long-term operational plans. Europe lacks a climate which favours and rewards innovation: cost-containment policies in Europe tend to focus at the beginning of the product life cycle rather than at the end of the product life cycle like in the US. The fragmentation of the EU pharmaceutical market results in a lucrative parallel trade which benefits neither social security systems nor patients but deprives the industry from additional resources to fund R&D. Parallel trade was estimated to amount to € 4,200 million (value at ex-factory prices) in 2004.

SHARE OF PARALLEL IMPORTS IN PHARMACY MARKET SALES (%) - 2004

18 16

17.0 14.8

14

12.8

12.1

12 10 8

7.4

6

5.3

4 2

2.0

0 Denmark Finland Germany The Netherlands Norway

Sweden

UK

Source: EFPIA member associations

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SLOWDOWN OF PHARMACEUTICAL R&D INVESTMENT IN EUROPE PHARMACEUTICAL R&D EXPENDITURE IN EUROPE, USA AND JAPAN (MILLION OF NATIONAL CURRENCY UNITS*), 1990-2005 7,766 6,803 5,161

1990

Europe USA Japan

11,484 11,874

1995 6,422

17,849 21,364

2000 7,462

21,106 2004

29,556 9,067 21,700(e)

2005

T

he benchmarking competitiveness report released by the European Commission in November 2000* highlighted two main trends: 1) the European researchbased pharmaceutical industry is losing competitiveness with respect to the US industry; and 2) there is a process of concentration of R&D into North America. The United States has become the dominant player in the pharmaceutical sector. Whereas R&D investment in Europe grew by 2.8 times between 1990 and 2005, the corresponding increase in the U.S. was 4.6 times. According to the 2000 competitiveness report, “North America has become the main locus of innovation in pharmaceuticals, to which European companies turn to get knowledge”. The report notes that the concentration of research and innovation in the U.S. is “worrying because Europe risks to be relegated into the fringe of the industry, surviving and even thriving through imitation, generics, marketing, but giving up a large share of the value added and becoming dependent on the USA for the development of new products.” * Global Competitiveness in Pharmaceuticals - A European Perspective, A. Gambardella, L. Orsenigo, F. Pammolli, Report prepared for the Directorate General Enterprise of the European Commission, November 2000

31,444(e) n.a. 0

5,000 10,000 15,000 20,000 25,000 30,000 35,000

* Note: Europe: € million; USA: $ million; Japan: ¥ million x 100 (e): estimate Source: EFPIA member associations, PhRMA, JPMA

PHARMACEUTICAL R&D EXPENDITURE IN EUROPE, USA AND JAPAN (€ MILLION, CURRENT EXCHANGE RATES), 1990-2005

30,000 Europe USA 25,277(e)

Japan

25,000

23,121

23,758 21,700(e)

21,106 20,000 17,849

15,000 11,484 10,000

9,078 7,766

7,499 5,342

6,744

5,221

5,000 2,810

n.a.

0 1990

1995

2000

2004

2005

(e): estimate Source: EFPIA member associations, PhRMA, JPMA

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BIOPHARMACEUTICALS

B

iotechnology is delivering significant advances in healthcare. Entirely new medicines are being created, notably for rare or previously untreated diseases. Approximately one-fifth of the new molecular entities launched on the world market each year are now derived from biotechnology. Biotech production methods also provide safer versions of existing treatments in unlimited quantities. Biotechnology has revolutionised research and development of new medicines and allows better product targeting for specific diseases and patient groups.

BIOPHARMACEUTICALS - EUROPE VERSUS USA (2005)

Revenues (€ million) R&D expenditure (€ million) Net loss (€ million) Number of public companies Number of employees (units)

Although Europe’s biopharmaceutical sector is growing steadily, it remains dominated by its American competitor. As Europe practically missed out on the first wave of biotech start-ups in the 1980s, most European biotech companies are significantly smaller than their US counterparts.

NUMBER OF NEW MOLECULAR ENTITIES (NMES) AND BIOTECHNOLOGY PRODUCTS FIRST LAUNCHED WORLDWIDE 1990-2004

(units)

Europe 7,862 2,630 1,562 122 33,340

USA 38,413 12,844 1,711 329 137,400*

*2004 data Source: Ernst & Young, ‘Beyond Borders, The Global Biotechnology Report 2006’ (data relate only to publicly traded companies)

Total NMEs (including biotechnology products)

60

Biotechnology products 51 50 46 43 40

40

40

41

41

36

37

36

32

31

30

28 26 24

20

10

10 7

7

6

1

5 2

6

5

11 9 6 4

4 2

0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Source: CMR International

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V

VALUE OF MEDICINES THE PHARMACEUTICAL INDUSTRY: A KEY ASSET TO SCIENTIFIC AND MEDICAL PROGRESS

T

he research-based pharmaceutical industry’s key contribution to medical progress is to turn fundamental research findings into innovative treatments that are widely available and accessible. Its successes in researching and developing new medicines have helped in the fight against previously fatal diseases (e.g. smallpox, tuberculosis, syphilis, diphtheria and polio) and have spurred medical progress in the treatment of other infections including HIV-AIDS, cancer, nervous disorders, stomach ulcers, asthma, and hypertension, to name but a few. Since aspirin was invented a century ago, scientific and technological breakthroughs in the pharmaceutical industry have enabled researchers to target increasingly complex diseases more closely, first, by exploring the biochemistry of tissues, and then by analysis of individual cells. Through the mapping of the human genome, today’s research will enable scientists to target the causes of diseases rooted in man’s molecular structure.

CHRONOLOGY OF DRUG INNOVATION

Treatment for autoimmune disease CNS drugs Cancer therapies

Focus on Molecular Structure

Complexity

Beta-blockers Anti-arthritis Tranquilizers

Focus on Cell Biochemistry

Antihypertensives

Serendipitous Observation

Antibiotics

Sulfonamides

Focus on Tissue Biochemistry

Aspirin

1890

1900

1910

1920

1930

1940

1950

1960

1970

1980

1990

2000

2010

Accumulated Knowledge of Human, Cell and Molecular Biology

Source: Boston Consulting Group

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K

K

KEY FIGURES THE PHARMACEUTICAL INDUSTRY: A KEY ASSET TO THE EUROPEAN ECONOMY

B

esides driving medical progress and improving health within Europe and worldwide, the research-based pharmaceutical industry is a key asset to the European economy. The pharmaceutical industry is one of Europe’s best performing high-technology sectors. INDUSTRY (EFPIA total) (*) Production Exports Imports Trade balance R&D expenditure Employment (units) R&D employment (units) Pharmaceutical market value at ex-factory prices Pharmaceutical market value at retail prices Payment for pharmaceuticals by statutory health insurance systems

(**)

1990 60,220 23,180 16,113 7,067 7,766 500,879 75,760

1995 87,799 44,188 31,018 13,170 11,484 506,052 82,282

2000 121,471 90,935 68,841 22,094 17,849 538,317 88,524

2004 160,769 165,003 132,853 32,150 21,106 612,114 102,222

2005 170,000 (e) 178,000 (e) 144,000 (e) 34,000 (e) 21,700 (e) 615,000 (e) 103,000 (e)

43,005

59,188

86,812

120,007

127,500 (e)

67,388

92,040

132,123

182,249

193,000 (e)

42,627

57,603

74,741

97,709

104,000 (e)

Values in € million unless otherwise stated (*) Data relate to EU-25, Norway and Switzerland since 2004 (**) Since 1998 data relate to ambulatory care only Source: EFPIA member associations (official figures) - (e): EFPIA estimate; Eurostat (EU-25 trade data 1995-2005)

The research-based pharmaceutical industry accounts for approximately 3.5% of the total EU manufacturing value added and for 18% of the whole EU business R&D expenditure. The pharmaceutical industry performs well on most standard indicators, such as: ■

employment: more than 612,000 jobs in Europe, including 102,200 in R&D units;



R&D investment: € 21,100 million in 2004 (up from € 7,800 in 1990);



trade surplus: € 32,200 million in 2004 (up from € 7,100 in 1990).

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EFPIA MEMBERSHIP

E

FPIA represents the pharmaceutical industry operating in Europe. Founded in 1978, its members comprise 19 national pharmaceutical industry associations (plus 9 associations with liaison status) and 44 leading companies undertaking research, development and manufacturing of medicinal products for human use in Europe.

MEMBER ASSOCIATIONS Austria Fachverband der Chemischen Industrie Österreichs (FCIO)

Belgium Association Générale de l’Industrie du Médicament (pharma.be)

Denmark Laegemiddelindustriforeningen The Danish Association of the Pharmaceutical Industry (Lif)

Finland Lääketeollisuus ry Pharma Industry Finland (PIF)

France Les Entreprises du Médicament (LEEM) Greece Hellenic Association of Pharmaceutical Companies (SFEE) Italy Associazione delle Imprese del Farmaco (Farmindustria) Norway Legemiddelindustriforeningen Norwegian Association of Pharmaceutical Manufacturers (LMI) Portugal Associação Portuguesa da Indústria Farmacêutica (Apifarma) Sweden Läkemedelsindustriföreningen The Swedish Association of the Pharmaceutical Industry (LIF) United Kingdom The Association of the British Pharmaceutical Industry (ABPI)

Germany Verband Forschender Arzneimittelhersteller (VFA) Ireland Irish Pharmaceutical Healthcare Association (IPHA) Netherlands Nederlandse Vereniging van de Research-georiënteerde Farmaceutische Industrie (Nefarma) Poland Association of Innovative Pharmaceutical Companies’ Representatives (SPIFF) Spain Asociación Nacional Empresarial de la Industria Farmacéutica (Farmaindustria) Switzerland Société Suisse des Industries Chimiques (SSIC) Turkey Arastirmaci Ilac Firmalari Dernegi (AIFD) Founder member (Germany) Bundesverband der Pharmazeutischen Industrie (BPI)

ASSOCIATIONS WITH LIAISON STATUS Bulgaria: Association of Research-based Pharmaceutical Manufacturers in Bulgaria (ARPharM) Czech Republic: Mezinárodní Asociace Farmaceutických Spolecností (MAFS) Estonia: Association of International Pharmaceutical Manufacturers in Estonia (AIPME) Hungary: Association of Innovative Pharmaceutical Manufacturers (AIPM) Latvia: Association of International Research-based Pharmaceutical Manufacturers (AFA) Lithuania: Association of Representative Offices of Ethical Pharmaceutical Manufacturers (EFA) Romania: Romanian Association of International Medicines Manufacturers (ARPIM) Slovakia: Slovak Association of Research-Based Pharmaceutical Companies (SAFS) Slovenia: Forum of International Research and Development Pharmaceutical Industries (EIG)

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MEMBER COMPANIES FULL MEMBERS Abbott Laboratories Akzo Nobel Pharma Almirall Altana Pharma AG Amgen AstraZeneca Baxter Bayer Healthcare Boehringer Ingelheim Bristol Myers Squibb Chiesi Farmaceutici Eli Lilly & Co Esteve Genzyme GlaxoSmithKline Grünenthal Ipsen Johnson & Johnson H. Lundbeck A/S Menarini Merck KGaA Merck & Co Novartis Novo Nordisk Orion Pharma Pfizer Pierre Fabre Médicament Procter & Gamble Pharmaceuticals Roche Sanofi-Aventis Schering AG Schering-Plough Schwarz Pharma AG Serono Servier Sigma-Tau Solvay UCB Pharma Wyeth

United States The Netherlands Spain Germany United States United Kingdom United States Germany Germany United States Italy United States Spain United States United Kingdom Germany France United States Denmark Italy Germany United States Switzerland Denmark Finland United States France United States Switzerland France Germany United States Germany Switzerland France Italy Belgium Belgium United States

AFFILIATE MEMBERS Bial Bracco Elan Pharmaceuticals Plc Otsuka Pharmaceuticals Recordati

Portugal Italy Ireland Japan Italy

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S NUMBER OF COMPANIES REPRESENTED BY EFPIA MEMBER ASSOCIATIONS EFPIA 2005

Units

Austria

64

Belgium Cyprus

140 n.a.

Czech Republic Denmark

32 41

Estonia Finland

19 64

France Germany Greece

257 310 65

Hungary Ireland

28 56

Italy Latvia

213 21

Lithuania Malta

16 n.a.

Netherlands Norway Poland

48 42 42

Portugal Slovakia

141 23

Slovenia Spain

16 239

Sweden Switzerland

62 65

United Kingdom

74

Total

2,078

Note:

Number of members as of 1 January 2005 Germany: VFA (39 members); BPI (271 members) Source: EFPIA member associations

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STRUCTURE OF THE PHARMACEUTICAL INDUSTRY

N

early 2,100 companies (separate legal entities) are represented by EFPIA and its member associations. These companies’ activities range from groundbreaking R&D to top-quality manufacturing and marketing (information and sales). The industry’s structure varies from country to country, reflecting differing national medical traditions, intellectual property protection standards and industrial policies.

ORIGIN OF THE TOP 20 COMPANIES BY WORLDWIDE SALES, 2005

From an international perspective, Europe’s research-based pharmaceutical companies have performed well historically. European companies are well represented among the top firms in the world measured by sales, research investment and new product launches.

8

Europe

9

USA

Over the last decade, US-based companies have significantly increased their share in the world’s top selling medicines. Of the top 10 worldwide products in 2005, 7 originate from the US against 3 from Europe. As shown by the report released by the European Commission on the competitiveness of the European pharmaceutical industry*, European-based firms have faced a comparative disadvantage in selling their new medicines over the past decade. The difference in sales growth between European and American companies resulted mainly from the difference in demand growth between the two continents, rather than the ability to develop new breakthrough medicines. American companies have better exploited the growing demand in their own country and have been more successful than European and Japanese companies in disseminating their new medicines at international level.

Japan 2 Others 1 0

1

Note:

* Global Competitiveness in Pharmaceuticals - A European Perspective, A. Gambardella, L. Orsenigo, F. Pammolli, Report prepared for the Directorate General Enterprise of the European Commission, November 2000

2

3

4

5

6

7

8

9

10

American companies (Pfizer; Johnson & Johnson; Merck & Co; Abbott; Bristol Myers Squibb; Wyeth; Eli Lilly; Amgen; Schering-Plough); European companies (GlaxoSmithKline; SanofiAventis; Novartis; AstraZeneca; Roche; Boehringer Ingelheim; Bayer; Schering AG); Japanese companies (Takeda; DaiichiSankyo); Others (Teva)

Source: IMS Health MIDAS December 2005

NEW CHEMICAL AND BIOLOGICAL ENTITIES LAUNCHED IN THE PAST FIVE YEARS, 2001-2005

ORIGIN OF THE TOP 40 COMPANIES BY R&D INVESTMENT, 2004-2005

Europe

12

Europe

51

8

Europe

USA

16

USA

ORIGIN OF THE TOP 30 MEDICINES BY WORLDWIDE SALES, 2004

61 21

USA 11

Japan

Japan 23

Others 1 0

2

Japan 1

Others 14 4

6

8

10

12

14

Source: UK Department of Trade and Industry, The 2005 R&D Scoreboard - EFPIA calculations

16

0

10

20

30

40

50

60

70

Source: SCRIP, 2005 - EFPIA calculations

80

0

2

4

6

8

10 12 14 16 18 20 22

Source: IMS Health - SCRIP 100, December 2005 (data relate to financial year 2004)

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P PHARMACEUTICAL PRODUCTION EFPIA 2004 Austria Belgium Cyprus Czech Republic Denmark Estonia Finland France Germany Greece Hungary Ireland Italy Latvia Lithuania Malta Netherlands Norway Poland Portugal Slovakia Slovenia Spain Sweden Switzerland United Kingdom Total Note:

€ million 1,597 4,799 n.a. n.a. 4,593 n.a. 753 33,141 20,893 449 n.a. 15,866 17,742 59 n.a. 34 5,660 535 1,367 1,590 n.a. n.a. 9,656 5,565 13,915 22,555 160,769

All data based on SITC 54 Sweden: 2004 provisional data Austria, Denmark, France, Ireland, Italy, Norway, Portugal, Spain, Switzerland: estimate Norway, Spain, Switzerland: veterinary products excluded

Source: EFPIA member associations (official figures)

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PHARMACEUTICAL OUTPUT

W

ith an estimated share of 39.3% of the world pharmaceutical output, the US has become the primary manufacturing centre for medicines in the world, just ahead of Europe and Japan. Together, these three regions account for the bulk (approximately 85%) of the world pharmaceutical production. In 2004, EFPIA countries’ pharmaceutical production was worth an estimated total of € 160,800 million.

BREAKDOWN OF THE WORLD PHARMACEUTICAL PRODUCTION (AT EX-FACTORY PRICES), 2004

14.1%

According to EUROSTAT data, the pharmaceutical industry is the high technology sector with the highest value added per person employed, well above the average value for high-tech and manufacturing industries. The pharmaceutical industry is also the sector with the highest ratio of R&D investment to net sales. It amounts to approximately 3.5% of the total EU manufacturing value added and 18.2% of the total EU business R&D expenditure.

35.8% 10.8%

39.3%

Europe

SECTOR R&D INVESTMENT AS % OF ALL SECTORS AND RESPECTIVE R&D/SALES RATIOS FOR EACH SECTOR (EU TOP 700 COMPANIES) - 2004 FTSE Sector Pharmaceuticals & Biotechnology Software & Computer Services IT Hardware Health Electronics & Electrical Equipment Aerospace & Defence Automobiles & Parts Chemicals Personal care & household Media & entertainment Engineering & Machinery Diversified industrials Food producers Telecommunication Services Oil & gas Others (16 sectors) Total (31 sectors)

R&D investment as % of total 18.2 6.4 18.6 2.1 11.2 3.8 19.0 5.1 1.2 1.2 2.9 1.9 1.0 2.1 1.4 4.2 100.0

R&D/Sales ratio (%) 15.3 10.7 8.6 6.8 5.6 4.9 4.3 3.7 2.9 2.7 2.5 2.4 1.8 1.5 0.3 1.4 3.8

USA Japan Rest of the World Source: EFPIA member associations, PhRMA, JPMA, OECD, IMS Health – Estimate (EFPIA calculations)

EUROPEAN PHARMACEUTICAL PRODUCTION, 1980-2005 (€ MILLION) 180,000 170,000(e) 160,769

160,000 140,000 121,471

120,000 100,000 87,799

80,000 60,220

60,000

Note:

FTSE sector: sector of economic activities according to the Financial Times Stock Exchange index classification Data relate to the top 700 companies with registered offices in the EU ranked by the size of their R&D investment (over € 4.1 million) Source: The 2005 EU industrial R&D investment scoreboard, European Commission, DG Research

39,821

40,000 20,000

20,336

0 1980 1985 1990 1995 2000 2004 2005

Note:

As these figures have been converted into a common currency, they are to some extent influenced by exchange rate movements. Source: EFPIA member associations (official figures) – (e): EFPIA estimate

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P PHARMACEUTICAL MARKET VALUE (AT EX-FACTORY PRICES) EFPIA 2004 Austria Belgium Cyprus Czech Republic Denmark Estonia Finland France Germany Greece Hungary Ireland Italy Latvia Lithuania Malta Netherlands Norway Poland Portugal Slovakia Slovenia Spain Sweden Switzerland United Kingdom Total Note:

€ million 2,312 3,539 n.a. 1,163 1,410 105 1,689 22,760 21,551 3,468 1,556 1,306 15,195 144 276 n.a. 3,579 1,223 2,939 2,879 487 413 10,671 2,608 2,624 16,110 120,007

Medicinal products as defined by Directive 2001/83/EEC Denmark, Finland, Latvia, Norway, Slovenia, Sweden: pharmaceutical market value at pharmacy purchasing prices Greece: including parallel exports Belgium, France, Germany, Ireland, Italy, Norway, Spain: estimate

Source: EFPIA member associations (official figures) – Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, Slovenia: data supplied by IMS Health The figures above are for pharmaceutical sales, at ex-factory prices, through all distribution channels (pharmacies, hospitals, dispensing doctors, supermarkets, etc.), whether dispensed on prescription or at the patient’s request. Samples and sales of veterinary medicines are excluded.

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PHARMACEUTICAL SALES

he world pharmaceutical market was worth an estimated € 454,867 million ($ 565,900 million) at ex-factory prices in 2005. The North American market (USA & Canada) remained the world’s largest market with a 47.0% share, well ahead of Europe and Japan. In 2005 the European market outpaced the US market in terms of growth, for the first time in more than a decade (the growth of the North American market was estimated at 5.2% in 2005, compared with an estimated market growth of 7.1% for Europe). The three biggest therapy classes are cardiovascular, central nervous system and alimentary & metabolism products, which all together account for approximately half of the world pharmaceutical market value.

T

BREAKDOWN OF THE WORLD PHARMACEUTICAL MARKET – 2005 SALES 8.2%

BREAKDOWN OF THE TOTAL PHARMACEUTICAL MARKET VALUE (AT EX-FACTORY PRICES) BY MAIN DISTRIBUTION CHANNELS (IN € MILLION), 2004

4.2%

10.7% 47.0%

Austria Belgium Cyprus Czech Republic Denmark Estonia Finland France Germany Greece Hungary Ireland Italy Latvia Lithuania Malta Netherlands Norway Poland Portugal Slovakia Slovenia Spain Sweden Switzerland United Kingdom EFPIA total Note:

Total 2,312 3,539 n.a. 1,163 1,410 105 1,689 22,760 21,551 3,468 1,556 1,306 15,195 144 276 n.a. 3,579 1,223 2,939 2,879 487 413 10,671 2,608 2,624 16,110 120,007

Pharmacy 1,621 3,024 n.a. 882 970 105 1,338 18,360 17,951 2,633 1,288 1,121 11,642 113 259 n.a. 2,748 1,054 2,597 2,186 436 346 8,268 2,277 1,436 11,757 94,412

Hospital 691 515 n.a. 281 424 n.a. 351 4,400 3,350 835 268 168 3,553 31 17 n.a. 554 159 342 693 51 67 2,403 331 506 3,536 23,526

Other channels 0 0 n.a. 0 16 0 0 0 250 0 0 17 0 0 0 n.a. 277 10 0 0 0 0 0 0 682 817 2,069

30.0%

North America (USA, Canada) Europe Japan Africa, Asia (excluding Japan) & Australia Latin America

Source: IMS MIDAS, MAT February 2006 (totals do not add due to rounding)

Other channels include dispensing doctors, supermarkets, drugstores and other retail outlets Denmark, Finland, Latvia, Norway, Slovenia, Sweden: pharmaceutical market value at pharmacy purchasing prices Belgium, France, Germany, Ireland, Italy, Norway, Spain: estimate Greece: including parallel exports

Source: EFPIA member associations – Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, Slovenia: data supplied by IMS Health

17

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GENERICS

T

he term ‘generics’ is widely used but its definition is not always consistent between countries. Generics are usually produced by a manufacturer who is not the inventor of the original product and are marketed when intellectual property protection rights are exhausted. The market share of generics cannot be analysed without taking market access conditions for new medicines in each country into consideration. In general there is a link between low levels of generic penetration and poor pricing conditions for innovative medicines on European markets. The market share of generics is significantly lower in price-controlled environments than in unrestricted ones, except in new EU Member States with historically low levels of intellectual property protection.

SHARE (ESTIMATE - IN %) ACCOUNTED FOR BY GENERICS IN PHARMACEUTICAL MARKET SALES VALUE (AT EX-FACTORY PRICES), 2004 Austria

8.5

Belgium

6.0

Denmark

20.4

France

13.4

Germany

31.1

Greece

10.1

Hungary

34.2

Ireland

6.9

Italy

10.1

Latvia

50.2

Netherlands

17.3

Norway

12.6

Portugal

9.0

Slovenia

37.5

Spain

5.2

Sweden

12.5

Switzerland

5.9

United Kingdom

23.3 0

5

10

Note:

15

20

% 25

30

35

40

45

50

Belgium, France, Germany, Greece, Portugal, Spain, U.K.: pharmacy market sales only Belgium, Denmark, Greece, U.K.: share of generics in pharmacy market sales Austria, France, Germany, Hungary, Ireland, Italy, Netherlands, Portugal, Spain: share of generics in reimbursable pharmacy market sales Latvia, Norway, Slovenia, Sweden, Switzerland: share of generics in total market sales France: data relate only to those active substances listed on the official list of medicines Denmark: total market sales at pharmacy selling prices Norway, Sweden: total market sales at pharmacy purchasing prices U.K.: pharmacy market sales at NHS reimbursement prices Definition: ‘generic’ means a medicine based on an active substance that is out of patent and which is marketed under a different name from that of the original branded medicine (depending on the data source, data might not include those generics marketed by the originator).

Source: EFPIA member associations

18

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VAT RATES APPLICABLE TO MEDICINES

D

istribution margins, which are generally fixed by governments, and VAT rates differ significantly from country to country in Europe. On average, about 37% of the retail price of a medicine does not revert to the manufacturer but rather to distributors (pharmacists and wholesalers) and the State. Directive 92/77/EEC on the approximation of VAT rates requires Member States to apply a standard VAT rate (of at least 15%) and, if they so choose, one or two reduced rates (minimum rate 5%). The reduced rates apply to an exhaustive list of products and services, most of which are basic necessities or goods and services used for social or cultural purposes, provided they could be supplied with little or no risk of distorting competition. Pharmaceutical products appear on this list. However, many exceptions may be made for specific national and sectoral situations during the transition period, which will end with the implementation of a definitive common VAT regime. The table below shows the VAT rates applied to medicines in European countries on 1 January 2006.

PRICE STRUCTURE - BREAKDOWN OF THE RETAIL PRICE OF A MEDICINE, 2004 (%) 9.81%

20.37% 63.25% 6.57%

Country Austria Belgium Cyprus Czech Republic Denmark Estonia Finland France (1) Germany Greece (2) Hungary Ireland (3) Italy Latvia Lithuania Malta Netherlands Norway (4) Poland Portugal Slovakia Slovenia Spain Sweden Switzerland UK (5) (1) (2) (3) (4) (5)

Standard VAT rate (%) 20.0 21.0 15.0 19.0 25.0 18.0 22.0 19.6 16.0 19.0 20.0 21.0 20.0 18.0 18.0 0.0 19.0 25.0 22.0 21.0 19.0 20.0 16.0 25.0 7.6 17.5

VAT rates applied to medicines Prescription (%) OTC (%) 20.0 20.0 6.0 6.0 0.0 0.0 5.0 5.0 25.0 25.0 5.0 5.0 8.0 8.0 2.1 - 5.5 2.1 – 5.5 16.0 16.0 9.0 9.0 5.0 5.0 0.0 - 21.0 0.0 – 21.0 10.0 10.0 5.0 5.0 5.0 5.0 0.0 0.0 6.0 6.0 25.0 25.0 7.0 7.0 5.0 5.0 19.0 19.0 8.5 8.5 4.0 4.0 0.0 25.0 2.4 2.4 0.0 17.5

Manufacturer Wholesaler Pharmacist State (VAT and other taxes) Note:

non-weighted average for Europe (estimate)

Source: EFPIA member associations

France: reimbursable medicines 2.1%; non-reimbursable medicines 5.5% Greece: VAT increase from 8% to 9% for medicines on 16 April 2005 Ireland: oral medication 0%; other medication 21% Norway: VAT increase from 24% to 25% on 1 January 2005 UK: 17.5% on medicines purchased by hospitals

19

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P PHARMACEUTICAL INDUSTRY RESEARCH & DEVELOPMENT IN EUROPE EFPIA 2004 Austria Belgium Cyprus Czech Republic Denmark Estonia Finland France Germany Greece Hungary Ireland Italy Latvia Lithuania Malta Netherlands Norway Poland Portugal Slovakia Slovenia Spain Sweden Switzerland United Kingdom Total Note:

€ million 251 1,529 n.a. n.a. 723 n.a. 188 3,950 3,902 36 n.a. 123 1,005 n.a. n.a. n.a. 455 99 n.a. n.a. n.a. 92 684 804 2,485 4,780 21,106

The figures relate to the R&D carried out in each country. Austria: 2002 data Denmark, France, Greece, Netherlands: 2003 data Belgium, Denmark, France, Greece, Ireland, Italy, Netherlands (preliminary), Norway, Sweden (LIF member companies), Switzerland: estimate Germany: VFA member companies

Source : EFPIA member associations (official figures)

20

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PHARMACEUTICAL RESEARCH & DEVELOPMENT (R&D) PHARMACEUTICAL DEVELOPMENT COSTS All new medicines introduced on the market are the result of lengthy, costly and risky research and development (R&D) conducted by pharmaceutical companies. The rate at which R&D costs have risen over the last decade is illustrated by several recent studies. The latest study released in November 2001 estimated the average cost of researching and developing a new chemical or biological entity at € 870 million. Meeting these costs demands ever-increasing investment efforts, which in the pharmaceutical industry’s case, are almost entirely financed from its own resources. High failure rates, the significant cost of clinical trials and the amount of resources needed to get approval by regulatory authorities are the primary reasons for this exponential increase of R&D costs. Promising new substances frequently reach an advanced stage of clinical research before results demonstrate that they must be abandoned. The chances of new substances becoming a marketable medicine remain relatively small: several studies have produced figures ranging from 1 in 5,000 to 1 in 10,000. The financing of such R&D costs requires a sustained and substantial cash flow that the company is only able to generate if it launches new medicines on the various national markets as quickly as possible.

ESTIMATED FULL COST OF BRINGING A NEW CHEMICAL OR BIOLOGICAL ENTITY TO MARKET (MILLION OF 2000 €) 900 800 700 600 500 400

PHASES OF THE RESEARCH AND DEVELOPMENT PROCESS

300

100 s

0

al

ty

au th or isa tio n

tri al ic lin C

em ac en ov t ig ila nc e

rs bu

Ph ar m

ei m R

Pr ic

Ph as

e Re III gi st ra tio e n

II

I Ph as e

Screening (10,000 molecules)

Ph as e

C

hr

/M ar ke tin g

on

Ph

ic

ar

to

m

xi

ac

ci

ol

ty

og

y

xi to

nt

e

te

ut Ac

Pa

ci

ap

pl

ic

at

io

n

Pr de e-c ve lin lo ica pm l en

t

200 149

344

868

1975

1987

2000

data have been expressed in € million, 2000 euros Source: J.A. DiMasi, R.W. Hansen, and H.G. Grabowski, ‘The Price of Innovation: New Estimates of Drug Development Costs’, Journal of Health Economics 22 (2003): 151-185 Note:

1 medicinal product

0

5 years

10 years of R&D

10 years

15 years

20 years Patent expiry

25 years SPC (supplementary protection certificate) max.+ 5 years

2 to 3 years of administrative procedures

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PHARMACEUTICAL R&D EXPENDITURE IN EUROPE (€ MILLION) 25,000

21,106

21,700(e)

20,000 17,849

15,000

10,000 7,766

4,310 2,331

0

n 2004 the pharmaceutical industry invested about € 21,100 million in R&D on the European territory. Compared to the US, Europe is seen as a less attractive R&D investment location in terms of market size and incentives for the creation of new innovative biotech companies. Over the past ten years, Europe’s research and development base has been gradually eroded, with new leading-edge technology research units being transferred out of Europe and mainly to the United States. Whereas R&D investments in Europe grew by 2.8 times between 1990 and 2005, the corresponding increase in the U.S. was 4.6 times.

I

As a whole, the research-based pharmaceutical industry invests 17.6% of its sales into R&D in Europe. In terms of allocation of R&D investment, companies spend on average 25.9% of their R&D budgets on pre-clinical functions (synthesis and extraction, biological screening and pharmacological testing, toxicology and safety testing, pharmaceutical dosage/formulation and stability). Clinical trials (Phase I, II and III) required for medicine approval account for 43.1% of R&D budgets while an additional 13.2% of R&D is spent on additional trials (pharmacovigilance) once the medicine has been approved by the regulatory authorities. In addition, 9.2% of R&D is allocated to the approval process.

11,484

5,000

IMPORTANCE OF PHARMACEUTICAL R&D

1980 1985 1990 1995 2000 2004 2005

ALLOCATION OF R&D INVESTMENTS BY FUNCTION (%) Source: EFPIA Member Associations (official figures) (e): EFPIA estimate

25.9

R&D AS PERCENTAGE OF SALES, 1985-2005 (%) 43.1

25

Pre-human/Pre-clinical 6.7

Phase I

10.2

Phase II

26.2

Phase III

Clinical trials

20.6 19.4

20 18.1

17.6

17.0(e)

9.2

Approval

13.2

Pharmacovigilance (Phase IV)

15.6 15

8.6

Uncategorized

10

Source: PhRMA, Annual Membership Survey 2006 (percentages calculated from 2004 data) 5

0

1985 1990 1995 2000 2004 2005

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

22

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DEVELOPING NEW CHEMICAL OR BIOLOGICAL ENTITIES (NCES/NBES)

T

he European pharmaceutical industry has for many years been the world’s leading inventor of new medicines. However, over the past decade, the United States has become the dominant player in the pharmaceutical sector, including R&D where Europe is under-represented in some crucial research fields such as biotechnology.

NUMBER OF NEW ACTIVE SUBSTANCES LAUNCHED ON THE WORLD MARKET OVER THE LAST FIVE YEARS (2001-2005) 45 40

Between 1960 and 1965, European companies invented 65% of new chemical entities (NCEs) placed on the world market. Forty years later their share had fallen to 34%. The latest data available (period 2001-2005) show the predominance of the United States which has now become the leading inventor of new molecules in the world.

35

36

30

31

30

29 25

Thirty new molecular (chemical and biological) entities reached the world market for the first time in 2005. According to IMS Health, the overall number of medicines in active development at the end of 2004 amounted to 5,500.

NEW CHEMICAL OR BIOLOGICAL ENTITIES (1986-2005)

23 20 15 10 5

110 100

0 2001

104

90

Europe USA Japan Others

94

80 70

73

70

60 50

61 54

51

51

30

2005

Source: SCRIP

12

31

20

0

2004

14

40

10

2003

ORIGIN OF THE 30 NEW MOLECULAR (CHEMICAL AND BIOLOGICAL) ENTITIES LAUNCHED ON THE WORLD MARKET IN 2005

83

78

2002

13

23 14

13 6

9

10

3 8

1986-1990 1991-1995 1996-2000 2001-2005 Source: SCRIP – EFPIA calculations (according to nationality of mother company) 6

4 4

4

Japan

Others

2

0 Europe

USA

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

23

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RESEARCH & DEVELOPMENT AS A PERCENTAGE OF GROSS DOMESTIC PRODUCT

A

ccording to the latest Eurostat data, Research and Development expenditure represented 1.90% of the European Union’s Gross Domestic Product (GDP) in 2004 against 1.93% in 2001. The gap with regard to R&D expenditure in the United States and Japan remains significant since these countries spent respectively 2.59% and 3.15% of their GDP on R&D. Among European countries, the lowest R&D ratios were registered in the southern countries and the new member States, whilst Sweden and Finland, with respective shares of their GDP of 3.74% and 3.51%, made the greatest research effort.

R&D EXPENDITURE AS A PERCENTAGE OF GDP (2004) 2.26

Austria 1.93

Belgium 0.37

Cyprus

1.28

Czech Republic

2.61

Denmark 0.91

Estonia

3.51

Finland 2.16

France Germany

2.49 0.58

Greece

0.89

Hungary

1.20

Ireland

1.14

Italy 0.42

Latvia

0.76

Lithuania

1.75

Luxembourg 0.29

Malta The Netherlands

1.77

Norway

1.75

Poland

0.58 0.78

Portugal 0.53

Slovakia

1.61

Slovenia 1.07

Spain

3.74

Sweden 2.57

Switzerland 1.79

United Kingdom

1.90

EU - 25 China

1.31

Japan

3.15 2.59

Unites States %

0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

Note:

Switzerland: 2001 data China, Italy, Japan, Portugal, USA: 2003 data Source: EUROSTAT, Statistics in Focus, Science and Technology, 6/2006, ‘R&D expenditure in Europe’, First preliminary data; EUROSTAT

24

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EUROPE SHOWS A SPECIALISATION IN PHARMACEUTICALS

T

he 2005 EU industrial R&D investment Scoreboard published by the European Commission shows that each region of the world has a different specialisation, which somewhat reflects historical strengths in certain sectors. The European Union, the United States and Switzerland (included in the Rest of the World group) show a specialisation in pharmaceuticals and biotechnology. The EU and Japan are primarily specialised in automobiles and related components whilst the United States are the strongest in IT hardware and in computers (US companies are responsible for more than 85% of global R&D spending in software & computers services). Among the five largest sectors by aggregate R&D investment (top 942 companies in 2004), the pharmaceutical sector has shown the highest growth in R&D investment between 2001 and 2004.

NOMINAL R&D GROWTH RATES FOR THE WORLD’S TOP 942 COMPANIES BY MAIN SECTOR FTSE Sector

Number of companies

Automobiles & Parts IT Hardware Pharmaceuticals & Biotechnology Electronics & Electrical Equipment Software & Computer Services Total (31 sectors)

R&D growth rate in 2004 (%)

65 169 121 78 80 942

7.2 0.6 9.7 7.2 1.3 5.1

R&D growth rate (yearly average) (%) 2001-2004 4.9 -5.0 12.6 3.7 8.0 2.9

Note:

FTSE sector: sector of economic activities according to the Financial Times Stock Exchange index classification Data relate to the top 942 companies ranked by their R&D investment level (over € 32.7 million) Source: The 2005 EU industrial R&D investment scoreboard, European Commission, DG Research

SHARES OF TOP 5 SECTORS IN TOTAL R&D INVESTMENT BY TOP 942 COMPANIES BY MAIN WORLD REGION IN 2004

80%

0.7%

70%

2.3%

60%

9.9%

0.4% 13.8% 2.0%

24.3%

50%

12.0%

23.0% 6.2%

40% 26.0% 30% 20%

26.1%

22.6%

Software & Computer Electronics & Electrical equipment Automobiles & Parts Pharmaceuticals & Biotechnology IT hardware

27.5%

17.3%

7.9%

14.1%

17.3%

25.6%

18.5%

EU

Japan

USA

Rest of World

10% 0 Note:

Data relate to the top 942 companies with registered offices in the EU (242 companies), Japan (198 companies), the USA (398 companies) and the Rest of the World (104 companies), ranked by their R&D investment level (over € 32.7 million) Source: The 2005 EU industrial R&D investment scoreboard, European Commission

25

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BIOPHARMACEUTICALS

SHARE OF GLOBAL BIOTECHNOLOGY REVENUES, PUBLIC COMPANIES (2005) 4.0% 4.8%

T

he major health challenges facing Europe require new technologies. The application of human genomics knowledge to clinical practice and drug development will allow us to predict a patient’s response to treatment and create new “personalised” medicines according to genetic variations. The introduction of these new medicines will not only affect the global burden of disease but also the pattern of care and patient management, with an operational shift from acute treatment to prevention and cure. Approximately one-fifth of the new molecular entities launched on the world market each year are now derived from biotechnology. Europe’s biotechnology sector is growing fast, although still not as fast as its US counterpart.

15.5%

75.7%

USA Europe Canada

In this context, competitive research is the key. The development of a strong and viable biomedical industry in Europe goes hand in hand with the maintenance of a competitive and innovative research-based industry in Europe. Accounting for 18% of the whole EU business R&D expenditure, the European research-based pharmaceutical industry can make a major contribution to the strategic goal set by the March 2000 Lisbon Council of turning Europe into “the most competitive and dynamic knowledgebased economy in the world by 2010”.

Asia/Pacific Source: Ernst & Young, ‘Beyond Borders, Global Biotechnology Report 2006’ (data relate only to publicly traded companies)

SHARE OF GLOBAL BIOTECHNOLOGY R&D EXPENSES, PUBLIC COMPANIES (2005) 4.2% 1.5%

BIOPHARMACEUTICALS (2005) Value in € million Revenues R&D Expenditure Net income (loss) Number of public companies (units) Number of private companies (units)

Global 50,765 16,410 (3,527)

USA 38,413 12,844 (1,711)

Europe 7,862 2,630 (1,562)

Canada Asia-Pacific 2,077 2,413 685 251 (260) 6

671

329

122

81

139

3,532

1,086

1,491

378

577

Source: Ernst & Young, ‘Beyond Borders, Global Biotechnology Report 2006’ (data relate only to publicly traded companies)

16.0%

EUROPEAN BIOPHARMACEUTICAL ENTERPRISES (EBE) 78.3%

USA Europe Canada Asia/Pacific

EBE (European Biopharmaceutical Enterprises) was established within EFPIA in 2000 in order to promote a better scientific, competitive and regulatory environment for biopharmaceutical companies in Europe. Through its commitment to encourage better understanding of biotechnology, EBE provides expert input to the main aspects of the healthcare debate, which covers a wide range of scientific, ethical, societal and economic issues related to biopharmaceuticals. Sixty-five companies are members of EBE. Further details about EBE and its activities are available on www.ebe-biopharma.org

Source: Ernst & Young, ‘Beyond Borders, Global Biotechnology Report 2006’ (data relate only to publicly traded companies)

26

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VACCINES

E

urope is the main manufacturing and research location for human-use vaccines. About 90% of the total production of the worldwide vaccine manufacturers originated from Europe in 2004. In terms of market sales, North America is the leading market accounting for nearly half of the value of worldwide vaccine sales (which was estimated to amount to € 6,250.3 million in 2004). The number of R&D projects (from pre-clinical stage to Phase III development) by major international vaccine manufacturers amounted to a total of 123 as of 31 December 2004. About two thirds of the total number of R&D projects were located in Europe in 2004 (Europe: 79 projects; North America: 43 projects; Other countries: 1 project). Major international vaccine manufacturers altogether had 19 manufacturing sites and 16 R&D sites based in Europe in 2004.

TOTAL NUMBER OF R&D PROJECTS BY INTERNATIONAL VACCINE MANUFACTURERS

47

22

WORLDWIDE MAJOR VACCINE MANUFACTURERS MARKET VALUE (€ MILLION – 2004) 1,011.5 (16.2%)

323.7 (5.2%)

2,064.1 (33.0%)

2,851.0 (45.6%)

North America Europe Specific/Humanitarian groups Rest of the world

32

22

Source: European Vaccine Manufacturers (EVM), 2006

Pre-clinical

Phase I

Phase II

Phase III

Source: European Vaccine Manufacturers (EVM), 2006

NUMBER AND LOCATION OF MANUFACTURING AND R&D SITES BY INTERNATIONAL VACCINE MANUFACTURERS IN EUROPE Manufacturing Austria Belgium Czech Republic France Germany Hungary Italy Netherlands Spain Switzerland U.K. Total

2 4 1 2 2 1 2 1 1 2 1 19

R&D 4 2 3 1 2 2 2 16

Source: European Vaccine Manufacturers (EVM), 2006

THE EUROPEAN VACCINE MANUFACTURERS (EVM) The European Vaccine Manufacturers (EVM) were established within EFPIA in 1991 in order to promote a favourable climate for expanded vaccine protection and improved vaccine coverage in Europe. EVM member companies are actively engaged in research and development of new vaccines, including use of DNA plasmid vaccine technology and immunotherapy (i.e. treating infectious disease once it has developed by stimulating the immune system). EVM companies are also engaged in pre-clinical and clinical research into cancer vaccines. Eight companies are members of EVM. Further details about EVM and its activities are available on www.evm-vaccines.org

27

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P PHARMACEUTICAL EXPORTS EFPIA 2004 Austria Belgium Cyprus Czech Republic Denmark Estonia Finland France Germany Greece Hungary Ireland Italy Latvia Lithuania Luxembourg Malta Netherlands Norway Poland Portugal Slovakia Slovenia Spain Sweden Switzerland United Kingdom Total Note:

€ million 2,875 24,599 88 393 4,525 25 490 17,196 27,333 682 890 15,156 9,060 91 67 40 23 8,989 364 304 308 133 855 3,999 5,791 22,520 18,207 165,003

All data based on SITC 54 Norway, Switzerland: veterinary products excluded

Source: Eurostat Norway, Switzerland: EFPIA member associations (official figures)

28

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PHARMACEUTICAL TRADE

PHARMACEUTICAL EXPORTS

T

he 2004 pharmaceutical trade data reflect some changes in the manufacturing and distribution pattern of medicines within Europe. Over the last years several companies have reorganised their manufacturing and distribution services, which resulted in a significant increase of trade exchanges between some European countries, e.g. Belgium, Germany and Ireland. In 2004 EFPIA countries’ pharmaceutical exports totalled € 165,000 million. Exports to non-EU countries amounted to € 62,300 million, i.e. 37.7% of total exports. The European Union’s main trading partners are the USA and Switzerland, with the USA being an increasing exporter of medicines to Europe.

THE EUROPEAN UNION’S TOP 5 PHARMACEUTICAL TRADING PARTNERS - 2004 EU exports

37.9%

EXPORTS, IMPORTS AND TRADE BALANCE WITH RESPECT TO NON-EU COUNTRIES (2004 - € MILLION) Austria Belgium Cyprus Czech Republic Denmark Estonia Finland France Germany Greece Hungary Ireland Italy Latvia Lithuania Luxembourg Malta Netherlands Norway Poland Portugal Slovakia Slovenia Spain Sweden Switzerland United Kingdom EFPIA total Note:

Exports 1,478 8,476 61 96 2,149 1 311 7,565 10,006 49 452 3,345 4,112 37 23 1 6 2,685 130 148 108 35 552 937 3,116 8,248 8,143 62,270

Imports 924 3,548 35 210 236 17 141 3,969 5,422 457 283 784 3,592 66 25 1 16 3,365 163 401 214 94 117 1,422 394 1,800 4,070 31,766

Trade balance 554 4,928 26 - 114 1,913 - 16 170 3,596 4,584 - 408 169 2,561 520 - 29 -2 0 - 10 - 680 - 33 -253 - 106 - 59 435 - 485 2,722 6,448 4,073 30,504

35.5%

12.3%

4.3% 4.4%

5.6% USA Switzerland Japan Australia Canada Others

EU imports 1.8% 2.5% 4.1%

8.1%

48.7% 34.8%

USA Switzerland Japan China Canada Others Source: EUROSTAT, SITC 54

All data based on SITC 54; Norway, Switzerland: veterinary products excluded

Source: Eurostat Norway, Switzerland: EFPIA member associations (official figures)

29

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PHARMACEUTICAL IMPORTS EFPIA 2004 Austria Belgium Cyprus Czech Republic Denmark Estonia Finland France Germany Greece Hungary Ireland Italy Latvia Lithuania Luxembourg Malta Netherlands Norway Poland Portugal Slovakia Slovenia Spain Sweden Switzerland United Kingdom Total Note:

€ million 2,996 26,316 141 1,503 1,734 142 1,283 12,963 21,991 2,249 1,222 1,987 10,448 224 309 237 69 8,421 970 2,319 1,597 653 392 6,716 1,999 11,230 12,742 132,853

All data based on SITC 54 Norway, Switzerland: veterinary products excluded

Source: Eurostat Norway, Switzerland: EFPIA member associations (official figures)

30

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PHARMACEUTICAL IMPORTS In 2004 pharmaceutical imports of EFPIA countries totalled € 132,900 million, of which 23.9% originate from non-EU countries. The European Union major trading partners are the USA, Switzerland, and Japan, with the USA being increasingly important. In 2004, the European Union’s top 3 pharmaceutical trading partners together supplied 87.6% of its imports, and purchased 55.8% of its exports.

SHARE OF PHARMACEUTICALS IN HIGH-TECH PRODUCTS EXPORTS (2004)

11.7% 21.1%

Pharmaceuticals contribute significantly to reducing the European Union’s trade deficit in high-tech products. Pharmaceuticals represented 5.4% of total EU manufacturing exports in 2004 against 2.1% in 1990.

27.7%

14.2%

EU TRADE IN HIGH-TECH PRODUCTS (2004 - € MILLION)

Pharmaceutical products (SITC 54) Power generating machinery and equipment (SITC 71) Office machines and computers (SITC 75) Telecommunication, sound, TV, video (SITC 76) Electrical machinery (SITC 77) Professional, scientific, controlling material (SITC 87) Total high-tech sectors Total manufacturing sectors

15.3%

EU EU exports imports 52,787 29,784 38,247 26,082 25,118 65,729 35,502 53,588 69,472 74,530 29,197 21,873 250,323 271,586 968,973 1,031,986

EU trade balance 23,003 12,165 -40,611 -18,086 -5,058 7,324 -21,263 - 63,013

10.0%

Source: EUROSTAT

SHARE OF PHARMACEUTICALS IN HIGH-TECH PRODUCTS IMPORTS (2004)

8.1% 11.0% 9.6% 27.4%

Source: EUROSTAT, Statistical Yearbook 2005 24.2% 19.7%

EU TRADE IN HIGH-TECH PRODUCTS (1990 - € MILLION)

Pharmaceutical products (SITC 54) Power generating machinery and equipment (SITC 71) Office machines and computers (SITC 75) Telecommunication, sound, TV, video (SITC 76) Electrical machinery (SITC 77) Professional, scientific, controlling material (SITC 87) Total high-tech sectors Total manufacturing sectors

EU exports 7,728 13,644 7,789 5,969 17,690 8,647 61,467 355,164

EU imports 4,121 9,522 22,080 14,044 17,933 8,159 75,859 404,351

EU trade balance 3,607 4,122 -14,291 -8,075 -243 488 -14,392 -49,187

Pharmaceutical products (SITC 54) Power generating machinery and equipment (SITC 71) Office machines and computers (SITC 75) Telecommunication, sound, TV, video (SITC 76) Electrical machinery (SITC 77) Professional, scientific, controlling material (SITC 87)

Source: EUROSTAT

Source: EUROSTAT

31

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PHARMACEUTICAL TRADE BALANCE EFPIA 2004

€ million

Austria Belgium Cyprus Czech Republic Denmark Estonia Finland France Germany Greece Hungary Ireland Italy Latvia Lithuania Luxembourg Malta Netherlands Norway Poland Portugal Slovakia Slovenia Spain Sweden Switzerland United Kingdom

- 121 - 1,717 - 53 - 1,110 2,791 - 117 - 793 4,233 5,342 - 1,567 - 332 13,169 - 1,388 - 133 - 242 - 197 - 46 568 - 606 - 2,015 - 1,289 - 520 463 - 2,717 3,792 11,290 5,465

Total

32,150

Note:

All data based on SITC 54 Norway, Switzerland: veterinary products excluded

Source: Eurostat Norway, Switzerland: EFPIA member associations (official figures)

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PHARMACEUTICAL TRADE BALANCE

E

urope is a net exporter of medicines. The European pharmaceutical industry generates a substantial trade surplus, which amounted to € 32,200 million in 2004. Over the last 15 years, the total pharmaceutical trade surplus grew by 4.5 times, from € 7,100 million in 1990 to € 32,200 million in 2004. In several European countries, the pharmaceutical industry ranks among the top five net exporters in the manufacturing sector. At European level, the pharmaceutical industry is the leading high-technology sector in terms of trade surplus.

EU TRADE BALANCE - HIGH TECHNOLOGY SECTORS (€ MILLION) - 2004 30,000

20,000

10,000

EUROPEAN TOTAL PHARMACEUTICAL EXPORTS, IMPORTS, AND TRADE BALANCE FOR 1985-2005 (€ MILLION) 180,000

0

178,000(e)

Total exports

-10,000

Total imports 165,003

Trade surplus 160,000

-20,000 144,000(e) -30,000

140,000 132,853

-40,000 120,000 SITC 54 Pharmaceutical products

23,003

SITC 71 Power generating machinery and equipment

100,000 90,935 80,000

12,165

SITC 75 Office machines and computers

-40,611

SITC 76 Telecommunication, sound, TV, video

-18,086

SITC 77 Electrical machinery

-5,058

SITC 87 Professional, scientific, controlling material

7,324

Source: EUROSTAT 68,841

60,000 44,188 40,000

32,150

31,018 23,180 20,000

14,854 9,724 5,130

34,000(e)

22,094

16,113

13,170

7,067

0 1985

1990

1995

2000

2004

2005

Note:

(e): estimate All data based on SITC 54 Norway, Switzerland: veterinary products excluded Source: Eurostat Norway, Switzerland: EFPIA member associations (official figures)

33

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P EMPLOYMENT IN THE PHARMACEUTICAL INDUSTRY EFPIA 2004

Units

Austria Belgium Cyprus Czech Republic Denmark Estonia Finland France Germany Greece Hungary Ireland Italy Latvia Lithuania Malta Netherlands Norway Poland Portugal Slovakia Slovenia Spain Sweden Switzerland United Kingdom

9,523 27,185 n.a. n.a. 16,759 n.a. 6,648 99,400 114,200 11,300 n.a. 22,500 73,266 n.a. n.a. 445 16,000 4,571 30,000 10,717 n.a. 6,500 39,000 20,100 31,000 73,000

Total

612,114

Note:

Austria: 2003 data Belgium, France, Greece, Ireland, Italy, Norway, Poland, Sweden, United Kingdom: estimate

Source: EFPIA member associations (official figures)

34

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PHARMACEUTICAL EMPLOYMENT

T

he research-based pharmaceutical industry is one of Europe’s major hightechnology industrial employers. Recent studies carried out in some countries showed that the research-based pharmaceutical industry generates three to four times more employment indirectly - upstream and downstream - than it does directly, a significant proportion being high value added jobs (e.g. clinical science, universities, etc). The industry directly employs about 612,100 people, of which 102,200 work in R&D. Through R&D activities carried out in close co-operation with universities and hospitals, the pharmaceutical industry funds the work of thousands of researchers in universities and healthcare centres. EMPLOYMENT IN PHARMACEUTICAL R&D (1985-2005)

EMPLOYMENT IN THE PHARMACEUTICAL INDUSTRY (1985-2005)

120,000

600,000

100,000 500,000

80,000 400,000

60,000 300,000

40,000 200,000

Note:

552,901

577,028

575,071

612,114

615,000(e)

1995

2000

2001

2002

2003

2004

2005

Note:

as of 2004 data include Malta, Poland and Slovenia

Source: EFPIA member associations (official figures) (e): EFPIA estimate

103,000(e)

538,317

1990

102,222

506,052

1985

88,524

500,879

0

82,282

439,090 0

63,000

100,000

75,760

20,000

1985 1990 1995 2000 2004 2005

Cyprus, Czech Republic, Estonia, Greece, Hungary, Latvia, Lithuania, Malta, Poland, Portugal, Slovakia: data not available

Source: EFPIA member associations (e): EFPIA estimate

35

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P PAYMENT FOR PHARMACEUTICALS BY COMPULSORY HEALTH INSURANCE SYSTEMS AND NATIONAL HEALTH SERVICES (AMBULATORY CARE ONLY) EFPIA 2004

€ million

Austria Belgium Cyprus Czech Republic Denmark Estonia Finland France Germany Greece Hungary Ireland Italy Latvia Lithuania Malta Netherlands Norway Poland Portugal Slovakia Slovenia Spain Sweden Switzerland United Kingdom

1,693 2,584 n.a. n.a. 906 n.a. 1,014 19,879 21,834 2,272 1,147 1,216 11,988 32 n.a. n.a. 4,003 1,101 1,351 1,395 n.a. 178 9,160 1,891 1,781 12,284

Total

97,709

Note:

France, Greece, Ireland, Netherlands, Norway, Sweden, United Kingdom: estimate

Source : EFPIA member associations (official figures)

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PHARMACEUTICAL REIMBURSEMENT

P

harmaceutical reimbursement refers to the share of medicine costs paid by the state through a compulsory social security system or by health insurance funds, according to the statutory national system. In most European countries only prescribed products are reimbursed, although arrangements differ widely from country to country. Not all medicines are reimbursed, and few are reimbursed in full (except, in most countries, when they are dispensed in hospitals). Some countries limit reimbursement to a proportion of the price of the prescribed medicine, others reimburse a flat-rate amount according to packaging or prescription. Most countries operate a co-payment system, which requires patients to meet part of the cost of their prescribed treatment. There are also over-the-counter (OTC) products, which are bought by patients at their own initiative and expense.

ESTIMATED COSTS PAID BY THE PATIENT IN THE TOTAL REIMBURSED PHARMACY MARKET VALUE AT RETAIL PRICES (IN %) – 2004 100

16.5

16.7

39.9

34.1

5.3

9.9

15.2

19.9

10.0

4.8

0.3

9.2

30.6

43.7

7.1

26.0

10.0

6.0

17.0

90 EFPIA (non weighted average)

80

70

60

50

40

30

20

10 83.5

83.3

60.1

65.9

94.7

90.1

84.8

80.1

90.0

95.2

99.7

90.8

69.4

56.3

92.9

74.0

Spain

Sweden

90.0

94.0

83.0

0 Austria Belgium Denmark Finland

France Germany Greece

Hungary Ireland

Italy

Norway Portugal Slovenia Netherlands

U.K. Switzerland

Costs paid by compulsory health insurance systems (%) Costs paid by the patient (%)

Note:

France: costs paid by compulsory health insurance system include costs paid by supplementary insurance (mutual or private), which amount to about 19.9% of total costs EFPIA calculations – Estimate

Source: EFPIA member associations

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P PERCENTAGE OF ELDERLY PEOPLE (65 AND OVER) IN TOTAL POPULATION Country 1960 Austria 12.0 Belgium 12.0 Cyprus 5.9 Czech Republic 8.8 Denmark 10.6 Estonia 10.5 Finland 7.2 France 11.6 Germany 11.5 Greece 8.3 Hungary 9.0 Ireland 11.2 Italy 9.3 Latvia 10.5 Lithuania 7.7 Luxembourg 10.8 Malta 7.4 Netherlands 9.0 Norway 11.1 Poland 5.8 Portugal 8.0 Slovakia 6.7 Slovenia 7.8 Spain 8.2 Sweden 12.0 Switzerland 10.1 Turkey 3.4 UK 11.7 EU-25* 10.0 USA 9.2 Japan 5.7 World** 5.3 * ** Note:

1970 14.1 13.4 10.1 12.1 12.3 11.7 9.2 12.9 13.7 11.1 11.6 11.2 10.9 11.9 10.0 12.7 8.9 10.2 12.9 8.2 9.2 9.2 9.9 9.8 13.7 11.3 4.3 12.9 11.8 9.8 7.1 5.5

1980 15.4 14.4 10.3 13.4 14.4 12.5 12.0 14.0 15.6 13.1 13.4 10.7 13.1 13.0 11.3 13.5 9.9 11.5 14.8 10.1 10.5 10.4 11.4 10.7 16.3 13.8 4.6 15.1 13.4 11.2 9.0 5.9

1990 14.9 14.9 10.9 12.5 15.6 11.3 13.4 14.0 15.0 13.7 13.3 11.4 15.3 11.9 10.9 12.2 10.6 12.8 16.3 10.1 13.4 10.3 11.1 13.8 17.8 14.4 4.0 15.9 14.1 12.2 12.0 6.2

2000 15.6 16.9 11.3 13.8 14.8 15.1 14.9 16.3 16.4 16.8 14.7 11.2 18.2 15.2 14.0 13.8 12.2 13.6 15.3 12.1 14.8 11.4 14.2 16.7 17.3 15.0 5.1 15.9 15.8 12.3 17.2 6.9

2005 16.7 17.6 12.1 14.2 15.0 16.5 15.9 16.6 18.8 18.2 15.2 10.9 20.0 16.9 15.4 13.8 13.4 14.1 15.0 12.9 17.1 11.8 15.6 16.5 17.2 16.0 5.4 16.0 16.8 12.3 19.7 7.4

2020p 20.8 20.9 15.5 20.9 19.5 18.4 22.5 20.8 22.1 20.2 19.9 13.8 24.5 19.3 17.7 15.0 20.7 19.4 19.0 17.7 20.3 16.6 20.8 19.2 21.4 21.6 7.2 18.8 20.6 15.8 28.1 9.4

weighted average for EU-25 countries weighted average figures for the year 2020 are United Nations projections.

Source: World Population Prospects (United Nations), OHE

38

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PHARMACEUTICAL SPENDING (AS A SHARE OF HEALTH SPENDING)

O

n average, total pharmaceutical spending accounts for 15.6% of total health expenditure in Europe. According to OECD figures, the share of pharmaceutical spending in total health expenditure shrank by one fourth between 1970 and 1980. Since then, pharmaceutical spending has grown at a slightly higher rate than that of health spending as a whole.

SHARE OF TOTAL PHARMACEUTICAL SPENDING IN TOTAL HEALTH SPENDING (%)

Europe United States Japan *

1970 16.8 12.4 -

1980 13.4 9.1 21.2

1990 14.0 9.2 21.4

1995 14.7 8.9 22.3

2000 15.4 11.9 18.7

2003 15.6 12.9 18.4*

2002 data

Source: OECD Health Data 2005, Statistics and Indicators for 30 Countries, October 2005 – EFPIA calculations (non-weighted average for 19 EU & EFTA countries)

Factors related to both supply and demand explain the growth in pharmaceutical spending. On the supply side, the industry has added to, and substantially improved, its range of treatments. On the demand side, a combination of socio-economic factors, in particular population ageing, has fuelled a steady increase in this spending. Medicines remain a prime target of Member States’ healthcare cost-containment policies. Most of these policies take little account of the structural factors underlying the growth in health care and pharmaceutical spending. For example, several European countries fix an overall budget or seek to impose percentage limits on growth in pharmaceutical spending. These budgets or growth targets for medicines spending are at levels which do not take into consideration the ageing population and the desire of patients to have access to new innovative treatments.

PERCENTAGE OF VERY ELDERLY PEOPLE (75 AND OVER) IN TOTAL POPULATION EU-25* USA Japan World**

* ** Note:

1960 3.4 3.1 1.8 1.6

1970 4.0 3.8 2.1 1.7

1980 5.2 4.5 3.1 1.9

1990 6.3 5.0 4.8 2.2

2000 6.9 5.8 7.0 2.5

2005 7.7 6.1 8.9 2.8

2020p 9.5 6.4 14.5 3.5

weighted average for EU-25 countries weighted average figures for the year 2020 are United Nations projections.

Source: World Population Prospects (United Nations), OHE

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H TOTAL SPENDING ON HEALTH CARE AS A PERCENTAGE OF GDP AT MARKET PRICES

Austria Belgium Czech Republic Denmark Finland France Germany Greece Hungary Ireland Italy Luxembourg Netherlands Norway Poland Portugal Slovakia Spain Sweden Switzerland Turkey UK Europe USA Japan

1960 4.3 3.4 3.8 3.8 4.8 3.7 3.6 2.9 1.5 4.9 3.9 3.7 5.0 3.0

1970 5.1 4.0 8.0 5.6 5.4 6.2 6.1 5.1 5.1 3.6 6.9 4.4 2.6 3.6 6.9 5.5 4.5 5.2 6.9 4.5

1980 7.4 6.4 9.1 6.4 7.1 8.7 6.6 8.4 7.0 5.9 7.5 7.0 5.6 5.4 9.1 7.4 3.3 5.6 6.9 8.7 6.5

1990 7.0 7.4 4.7 8.5 7.8 8.6 8.5 7.4 7.1 6.1 7.9 6.1 8.0 7.7 4.9 6.2 6.7 8.4 8.3 3.6 6.0 7.0 11.9 5.9

* **

estimate 2002 data

Note:

Europe: non-weighted average (22 countries) – EFPIA calculations

2000 7.5 8.7 6.6 8.4 6.7 9.3 10.6 9.9 7.1 6.3 8.1 6.0 8.3 8.5 5.7 9.2 5.5 7.4 8.4 10.4 6.6 7.3 7.8 13.1 7.6

2003** 7.5** 9.6** 7.5** 9.0** 7.4** 10.1** 11.1** 9.9** 8.4** 7.4** 8.4** 6.9** 9.8** 10.3** 6.5** 9.6** 5.9** 7.7** 9.4** 11.5** 7.4** 7.7** 8.6** 15.0** 7.9**

Source: OECD Health Data 2005, Statistics and Indicators for 30 Countries, October 2005

40

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HEALTH CARE EXPENDITURE

O

ver the last 40 years the growth in health care spending has outstripped that of gross domestic product in all industrialised countries. After accelerating sharply in the 1960s and 1970s, the rate of growth in health spending declined substantially at the end of the 1980s. Public health spending grew faster than total health spending until the end of the 1970s. By the beginning of the 1980s, health cost containment policies had begun to stabilize the share of public spending in total health spending. The latest available OECD data show that European countries spent on average 8.6% of their gross domestic product on health care in 2003. The US continues to top the OECD ranking for overall healthcare spending at $ 5,635 (€ 4,982) per capita in 2003, more than twice the European average. Although more than half of this spending is financed through private spending, public spending per capita in the US is quite high and amounts to levels equivalent to those of most European countries. In any industrialized country, the share of income spent on health care generally rises with income itself. However, increased incomes and living standards do not by themselves explain the growth in health care spending. This growth is in fact due to several factors, including: -

ageing population; population increase; growing proportion of health care dispensed in hospitals and psychiatric institutions; widening range of treatments available and technological progress; widening social security cover, which is now available to almost the entire population in European countries.

PUBLIC EXPENDITURE ON HEALTH PER CAPITA ($ PPP) 2,503

2,500

Europe USA Japan

2,000

1,602

1,764

1,743*

1,440

1,500 1,085 939 865

1,000 523

500

TOTAL EXPENDITURE ON HEALTH PER CAPITA ($ PPP)

2,008

438 413

130 126 104

0 1970

5,635 5,000

2000

2003

2002 data Europe: non-weighted average – EFPIA calculations Source: OECD Health Data 2005, Statistics and Indicators for 30 countries, October 2005

4,539

USA Japan

4,000

1990

* Note:

Europe

4,500

1980

3,500 3,000

2,738 2,360

2,500 1,946

2,000 1,500

1,199

1,055

1,000 675 500 206 0

347

1970

2,139*

1,971

1,115

580

149 1980

1990

2000

2003

* 2002 data Note: Europe: non-weighted average – EFPIA calculations Source: OECD Health Data 2005, Statistics and Indicators for 30 countries, October 2005

41

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H

INCIDENCE OF CERTAIN DISEASES AND STANDARD DEATH RATES, 2003 Diseases incidence rates (per 100,000 persons - except AIDS: per million persons) AIDS Pertussis Salmonellosis Tuberculosis (2004) (2004)

EU-25 ***21.4 Austria 5.3 Belgium 8.4 Cyprus n.a. Czech Republic 0.8 Denmark 7.6 Estonia 7.4 Finland 4.9 France 11.5 Germany 4.3 Greece **8.1 Hungary 2.6 Ireland 2.1 Italy **31.0 Latvia 25.0 Lithuania 2.6 Luxembourg 17.8 Malta n.a. Netherlands **2.8 Norway 8.6 Poland 4.4 Portugal 78.6 Slovakia 0.4 Slovenia 3.0 Spain 32.8 Sweden 5.8 Switzerland 30.4 Turkey n.a. United Kingdom **12.0

**3.7 1.6 0.9 2.1 3.7 4.2 33.7 31.2 **0.6 *1.6 0.2 0.3 2.2 1.5 1.8 1.4 2.2 1.8 56.0 168.8 7.7 0.4 0.4 5.7 1.2 17.4 *75.7 0.6 0.3

45.0 82.3 123.5 12.2 300.9 28.5 10.0 43.0 10.4 69.0 14.5 74.7 10.3 18.7 22.4 54.5 72.2 19.3 12.4 34.2 41.4 5.2 234.3 159.7 20.8 40.6 25.9 30.7 25.3

Standard death rates (per 100,000) All causes of death Death from cancer Males Females Males Females

*14.4 **887.9 **530.1 **252.8 **141.6 *13.3 828.1 519.4 227.9 136.8 *11.7 ⊕947.5 ⊕548.2 ⊕288.3 ⊕149.3 *2.8 782.8 531.7 n.a. n.a. *11.8 1164.3 703.5 319.4 176.1 7.3 **910.0 **627.9 **253.1 **197.3 **59.4 1553.6 749.0 296.7 138.1 8.0 873.8 499.4 190.2 119.3 *10.7 *831.4 *454.8 *267.9 *126.3 8.7 810.8 510.9 217.2 133.0 *5.3 796.1 562.6 217.9 113.2 *29.6 1410.2 784.4 370.8 191.4 10.6 848.2 558.2 228.3 162.1 *7.3 *745.4 *441.6 *239.6 *129.1 **88.0 1571.3 812.7 290.9 140.1 64.9 1467.0 693.5 285.0 140.0 *7.2 926.8 547.8 238.3 135.8 *6.1 830.3 568.8 192.0 135.0 *8.7 837.2 543.9 246.3 155.2 7.5 766.7 493.7 212.3 145.1 *27.1 1213.6 657.0 300.6 157.5 *44.4 937.9 566.7 224.7 114.4 *19.6 **1333.5 **738.9 **328.8 **154.6 *17.6 1093.3 584.6 289.1 151.1 16.2 792.0 445.6 243.9 107.9 4.9 718.6 475.5 186.3 135.5 8.5 *705.4 *442.0 *199.9 *121.0 *28.3 n.a n.a n.a n.a *12.3 ***822.5 ***555.5 ***222.0 ***159.2

* 2002 data; ** 2001 data; ***2000 data; ⊕1997 data Pertussis: 2004 data (Italy, Luxembourg, Malta: 2003 data) Salmonellosis: 2004 data (Belgium, France, Malta, Netherlands, Spain, Turkey, UK, EU-25: 2003 data) Source: Eurostat (AIDS, death rates); Community Network on Communicable Diseases (pertussis, salmonellosis); Euro TB (tuberculosis)

42

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HEALTH STATUS & VALUE OF MEDICINES

M

edicine has played a central role in health care and therapeutic practice since the earliest times. Medicines have greatly contributed to the increase in life expectancy, to the improvement of quality of life and to the eradication of diseases which were previously life threatening. Diseases such as pertussis, polio, measles or mumps are contagious, some highly so, but their incidence is very low because they can be prevented by vaccines. Polio could be considered as eradicated in the EU. The same applies to hepatitis B, for which the incidence has significantly declined over the past decade.

According to mortality and morbidity statistics, coronary heart disease remains the main cause of death in industrialised countries. A study published by the World Health Organisation shows that the introduction of new medicines and treatments are the main contributor to the decline in coronary-event rates observed between the mid-1980s and mid-1990s in the United States and European countries (WHO MONICA Project, THE LANCET, Vol. 355, 26 February 2000).

In the debate on the future of the health care system in various European countries, and the funding pressures health systems face in meeting the needs and expectations of the population, medicines have a key role to play. There is strong evidence in health outcomes research literature of the added value of medicines in the health care context, not only in terms of global cost savings but also in terms of contribution to the quality of care. Major advances in scientific knowledge and, particularly, in modern medicines offer entirely new opportunities to treat diseases and ill health. Spending on medicines actually reduces the overall cost of disease treatment by cutting or eliminating the burden in other sectors of state expenditure and speeding up the delivery of health care. On the eve of major health care reform discussions in Europe, governments must look beyond the short term and invest in medicines for the future. The rewards – and savings – by increased spending on medicines might not be immediate but will be far higher than short-term cost cutting.

AVERAGE LENGTH OF STAY FOR ACUTE CARE (DAYS), 2003 Austria Belgium Czech Republic Denmark Finland France Germany Greece Hungary Ireland Italy Luxembourg Netherlands Norway Poland

5.8 7.7 8.3 3.6 4.3 5.6 8.9 6.2 6.7 6.5 6.8 7.4 8.6 5.4 7.9

Portugal Spain Sweden Switzerland United Kingdom Europe United States

7.3 7.0 4.8 9.0 6.7 6.7 5.7 0

1

2

3

4

5

6

7

8

9

10

Note:

Belgium, Italy, Poland, Sweden: 2002 data; Netherlands, Portugal, Spain: 2001 data; Greece: 2000 data Europe: non-weighted average – EFPIA calculations Source: OECD Health Data 2005, Statistics and Indicators for 30 countries, October 2005

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H EXPENDITURE ON SOCIAL PROTECTION IN EUROPE Expenditure on social protection as % of GDP 2002 (%)

Austria Belgium Cyprus Czech Rep. Denmark Estonia Finland France Germany Greece Hungary Ireland Italy Latvia Lithuania Luxembourg Malta Netherlands Norway Poland Portugal Slovakia Slovenia Spain Sweden Switzerland U.K. EU-25

29.1 27.8 19.9 30.0 14.3* 26.4 30.6 30.5 26.6 20.9 16.0 26.1 14.3* 15.2* 22.7 17.7 28.5 26.3 22.1* 25.4 19.2 25.4 20.2 32.5 28.6 27.6 27.7

Distribution of social benefits in 2001 by group of functions % Old-age, survivors

49.9 44.1 42.5 38.0 42.6 36.6 43.7 42.5 51.4 42.4 24.4 62.3 56.4 47.7 37.5 53.8 41.8 30.5 55.2 45.8 38.2 45.5 45.3 40.0 50.8 46.3 46.2

Sickness, health care

25.3 24.7 34.6 20.3 31.0 24.5 29.2 28.7 25.8 27.5 42.2 26.1 19.1 30.0 25.2 25.5 30.4 34.5 19.2 31.3 35.0 31.4 30.0 26.9 25.9 27.6 27.9

Disability

7.8 9.3 8.5 12.5 7.8 13.7 6.0 7.8 5.0 10.3 5.1 5.7 9.6 8.8 14.7 6.1 11.5 16.5 13.3 12.3 8.1 8.7 7.6 13.3 12.8 9.3 8.2

Family, children

10.5 8.7 8.2 13.3 14.6 12.1 9.5 10.4 6.7 12.9 14.4 4.1 10.1 8.3 16.0 6.5 4.4 12.8 7.8 5.6 8.2 8.9 2.6 9.7 5.0 6.8 8.0

Unemployment

Housing, social exclusion

4.9 11.6 3.1 10.0 1.3 9.8 7.1 8.2 6.0 3.4 8.5 1.6 3.6 1.9 3.4 6.0 5.0 2.6 4.3 3.6 3.6 3.7 12.9 5.7 2.4 3.5 6.2

1.6 1.6 3.3 6.0 2.7 3.3 4.4 2.5 5.1 3.5 5.3 0.3 1.3 3.5 3.2 2.0 6.8 3.1 0.2 1.3 6.8 1.8 1.7 4.3 3.1 6.4 3.5

* 2001 data Note: PPS: Purchasing Power Standard (€) Source: EUROSTAT-ESSPROS, Statistics in Focus ‘Social protection in the European Union’, 14/2005

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HEALTH CARE SYSTEMS

S

ince the early 1950s, Europe’s social history has been marked by the progressive establishment of social security systems which cover more and more people and offer an ever-wider range of services. Initially these systems covered only employees, but coverage was later extended, with a few exceptions, to the entire population. The fundamental purpose of Europe’s health insurance systems is to ensure public access to health care. However, the conditions that prevailed at the time those systems were set up have evolved. The citizen’s needs and ability to invest in healthcare have also evolved. Today, higher average incomes enable patients to bear a larger share of costs, and expectations of health care are no longer limited to ‘satisfactory’ public health standards, but encompass the wider notion of ‘well-being’. Furthermore, an ageing population represents a real challenge for existing social protection systems in Europe. Data on social protection expenditure show significant differences between countries, which reflect differences in national social protection systems as well as the particular demographic, economic, social and institutional features of each country. OVERVIEW OF HEALTH CARE SYSTEMS Characteristic properties Type

Premium financed Tax-financed system system (Bismarck type)** (Beveridge type)* Social insurance National Health Service

Private insurance system

Pluralistic (Medicare/Medicaid Managed Care) General definition Health goods are Health care as Governmentlargely consumer regulated care with guaranteed basic goods right health services Finances Largely private Contributions from Taxes. Every taxemployees/employers finance payer contributes Service organisation Public Largely private Private/public Service package Demand-oriented More demandMore supplyoriented oriented State intervention Strong/direct Weak/indirect Mostly direct Payment transfer Direct and indirect Largely indirect Indirect Role of professional Not very strong Very strong Strong associations Opinion-forming Bottom-up Bottom-up Top-down Examples USA, Switzerland Japan, Germany, Scandinavian France, Belgium, countries, U.K., Italy, Spain, Greece, Netherlands, Austria Canada * **

Sir William Henry Beveridge (1879-1963), founder of British National Health Service (NHS) in 1948. Fürst Otto Eduard Leopold von Bismarck (1815-1898) established the first national health insurance system in Germany in the 1880s.

Source: F. Schmidt, M. Egler & R. Geursen, Aventis Pharma AG, Drugs made in Germany 44, n°3 (2001)

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N GDP, POPULATION, INFLATION AND EURO RATE

Country Austria Belgium Cyprus Czech Republic Denmark Estonia Finland France Germany Greece Hungary Ireland Italy Latvia Lithuania Luxembourg Malta Netherlands Norway Poland Portugal Slovakia Slovenia Spain Sweden Switzerland Turkey UK EU-25 USA Japan

GDP 2004 € million 237,039 288,089 12,469 86,787 197,222 9,043 151,935 1,648,369 2,215,650 168,417 81,115 148,557 1,388,870 11,145 18,083 27,056 4,277 488,642 205,137 203,711 142,843 33,863 26,146 837,316 282,014 288,853 242,262 1.715,942 10,421,644 9,433,475 3,689,752

Population 01/01/2005 (1,000) 8,207 10,446 749 10,221 5,411 1,347 5,237 60,561 82,501 11,076 10,098 4,109 58,462 2,306 3,425 455 403 16,306 4,606 38,174 10,529 5,385 1,998 43,038 9,011 7,415 71,608 60,035 459,488 293,655 127,687

Inflation 2004 2.0 1.9 1.9 2.6 0.9 3.0 0.1 2.3 1.8 3.0 6.8 2.3 2.3 6.2 1.2 3.2 2.7 1.4 0.6 3.6 2.5 7.5 3.7 3.1 1.0 0.8 10.1 1.3 2.1 2.7 0.0

€ rate 2004 13.760 40.340 0.582 31.891 7.440 15.647 5.946 6.560 1.956 340.750 251.660 0.788 1,936.270 0.665 3.453 40.340 0.428 2.204 8.370 4.527 200.482 40.022 239.09 166.386 9.124 1.544 1,777,052 0.679 1.244 134.44

Note: € rate: yearly average value in national currency units GDP: gross domestic product at market prices Source: EUROSTAT(GDP, population, inflation); European Central Bank (€ rate); OECD

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NOTES

T

his booklet provides some general statistical data on the pharmaceutical industry’s activities and on the context in which it operates. The statistics have been compiled mainly on the basis of information supplied by EFPIA’s member associations, supplemented with data from various other sources, such as the OECD and Eurostat. Every effort has been made to compile these statistics on a common basis. For several years, EFPIA has based its work in this area on the OECD Standard International Trade Classification (SITC) heading 54, which covers the entire chapter on medicinal products and some sections on specific active substances produced by the pharmaceutical industry. It should also be noted that: ■

Differences between these statistics and those published by EFPIA’s national member associations are almost certainly due to the choice of classification (SITC 54) and the need to establish common definitions for all countries represented by EFPIA. As it does not include certain basic substances, SITC 54 may in some cases be too restrictive to provide an accurate picture of pharmaceutical industry activity in some countries;



Some data have been updated and revised, and concepts clarified. As a result, the data in this edition may not be strictly comparable with those in preceding ones;



All data have been converted into a single currency, the EURO (€). Any proper analysis should therefore take the impact of exchange rate movements on the figures in this booklet into account;



Ratification of the Maastricht Treaty by 12 European Community Member States brought the European Union (EU) into existence on 1 November 1993. Austria, Finland and Sweden joined the European Union on 1 January 1995. Since 1 May 2004 the European Union is composed of 25 Member States further to the accession of Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia.



Contrary to preceding editions of this booklet, EFPIA aggregate figures shown in this edition cover Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia (although data are not always available).

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DEFINITION OF A MEDICINAL PRODUCT

A

ny survey of the pharmaceutical sector requires a definition of what is meant by medicinal products. Within the European Union, Article 1 of Directive 2001/83/EEC defines medicinal products as follows: 1. Proprietary medicinal product: Any ready-prepared medicinal product placed on the market under a special name and in a special pack. 2. Medicinal Product: Any substance or combination of substances presented for treating or preventing diseases in human beings. Any substance or combination of substances which may be administered to human beings with a view to making a medical diagnosis or to restoring, correcting or modifying physiological functions in human beings is likewise considered a medicinal product. 3. Substance: Any matter, irrespective of origin, which may be: - human, e.g. human blood and human blood products; - animal, e.g. micro-organisms, whole animals, parts or organs, animal secretions, toxins, extracts, blood products; - vegetable, e.g. micro-organisms, plants, parts of plants, vegetable secretions, extracts; - chemical, e.g. elements, naturally occurring chemical materials and chemical products obtained by chemical change or synthesis.

COMPOSITION OF OECD SITC HEADING 54 OECD SITC heading 54 covers Chapter 30 and several sections of Chapter 29 of the Combined Nomenclature: Composition of SITC heading 54 Provitamins Hormones Heterosides Alkaloids Antibiotics Pharmaceutical products

Combined Nomenclature (CN) 29.36 29.37 29.38 29.39 29.41 30.01-30.06

Since the 1988 revision of SITC, heading 54 no longer covers sulphonamides; these are now included in heading 51.

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