The Pharmaceutical Industry in Europe Key data

1
The Pharmaceutical Industry in EuropeKey data
Values in million unless otherwise stated ()
Data relate to EU-25, Norway and Switzerland
since 2004 Source EFPIA member associations
(official figures) (e) EFPIA estimate
Eurostat (EU-25 trade data 1995-2005)
2
Pharmaceutical production in Europe1980-2005 (
million)
Source EFPIA member associations (official
figures) Data 2005 EFPIA estimate
3
Pharmaceutical employment in Europe 1985-2005
Note as of 2004 data include Malta, Poland and
Slovenia Source EFPIA member associations
(official figures) Data 2005 EFPIA estimate
4
Employment in pharmaceutical RD in Europe
(1985-2005)
Cyprus, Czech Rep., Estonia, Greece, Hungary,
Latvia, Lithuania, Malta, Poland, Portugal
Slovakia data not available Source EFPIA member
associations Data 2005 EFPIA estimate
5
Pharmaceutical RD expenditure in Europe
million
Source EFPIA Member Associations (official
figures) Data 2005 EFPIA estimate
6
European total pharmaceutical exports, imports
trade balance 1985-2005 ( million)
Note All data based on SITC 54 Data 2005 EFPIA
estimate Source Eurostat (1995-2005) Norway,
Switzerland EFPIA Member Associations (official
figures)
7
EU Trade balance High technology sectors (
million) 2004
Source Eurostat
8
Shares of top 5 sectors in total RD
investment by top 942 companies by main world
region in 2004
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 size of their RD
investment level (over 32.7 million) Source
The 2005 EU industrial RD investment scoreboard,
European Commission
9
Sector RD investment as of all sectors EU top
700 companies - 2004
Note Sector of economic activities according to
the Financial Times Stock Exchange (FTSE) index
classification Data relate to the top
700 companies with registered offices in the EU
ranked by the size of their RD investments (over
4.1 million) Source The 2005 EU industrial RD
investment scoreboard, European Commission, DG
Research
10
RD/Sales ratio for industrial sectors () EU top
700 companies - 2004
Note Sector of economic activities according to
the Financial Times Stock Exchange (FTSE) index
classification Data relate to the top
700 companies with registered offices in the EU
ranked by the size of their RD investments (over
4.1 million) Source The 2005 EU industrial RD
investment scoreboard, European Commission, DG
Research
11
Breakdown of the world pharmaceutical market
2005 sales
Source IMS MIDAS, MAT February 2006 (totals do
not add due to rounding)
12
Pharmacy Market Growth Rate2005 ()
Source IMS Retail Drug Monitor, 12 months to
December 2005 Note US including sales through
mail order channels Japan including hospital
sales Average growth rate for Europe (top five
markets) 4
13
Breakdown of the world pharmaceutical market
1990 - 2005
Total pharmaceutical market value 1990 135,900
million Euros 173,000 million Dollars
Total pharmaceutical market value 2005 454,867
million Euros 565,900 million Dollars
Source IMS MIDAS, MAT February 2006
14
Total pharmacy market (at ex-factory
prices) Average annual growth rate 1994-2004
Source EFPIA member associations, PhRMA, JPMA
15
Total pharmacy market (at ex-factory
prices)Average annual growth rate 1994-2004
Source EFPIA member associations, PhRMA, JPMA
16
Total pharmacy market (at ex-factory
prices)Average real annual growth rate 1994-2004
Source EFPIA member associations, PhRMA, JPMA
17
Global corporate performance (worldwide)
Source IMS Health MIDAS December 2005
18
Leading products (worldwide)
Source IMS MIDAS December 2005
19
Pharmaceutical RD expenditure in Europe, USA and
Japan, 1990-2005 million, current
exchange rates
Data 2005 estimate EFPIA PhRMA Source EFPIA
member associations, PhRMA, JPMA
20
Pharmaceutical RD Expenditure Yearly growth rate
(Europe vs USA)
Source EFPIA member associations, PhRMA, JPMA
21
Breakdown of Worldwide Phramaceutical RD
Expenditure 1990-2004
Note RD expenditure in Europe, USA Japan used
as proxy for worldwide expenditure Source EFPIA
member associations, PhRMA, JPMA
22
Breakdown of Worldwide Phramaceutical RD
Expenditure 2004
Note RD expenditure in Europe, USA Japan used
as proxy for worldwide expenditure Source EFPIA
member associations, PhRMA, JPMA
23
Pharmaceutical RD expenditure in Europe, USA and
Japan, 1990-2005 Million of national
currency units
National currency units Europe million
USA million Japan million x 100 Data 2005
estimate EFPIA PhRMA Source EFPIA member
associations, PhRMA, JPMA
24
New Molecular Entities 1986-2005
Source SCRIP Publications - EFPIA calculations
(according to nationality of mother company)
25
BiopharmaceuticalsEurope versus USA (2005)
2004 data Source Ernst Young, Beyond
Borders, The Global Biotechnology Report, 2006
(data relate to publicly traded companies)
26
Share of Global Biotechnology Revenues Publicly
traded companies (2005)
Note Global revenues of 50,765 million (USA
38,413 Europe 7,862 Canada 2,077
Asia/Pacific 2,413) Source Ernst Young,
Beyond Borders, The Global Biotechnology Report,
2006
27
Share of Global Biotechnology RD Expenses
Publicly traded companies (2005)
Note Global RD expenses of 16,410 million
(USA 12,844 Europe 2,630 Canada 685
Asia/Pacific 251) Source Ernst Young, Beyond
Borders, The Global Biotechnology Report, 2006
28
Number of new molecular entities (NMEs) and
biotechnology products first launched worldwide
1990-2004
Source CMR International
29
ROUTE OF A NEW SUBSTANCE FROM DISCOVERY TO
PATIENTS ACCESS
1
Patent application
Acute toxicity
Phase I clinical trials
Pharmacology
Chronic toxicity
Registration and transparency
Phase II
Phase III
Reimbursement
Pharmacovigilance
Price
1 medicinal product
0
5 years
10 years
15 years
20 years Patent expiry
SPC (supplementary protection certificate) max.
5 years
10 years of research
2 to 3 years of administrative procedures
Source  Recherche Vie , LIM (AGIM)
30
Estimated full cost of bringing a new chemical or
biological entity to market (million of 2000 )
Note Data have been expressed in million,
2000 euros Source J.A. Di Masi, 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
31
RD Scientific Risk
Phases
1
Introduction/Registration
Post-Marketing Surveillance
IV
2
III
Clinical Tests (Humans)
2-5
II
Development
5-10
I
Preclinical Tests (Animals)
10-20
Basic Research
3,000-10,000
Source Based on PhRMA analysis, updated for data
per Tufts Center for the Study of Drug
Development (CSDD) database.
32
Allocation of RD investments by function
Source PhRMA, Annual Membership Survey 2006
(percentages calculated from 2004 data)
33
RD as a percentage of sales 1985-2005
Source EFPIA Member Associations (official
figures) (e) EFPIA estimate
34
RD Expenditure as a percentage of GDP (2004)
Note Switzerland 2001 data China, Italy,
Japan, Portugal, USA 2003 data Source EUROSTAT,
Statistics in Focus, Science and Technology,
6/2006, RD expenditure in Europe, First
preliminary data EUROSTAT
35
EU / US Global Environment

• USA
• Basic patent (20 years)
• Patent Term Restoration max 5 years, 1984
• Biotech Patent, 1983
• Orphan Drug Act, 1984
• Same levels of IPRs across all States
• Bayh-Dole Act National Institutes for Health
• Economic environment (direct access to a large
  unified market competitive market pricing)

• EUROPE
• Basic patent (20 years)
• SPC max 5 years, 1992
• Biotech Patent 2000-yet to be applied in some MS
• Orphan Drug Reg., 2000
• Lower IPRs in some EU MS ( EU enlargement)
• European Framework Research Programme
• Economic environment (no direct market access
  price controls parallel trade)

36
EU/US Healthcare Environment

• EUROPE
• National health services depending on the
  restrictive requirements of public budgets
  (welfare, Maastricht, etc)
• No difference between payer/buyer and regulator
  of health care services
• Rigid economic environment marked by fragmented
  legislation and policies (lack of a single
  economic European market)
• Limited incentives to scientific and
  technological innovation (financial, credit and
  fiscal incentives)

• USA
• A less regulated health system and no monopsony
• Difference between payer and supplier of health
  care services
• Scientific and economic system which is flexible
  and ready for changes and renewals (universities,
  small enterprises and high-tech laboratories,
  integration between schools and enterprises, etc)
• Financial and fiscal incentives for scientific
  and technological innovation (access to credits
  and capital, incentives, flexibility at work,
  company aids, etc)

37
Product life cycle in US and Europe
Main target of savings For EU governments
US
Europe
Sales
Govt budget wasted as result of lack of
generic competition
Time
European policies do not reward innovation but
neutralise generic competition prices of
generics are much lower in the US than in Europe.
Delay in Market Access
38
Innovation Market penetration
Geographical breakdown (by main markets) of sales
of new medicines launched during the period
2001-2005
66 USA
24 Europe
4 Japan
6 ROW
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
39
Innovation market penetration
Geographical breakdown (by main markets) of
sales of new medicines launched
1995 - 2000
57 USA
25 EUR
5JPN
13ROW
Source IMS Health MIDAS MAT December 2005
40
Impact of Cost Containment Policies on Industry
EFPIA Calculations (p) provisional - (e)
estimate Data relate to the 7 largest EU markets
(Belgium, France, Germany, Italy, Netherlands,
Spain, U.K.) Total market value in 2003 Euro
90,342 million (Source IMS) Total market value
in 2004 Euro 95,762 million (p)
41
Share of Parallel Imports in Pharmacy Market
Sales () - 2004
Note Paralle trade was estimated to amount to
4,200 million (value at ex-factory prices) in
2004. Source EFPIA Member Associations
42
Pricing International referencing
43
Average time delay between marketing
authorisation and effective market access all
products (MA 31/12/2000 to 31/12/2004)

For Poland, the true delay could not be
calculated as no new innovative products have
been reimbursed for almost seven years
Blue bars represent time period (30 June 2000
30 June 2004) Source IMS, May 2005
44
Diffusion of Medicines in EuropeCurrent situation

• Market authorization does not mean access for the
  patient
• There are huge differences between a possible
  optimal treatment and the treatment in reality
• There are also huge differences in the provision
  of innovative medicines between European countries

Many patients do not receive"up-to-date"
therapies withnew medicines
45
Percentage of eligible patientsreceiving statins
Source Diffusion of Medicines in Europe, Oliver
Schöffsky, December 2002
46
Breakdown of total health expenditure in Europe -
2003
Source OECD Health Data 2005, Statistics and
Indicators for 30 countries, October 2005 EFPIA
calculations (non-weighted average for 19 EU
EFTA countries)
47
The case of introducing inhaled corticosteroid in
asthma management
An audit carried out among 50 patients with
severe asthma attending a specialist asthma
clinic in Leeds showed that, after six months,
adding inhaled corticosteroid in the disease
treatment led to an increase in steroid costs
from 1,374 to 6,91. However, the costs of
hospital admissions fell from 28,427 to 6,146
with a combined effect of reducing healthcare
costs by 16,744 or 56.
Source The Value of Medicines (Asthma), ABPI