Euro pharma "at risk from price controls"

The European pharmaceutical industry is losing out in terms ofinvestment and employment to the USA as a result of of European drug pricing regulations, according to Henry McKinnell, chief executive of Pfizer and president of the Pharmaceutical Research and Manufacturers of America.

The low prices which are set for innovative new drugs in most European countries are stifling innovation and are causing successful companies to move more of their activities to the USA, where the potential return on capital is higher because of free-market pricing and the possibility of fast-track approvals, he told a pharmaceutical industry meeting in London, UK, this month. For example, he said that the pharmaceutical industries of France and Germany had been "essentially destroyed" because of their pricing regulations. Many European drug firms are declining, he said, adding that the classic example is Bayer, which has issued three profits warnings this year (Marketletters passim).

"Europe risks the loss of its drug industry to slow grinding erosion of resources," warned Mr McKinnell. The industry's problems of fast-rising R&D expenditures with only small increases in output were even more complex, given the "almost singular focus by European governments to lower or limit pharmaceutical usage," he said, adding: "high-risk businesses cannot survive if they cannot aim for high rewards."