Europe: Where Next For Pharmaceuticals?

Conditions are now more favorable for European pharmaceutical firms, as managed care and patent expiry have led US companies to concentrate on defensive actions in the US market. Market shifts have raised the European advantage of financial strength, compared to the traditional US emphasis on innovation, according to an article in the European Business Journal by Nick Bosanquet, professor of health policy at St Mary's Hospital Medical School/Imperial College, University of London.

Prof Bosanquet notes that since 1991, the role of companies based in Europe has grown, representing 12 out of the leading 25 firms in Europe compared to 11 in the USA. US firms have had to adjust to a new and tough pricing and buying regimen in managed care, and this has enforced strategic adjustment, especially for firms such as Eli Lilly with less strength outside the USA. US majors such as Bristol-Myers Squibb and Pfizer face pressures from patent losses and pharmacy benefit managers, and while European companies have faced shocks in Germany and Italy, these have not yet forced new strategies. European firms now face questions about how to use their unexpected financial strength, said Prof Bosanquet.

Industry doubts about cost containment are unnecessary, notes Prof Bosanquet, as the demand for pharmaceuticals remains strong and, if anything, is growing. Changes in funding pressure from demography will increase demand in the longer term, and there is scope in Europe for economies through reduced prescribing of comfort drugs. Shifts from prescribing to over-the-counter products could also allow concentration of funding on prescription drugs, and provide firms with major opportunities to develop new partnerships in central Europe.