Despite its importance to Europe, there is a feeling that the pharma industry is not as innovative as it once was and has lost ground to foreign rivals. This shift has been exacerbated by ambivalent attitudes from regional governments towards the industry; on the one hand, governments value the industry's economic contribution and its role in providing medicines, but they are also preoccupied with the rising cost of healthcare. As a result, pharma companies are under pressure to reduce their product prices.
European companies believe that government cost containment measures have damaged the region's competitiveness, and point to R&D investment figures as evidence. In 1990, pharmaceutical R&D investment in the US was less than in Europe; however, R&D investment in Europe now is only approximately 70% of the US figure.1 Between 1990 and 2008, R&D investment in the US grew by 5.6 times compared with 3.5 times in Europe.1 To compound the situation, Europe also faces competition from further afield because of the rapid growth in the research environment in emerging economies, such as China and India. The European Federation of Pharmaceutical Industry Associations (EFPIA) has expressed its concern that this trend has led to the closure of European R&D sites.
Government policies alone, however, cannot be blamed for the difficult R&D conditions. Because of the inherent risks of drug development, many companies have adopted a conservative attitude to using new technologies that may add extra risk to the process, but the steady decline in new drug output suggests that this cautious approach is undermining innovation. However, although there is recognition that bottlenecks exist in the current R&D process, few solutions have been found to ease them.
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