India Archives - European Industrial Pharmacists Group (EIPG)

The drug shortage situation - EIPG's point of view

by Maurizio Battistini The shortage of medicines has been a major concern in the countries of the European Union, and elsewhere, for more than 10 years, so much so that the Economic Community has devoted a great deal of effort Read more

EP’s draft position on Unitary SPC and SPC Regulation revision

by Giuliana Miglierini The Committee for Legal Affairs (JURI) of the European Parliament released the draft amendments to the Commission’s proposals aimed to establish a Unitary Supplementary Protection Certificate (SPC) (links to the document and to the procedure) and to Read more

Reactions to the proposed ban of PFAS

by Giuliana Miglierini A proposal to ban around 10,000 per- and polyfluoroalkyl substances (PFAS) was submitted in January 2023 to the European Chemicals Agency (ECHA) by authorities of Germany, Denmark, the Netherlands, Norway, and Sweden. The proposal was published on Read more

EC Communication (part 2): a Critical Medicines Alliance to support European pharma supply chain

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by Giuliana Miglierini

After last week’s examination of the first part of the Commission’s Communication, specifically targeted to short-term actions to prevent and mitigate critical medicine shortages, in this second post we will address the announced mid- and long-term structural measures, focused on the creation of the Critical Medicines Alliance, the diversification of supply chains and the role of international partnerships.

The Critical Medicines Alliance

The second part of the Commission’s Communication details the structural measures to strengthen the secure supply of pharmaceuticals in the EU, with particular reference to critical medicines. An objective that, according to the Commission, may require the development of new pieces of legislation, such as the EU Critical Medicines Act. To this instance, the preparatory study should be launched by the end of 2023, and followed by the impact assessment.

In the meantime, the improved coordination of the industrial approach to the management of shortages in the EU should be pursued by the Critical Medicines Alliance, to be created in early 2024. The Alliance will bring together all involved stakeholders; its activities should start from a shared analysis of vulnerabilities in the supply chain of the critical medicines on the Union list (i.e over-dependency on a limited number of external suppliers, limited diversification possibilities, limited production capacities, etc).

The result of this exercise should be the identification of useful tools to address vulnerabilities of a limited number of critical medicines with the highest risk of shortages and impact on healthcare systems. To this regard, several lines of actions are identified in the Communication, starting from the issuing of a dedicated guidance and common criteria for the coordinated procurement of critical medicines (e.g. green production and prioritisation of supplies in Euro-pe at times of critical shortages). A better quantification of demand and the consequent possibility to compensate and incentivise industry for its effort in these directions are other expected outcomes.

Medium-term contractual incentives are proposed as a tool to improve predictability of supply and to attract new manufacturing investments in Europe, together with the use of capacity reservation contracts modelled on EU FABs. These last instruments were launched by the HERA Authority during the pandemic in order to reserve manufacturing capacities for vaccines and obtain a priority right for their manufacturing in case of a future public health emergency.

The second line of action of the Alliance would address the diversification of global supply chains for critical medicines, including the identification of priority countries to be involved in strategic partnerships on the security of supply (see also below).

The third pillar should see the Alliance involved in the coordination and harmonisation of efforts to identify security of supply needs for critical medicines, on the basis of the above-mentioned identified vulnerabilities. Actions cited by the Communication, such as the Services of General Economic Interest (SGEI) coordinated at the EU level, should be compatible with the state aid framework. The Alliance may also represent the dedicated location where member states may better discuss the possibility of a new Important Project of Common European Interest (IPCEI) focusing on sustainable manufacturing of critical medicines (including off patent medicines).

Stockpiling, skills and financial support

EU stockpiling of critical medicines is another area of activity of the Critical Medicines Alliance. The goal is to overcome current limitations typical of national stockpile programmes; the development of a common strategic approach and a Joint Action on stockpiling has been announced for the first half of 2024, based on the previously mentioned vulnerability analysis and on the experience of the Union Civil Protection Mechanism (UCPM, that will continue to be part of the EU approach) and the rescEU stockpile.

The Alliance should also address the need for new and updated skills to work in the pharmaceutical sector, so to cope with the increasing impact of digitalisation, the evolution of the regulatory environment and the green transition. Pharmacists are cited in the Communication, as their curricula could be easily adjusted to accommodate education and training on new skills. Attention should be paid to increasing STEM (Science, Technology, Engineering and Mathematics) graduates. A Pact for Skills is the measure identified to actively involve key actors in educational and training activities aimed to fill industry skills gaps.

The Alliance would also play a significant role in better leverage and align EU and national funding: a goal deemed important in order to support improved long-term investment predictability for the private sector, and to avoid duplication of efforts. Among other tools cited by the Communication to reach it, the proposed Strategic Technologies for Europe Platform (STEP) is also inclusive of pharmaceuticals, biotechnologies and medical technologies. The creation of a Sovereignty Seal to promote synergies amongst existing programmes, and the Technical Support Instrument to enhance the administrative capacity of member states in managing shortages and producing critical medicines are among other proposed tools.

Diversification of supply chains

A second, fundamental line of action identified by the Commission addresses how to better diversify the complex, global pharmaceutical supply chain, also by means of new international partnerships with third countries. According to the Communication, the EU industry needs to have access to a broad range of essential inputs; to this regard, new strategic partnerships with third countries for production of critical medicines and active ingredients should be based on concrete actions of mutual interest.

The EU has 42 preferential trade agreements in place with 74 different trading partners, and a new one is under negotiation with India. The Commission also recalled the importance of bilateral meetings with China on issues affecting access to medicines supply chains, and of the dialogue with Latin America.

An improved regulatory convergence is another main objective of the planned actions at the international level, so to increase GMP compliance of medicinal products marketed in the EU and manufactured by extra-UE partners. To this instance, the Communication mentions the work of international bodies such as the ICH (International Council for Harmonisation of Technical Requirements for Pharmaceuticals for Human Use) and ICMRA (International Coalition of Medicines Regulatory Authorities) for the harmonisation of standards for pharmaceuticals, and the WHO support to improved regulatory convergence. Many free trade and mutual recognition agreements (MRAs) signed by the EU also contain this type of obligation, and in some cases the sharing of non-sensitive market knowledge to anticipate possible problems too.

A new network of international partners should be created by the Commission within a year, in conformity with applicable state aid and antitrust rules. The network activities would focus on crisis preparedness and supply diversification. The Communication mentions also different international initiatives already in place, such as the Global Gateway to support local manufacturing of health products and announced another Team European Initiative in Africa on health security and pandemic preparedness and response. Another ongoing initiative is the EU-Latin America and Caribbean Partnership on manufacturing and access to vaccines, medicines and health technologies. The EU will also continue to support the provision of critical medicines in humanitarian contexts.

EFPIA’s Annual Report on the Pharmaceutical industry 2022

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by Giuliana Miglierini

In the 21 years from 2000 to 2021 – in which time we’ve come through the Global Financial Crisis and a pandemic – EFPIA companies have more than doubled production, increased exports by a factor of six, and recorded a trade balance that puts it far ahead of other high-tech sectors in Europe”, writes EFPIA’s Director General Nathalie Moll commenting the Annual Report2022.

Despite this marked growth, many challenges are still to be faced to allow the European pharmaceutical industry to maintain and even strengthen its role as primary hub of innovation, thus contributing to the overall success of the EU’s economy. It can be expected, for example, that the energy crisis will be highly impacting pharmaceutical productions, also in the form of increased difficulties to guarantee a constant supply of raw materials. This would represent just the last drop adding to existing regulatory barriers slowing down R&D and to the impact of fiscal austerity policies that may discourage investors.

At the same time, we have seen the growth of Brazilian, Chinese and Indian markets outstrip growth in the top 5 European markets. Our global competitors have prioritised life sciences and we must respond with similar ambition”, adds Nathalie Moll.

The 2021 of the pharmaceutical industry

According to EFPIA’s Annual Report 2022, the value of production for the research-based European pharmaceutical industry has grown from 127.5 billion euro in year 2000 to 300 billion in2021. Even more relevant is the growth of export, increased from €90.9 bln to €565 bln over the same period. In 2021 imports counted for €390 bln, with a positive trade balance of €175 bln.

The research-based pharma industry employed last year 840,000 units (125,000 of which in R&D) and invested €41.5 bln in research and development activities.

The total European pharmaceutical market value at ex-factory prices increased from €89.4 bln in 2000 to €255 bln in 2021. The pharmaceutical expenditure supported by statutory health insurance systems (and referred to ambulatory care only) grown from €76.9 bln to €157.5 bln over the same time.

Despite these positive figures, EFPIA warns about the danger of migration of many R&D activities from Europe towards fast-growing markets such as Brazil, India and China, thanks to the more favourable conditions. The pharmaceutical market in these countries grown, respectively,11.7%, 6.7% and 11.8% in the period 2016-2021, compared to 5.8% of top EU countries (France, Germany, Italy, Spain and United Kingdom) and 5.6% of the US.

North America still represents the wider market area for pharmaceuticals (49.1%, vs 23.4% for Europe), and accounts for the higher proportion of new launches (64.4%, vs 16.8% of top five EU countries). In 2020 China marked the higher pharmaceutical R&D expenditure (78,5 billion Yuan, from 1.9 bln Yuan in 2000), overcoming for the first time the US ($72.4 bln), while Europe is positioned far behind (€39,7 bln). Not less interesting is the 3.2% market share assigned to emerging, high-growth pharmaceutical markets including many African, South American and Asiatic countries (Algeria, Argentina, Bangladesh, Brazil, Colombia, Chile, China, Egypt, India, Indonesia, Kazakhstan, Mexico, Nigeria, Pakistan, Philippines, Poland, Russia, Saudi Arabia, South Africa, Turkey and Vietnam).

Parallel trade is a characteristic of the European pharmaceutical market, due to the persistent fragmentation of many policies in different countries. Denmark saw in 2020 the higher share of parallel imports in pharmacy market sales (26.9%), well above other countries (e.g. 10.9% Sweden,9.1% UK, 8.3% Germany).

 Issues slowing down R&D

According to EFPIA, the length of time needed to bring a new medicine to the market (up to 12-13 years) is still a major issue impacting the attractiveness of European R&D. An average of one-two new synthetic substances out of every 10 thousand exiting the labs passes all the scrutiny steps needed to reach approval. The total costs of R&D was estimated in 2014 to reach €1.97 billion, indicates the report.

Germany, Switzerland and the UK are the European countries more active in research and development (€7.8 bln, €7.4 bln and € 5.6 bln expenditure in 2020, respectively). Clinical research accounts for the higher percentage of investment (44.1%, mainly in phase III studies), far above pre-human and pre-clinical research (14.9%) and phase IV studies aimed to post-marketing surveillance (11.5%). Approval studies account for 4.3% of the total R&D expenditure.

The US generated 159 new chemical entities (both chemical and biological) in years 2017-2021, almost doubling Europe (72) and a group of other countries (71), excluding Japan (41). Even more worrying, in 2021 China lagged just behind Europe as originator of new active substances launched for the first time on the world market (18 vs 19, respectively), while the US confirmed its leading position (35). According to EFPIA, this trend is associated with a marked lower annual growth rate of pharmaceutical R&D expenditure in Europe (4.0% for years 2017-2021), compared to that in the US (8.5%) and China (12.9%). Despite this, health industries still position at the first place of the ranking of industrial sectors by overall R&D intensity (12.4%, vs 8.7% of ITC services and 7.4% of ITC products).

The pharmaceutical production

Switzerland, Germany and Italy are the leading European hubs for pharmaceutical production (€53.2 bln, €32.3 bln and €34.3 bln of value, respectively). This corresponds in Germany to a significant higher number of people employed in the sector (115,519, vs 66,400 in Italy and 47,000 in Switzerland). EFPIA also mentions that the research-based pharmaceutical industry generates about three times more indirect employment along its value chain (both upstream and downstream) than it does directly, thus significantly contributing to the overall European job market. This is even more true for highly skilled jobs, thus preventing the phenomenon of brain-draining towards more attractive countries for scientific talents.

The US remains the favoured trading partner for the EU pharmaceutical industry, accounting for 32.2% EU exports and 30.2% imports. Switzerland is at the first place for EU imports (36.4%, and 11.8% EU exports); more distanced are the UK, China and Japan.

Fragmentation still impacts the European market

Fragmentation of policies on price and reimbursement and different VAT rates for medicinal product sis a very typical phenomenon still limiting the potentiality of the European pharmaceutical market.

According to EFPIA, in 2020 the retail price of a medicine corresponded on average to 66.8% rewarding for the manufacturer, 17.4% for the pharmacist, 10.6% for the State and 5.2% for the wholesaler. The top 5 countries for market value at ex-factory prices were Germany (€42.9 bln), Italy (€23.4 bln), France (€29, 5 bln), the UK (€24.6 bln) and Spain (€17.6 bln); Russia also represented a relevant market (€18,4 bln). Italy sees the higher market share for generics (67.6%), well above Poland (58%) and Austria (49%). EFPIA also monitored the VAT rates applied to prescription and OTC medicines in different European countries, compared to the standard VAT rates. Malta (0%), Sweden (0%), France (2.1%), Switzerland (2.5%), Luxembourg (3%), Spain (4%), Lithuania, Croatia, Cyprus, Hungary (5%) marked the lower VAT rates on prescription medicines. In some case, these same rates applies also to OTC products (Croatia, Cyprus, Hungary, Luxembourg, Malta, Spain, Switzerland), while in other countries the rates for this category of medicines is higher (France 10%, Lithuania 21%, Sweden 25%).