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EUROPEAN PHARMACEUTICAL INDUSTRY
GROWING AT 8% ANNUALLY IN THE NEXT FIVE YEARS
The
European pharmaceutical industry is one of the leading industries in
Europe. Due to the unique nature of the industry, where national
governments are the main purchasers
of pharmaceutical products, the industry must
maintain a delicate balance between the desire for profits and cost
containment measures imposed by those governments. The
rising cost of research and development has
increased the cost of innovative drugs and imposed added pressure on their
ability to market in the E.U. This is in stark contrast to
the U.S. pharmaceutical industry that does not
impose restrictions or cost containment measures on this sector. Mergers,
a major factor in both markets, will slow employment
and affect growth in general. The opening up of
markets such as Eastern Europe and Latin America should contribute heavily
to company growth in the U.S. and in Europe.
According to a soon-to-be-released BUSINESS
COMMUNICATIONS CO., INC. study RB-138
European Pharmaceutical Industry, the
European pharmaceutical market is expected to account for nearly 40% of
global production with sales of about $101.5 million in 2000. Growing at
an AAGR (average annual growth rate) of 8.1% this
sector is expected to total $150 million by 2005, the increase due to
European Single Market Convergence, which will provide competition
incentives.
The U.S. pharmaceutical market is expected to
grow at an AAGR of 12.3% during the 5-year forecast period. Even though
Europe's share of the total market will fall to 35% by 2005, both the U.S.
and European markets will benefit by the rising ranks of the elderly, as
well as intensified global research and development.
The U.S. market should have stronger consumer
spending growth, although in single digits, and exports should rise 10%
per year due to the expanding foreign market in developing nations. Europe
should expect to see exports remain steady. This
will be tempered however, by the rising cost of research and development
and cost containment measures imposed by European Member States.
European drug manufacturers will have three of
the top ten drugs in the coming year, with the remaining seven drugs being
manufactured by U.S. companies. Two of the drugs will be manufactured by
companies owned or operating in the UK, emerging as the strongest
competitor within the EU. The Single market has not yet been achieved and
market fragmentation hurts competitiveness. Although European policy does
not provide as many tax and financial incentives,
such as the R&D tax credit, available in the
U.S. eventual harmonization, already underway, should contribute to
increased competitiveness. America has established a strong presence in
the European pharmaceutical market, through investment as well as research
and development. American pharmaceutical manufacturers will play an
increased role in the competitiveness of the European
pharmaceutical industry. Individual European
governments, as well as the EU level, are closely studying U.S.
governmental regulations and incentives, in order to compete in the global
pharmaceutical marketplace.
Strengthening the competitiveness of the sector
should be a main priority of the EU and European national governments. The
danger exists for less wealthy EU countries to become less attractive
investment sites. While the opening of Eastern
Europe markets should contribute to competitiveness, ailing healthcare
systems and weak intellectual property laws may weaken the EU overall. The
increasing number of alliances across nations and continents as well as
international agreements for intellectual property and mutual recognition
procedures should help strengthen the
EU market, as well as the U.S. market.
GLOBAL PHARMACEUTICAL INDUSTRY, 2000-2005
($ Millions)
| |
1999 |
2005 |
AAGR %
1999-2005 |
| Europe |
101.5 |
150.0 |
8.1 |
| U.S. |
150 |
268.0 |
12.3 |
| Rest of the World |
7.3 |
8.9 |
4.0 |
| Total |
258.8 |
426.9 |
10.5 |
RB-138 European Pharmaceutical Industry
Published: April 2000
Data and analysis provided courtesy of
BUSINESS COMMUNICATIONS COMPANY, INC., 25 Van Zant Street, Norwalk, CT
06855, Telephone: (203) 853-4266; ext. 309, Email: publisher@bccresearch.com |
