The Community's pharmaceutical industry

DOCUMENT
THE COMMUNITY'S
PHARMACEUTICAL INDUSTRY
COMMISSION
OF THE EUROPEAN COMMUNITIES This document has been prepared for use within the Commission. It does not
necessarily represent the Commission's official position.
Cataloguing data can be found at the end of this publication
Luxembourg: Office for Official Publications of the European Communities.
1985
ISBN: 92-825-5224-1
Catalogue number: CB-43-85-361-EN-C
Articles and texts appearing in this document may be reproduced freely in
whole or in part providing their source is mentioned.
Printed in Belgium Commission of the European Communities
THE COMMUNITY'S PHARMACEUTICAL INDUSTRY
by
N. L. BURSTALL
with Ian Senior
Economists Advisroy Group
LONDON
Document This document has been prepared for use within the Commission. It does not
necessarily represent the Commission's official position. PREFACE
The present volume is part of a series of sectoral studies on the
evolution of concentration in the member states of the European
Community.
These reports were compiled by the different national Institutes and
experts, engaged by the Commission to effect the study programme in
question.
Regarding the specific and general interest of these reports and the
responsibility taken by the Commission with regard to the European
Parliament, they are published wholly in the original version.
The Commission refrains from commenting, only stating that the
responsibility for the data and opinions appearing in the reports,
rests solely with the Institute or the expert who is the author.
Other reports on the sectoral programme will be published by the
Commission as soon as they are received. CONTENTS
Page
1 INTRODUCTION
1.1 Terms of reference
1.2 Method
1.3 Timing
2 SUMMARY
3 NATURE OF THE PHARMACEUTICAL INDUSTRY
3.1 The demand for drugs 8
11 3.2 Operations of the industry
14 3.3 The role of governments
19 3.4e organisation of the industry
22 3.5 The supply of drugs
THE PHARMACEUTICAL MARKET OF THE
EUROPEAN COMMUNITY
29 4.1 The pattern of demand
4.2 Barriers within the European Community 36
5 THE STRUCTURE OF THE PHARMACEUTICAL INDUSTRY OF
THE EUROPEAN COMMUNITY
5.1 A Community perspective 46
5.2 The pharmaceutical companies of the European
Community 48
5.3 The innovative companies of the European
50 Community
57 5.4 Role of the smaller company
5.5 Activities of companies from outside the
Community 60
63 5.6 National strengths and weaknesses
6 COMPETITION AND THE SUPPLY OF DRUGS INSIDE THE
EUROPEAN COMMUNITY
6.1 Life cycle of a drug 67
6.2 The balance between in-patent and out-of-
patent drugs 67
70 6.3 Competition and the patented product
6.4 Originals, copies and generics in the
prescription market 72
6.5 Competition in the over-the-counter-sector 73
74 6.6 Implications
msssßn3SiMaaS79 AieMostõx^v (Mmmjiß LIST OF TABLES
Page
3 NATURE OF THE PHARMACEUTICAL INDUSTRY
3.1 : World consumption of drugs in 1982 10
3.2 : Common forms of government intervention
in the pharmaceutical industry 19825
3.3 : The 50 largest pharmaceutical countries in
the world by sales in 1982 2
3.4 : Production of and trade in pharmaceuticals 23
3.5 : World trade in finished drugs, 1980, index form 26
3.6 :de in intermediates,,x form 26
4 THE PHARMACEUTICAL MARKET OF THE EUROPEAN COMMUNITY
4.1 : Pharmaceutical consumption in the European
Community 1972-1982 30
4.2 : Principal health and mortality statistics of
the European Community 19821
4.3 : Drug consumption in the European Community by
therapeutic category in 19823
4.4 : Drugn in the Europeany 1972
and 19825
4.5 : The registration requirements for new
pharmaceutical products in the European
Community 37
4.6 : Pharmaceutical pricing systems in the European
Community 40
5 THE STRUCTURE OF THE PHARMACEUTICAL INDUSTRY OF THE
EUROPEAN COMMUNITY
5.1 : Pharmaceutical production in the European
Community 1972-1982
5.2 : The innovative pharmaceutical companies of the
European Community in 1982 51
5.3 : Location of R and D production facilities of the
innovative pharmaceutical companies of the
European Community in 19825
5.4 : Operations of innovatives from outside
the European Community within the Community in
1982 6
5.5 : National pharmaceutical companies and national
competitive strength in the European Community
19824
MsmmxkmrFg Ao^B^tm^f «s^j^ Page
6 COMPETITION AND THE SUPPLY OF DRUGS INSIDE THE
EUROPEAN COMMUNITY
6.1 : Sales of different types of pharmaceutical
products 1981 69
7 CONCENTRATION IN THE PHARMACEUTICAL INDUSTRY
7.1 : Concentration of market shares in European
Community countries on an ownership basis
in 1982 77
7.2 :n of market shares by product
in 19828
7.3 : Measures of concentration in various therapeutic
markets in 19829
7.4 : Best selling drugs in the European Community 1982 83
7.5 : Concentration of activity by therapeutic group
in the innovative companies of they in
1982 85
7.6 :n of sales by innovative companies
in the European Community in 1982 8
8 THE PATTERN OF SUPPLY
8.1 : Sales of drugs through retail pharmacies by
companies of various nationalities in 1982 94
8.2 : Trade in finished drugs within the European
Community 1983 96
8.3 : Supplies of finished drugs by local affiliates
of foreign companies in Europe7
9 THE COMPETITIVE TRADING STRENGTH OF THE COMMUNITY
PHARMACEUTICAL INDUSTRY
9.1 : Pharmaceutical market shares in Europe 1982 108
9.2 : Pharmaceuticalt shares in the developed
world outside Europe 110
9.3 :l market shares in the developing
world3
9.4 : Pharmaceutical market shares - a world view,
1982 115
10 THE ELEMENTS OF COMPETITIVE STRENGTH
10.1 : Measures of innovative capacity 1950-1982 118
10.2 : Profits and profitability of innovative
pharmaceutical companies 1982 121
11 THE AIMS OF THE COMMUNITY GOVERNMENTS
11.1 : Government action in favour of the national
pharmaceutical industries 137