BioWorld International Correspondent

BRUSSELS, Belgium - The European pharmaceutical industry sees itself - and its research in biotechnology - as increasingly the victim of political incomprehension.

At the annual meeting of the European Federation of Pharmaceutical Industries and Associations here on Tuesday, the new president of this leading European drug industry lobby group, Tom McKillop, CEO of AstraZeneca plc, said, "What stands in the way of the industry is politics." The moves made so far by the European Union to help the innovative pharmaceutical and biotechnology sector are insufficient, he said.

If the industry does not win a more sympathetic regimen on pricing for innovative medicines, the industry will lose out catastrophically in international competition because it will not be able to fund research, he said. There already has been a "dramatic change in the balance of power" between the EU and the U.S. over the last decade, with the size of the EU market falling from an equal third (with the U.S.) in the world to just 22 percent, against the U.S.'s 47 percent. And without a change in EU political attitudes, that could get worse, he suggested.

Recent EU moves to boost biotechnology research have fallen short of expectations, McKillop said, because they have been aimed at the wrong target - at infrastructure rather than at a recognition of the pharmaceutical industry's key role in driving research forward and turning science into effective products. "I cannot understand how there is wide political support in the EU for the concept of biotechnology while the interests of the pharmaceutical industry are ignored. There is too much about creating science parks, and not enough about the links between supporting biotechnology and supporting the pharmaceutical industry," he said.

Biotechnology in Europe also suffered severely from Europe's inbuilt conservatism about innovation, McKillop suggested. "In Asia, if you say you have something new, they are so keen they will steal it. But here in Europe the attitude to innovation is too reserved, and instead of supporting it, people shrink from it."

Trevor Jones, director general of the UK drug industry's Association of the British Pharmaceutical Industry, and now also head of the EFPIA strategy group on research, said Europe was still too weak in its development of a "genome valley" to match the U.S.'s Silicon Valley. Only around Cambridge, UK; Utrech, the Netherlands; and Karolinska, Sweden, were there anything approaching the right concentration of biotechnology companies with functioning links to major pharmaceutical companies. Even in Germany the biotechnology development system was too dispersed and, in consequence, was underperforming, he said.

The EU needed to provide conditions that would reinforce contacts between major drug firms and biotechnology innovators, and since Europe has no equivalent of the U.S. National Institutes of Health to provide a strong platform for technology and fundamental research, the EU should do it by helping establish efficient networks in Europe. But they should not be complex and ponderous institutional organizations: "Not bureaucrat to bureaucrat, but scientist to scientist," Jones said.

The real solution lies in winning some greater freedom for price setting for new medicines in Europe, the European drug industry argued. EFPIA's outgoing president, Jean-François Dehecq, CEO of Sanofi-Syntélabo, told BioWorld International that the answer should be freedom for companies to set a European-wide price at the level they choose, so they could launch new products immediately at that price in Germany and the UK (among the most liberal and most valuable markets in Europe), and then to freely negotiate lower prices in other EU countries with lower levels of prosperity and/or a more restrictive attitude to drug pricing (such as Greece or Portugal). If those lower prices were achieved through rebates paid directly by the company to the national social security agencies, innovative companies would be spared the major problem of parallel importing (when a Greek wholesaler, for instance, exports cheaper Greek versions of a successful product to retail pharmacies in the UK or Germany at a cut price, depriving the manufacturer of sales at higher UK or German prices), Dehecq said.

At present, the European innovative industry claims it loses more than €3 billion (US$2.8 billion) in profits a year through parallel importing.

Without a major change in the EU pricing system, warned McKillop, the resentment in the U.S. - where prices are still higher than in Europe - over, in effect, funding biotechnology research worldwide, risked boiling over and leading to major changes in the U.S. pricing system. The results of that would be dramatic and serious for Europe and the European industry, he said.

Speaking at the EFPIA meeting, Erkki Liikanen, the European commissioner responsible for industry, recognized that "Europe is losing ground in its ability to generate, organize and sustain innovative processes." The U.S. has increasingly taken a leading position in pharmaceutical R&D, he said, due to fostering the development of new technology suppliers and innovation specialists.

"Most new applications to develop medicines are biotech-derived," he said. "This is a clear indication of the growing importance of biotechnology for the pharmaceutical industry. It is also an area where the U.S. has a significant lead, although there are certain indications that this gap could progressively be reduced. Today, however, the USA still has more than twice the number of people employed in biotechnology than the EU and the U.S. biotechnology sector generates twice the revenue generated by its European counterpart."

The weaknesses the commissioner identified as affecting the biotech industry in Europe include insufficiently developed intellectual property protection, weak commercial funding, fragmentation of links between biotech and supporting businesses and the lack of a risk-taking tradition in the EU. But while the industry agreed with his diagnosis, many executives at the meeting privately expressed disappointment at his prescription for remedying the problems. He said the EU planned to tackle these issues by ensuring urgent implementation of the EU's rules on the legal protection of biotechnological inventions, to introduce an EU patent scheme, and to launch studies on how to improve the longer-term financing of the industry.