December 1, 2005

France's drug industry association, LEEM, appears to have terminated its consensus approach to the government's pharmaceuticals sector policy. The group has called for an urgent meeting of the Industry Council, amid bitter claims that official efforts to balance the social security budget violate agreements between drug firms and the government.

In April, France's pharmaceuticals industry agreed to create 6,000 new jobs by 2008, mainly by integrating sub-contractors and distributors, but industry sources have protested the growing financial burden presented by new sales taxes, deep price cuts and a planned EUR2.1bn (US$1.21bn) reduction in the national drugs bill. Reforms to state health insurance passed in August 2004 are also set to cost the sector EUR3.1bn in 2005-2007.

LEEM now expects industry revenues to slide to 1.5% next year, after growth rates of 7% in recent years. Accordingly, LEEM does not now expect all of the 40,000 jobs set to be lost to "natural wastage" by 2010 to be replaced, implying a severe decline in the industry's size and prestige.

Meanwhile, in another worrying sign, the country's 300 biotechs have announced that 2005 has been the weakest year for new finance in several years. Proceeds from financing rounds have totalled just EUR128mn this year, compared to EUR368mn in 2004. No new biotech stockmarket listings have taken place since 1999. Further, although the total of French biotech compounds in clinical trials has now peaked at 96, only nine are currently commercially available.