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www.fdanews.com/articles/82897-uk-concerned-that-european-drug-industry-is-losing-ground-to-us

UK CONCERNED THAT EUROPEAN DRUG INDUSTRY IS LOSING GROUND TO US

December 6, 2005

Europe must take action in order to stop its pharmaceuticals industry from falling behind the US, according to claims made by the British government as it holds the rotating presidency of the European Union (EU). The UK's Minister of Science has called for governments to form a new alliance with the drug industry aimed at making the continent a more attractive place for pharmaceutical investment.

Drug companies have long complained that restrictive pricing policies in Europe affect profits and reduce the incentive for innovation. In many European markets, governments control drug prices in order to balance soaring healthcare budgets. In France, for example, the government is attempting to reduce its annual drug spending by EUR2.1bn (US$1.21bn) per year and is planning to restrict reimbursement, introduce new price cuts and encourage generic provision.

Also, due to EU free trade laws, parallel imports are a significant problem. Industry sources are also worried about increasing competition from low-cost countries such as India and China, while Singapore is becoming a serious rival for biotech investment due to strong government support for this sector, which includes tax breaks as well as the construction of state-of-the-art facilities.

However, recent studies have rejected longstanding claims that Europe's drug industry in "free-riding" on R&D conducted by US companies. New data suggests that R&D investment, as a percentage of GDP, is actually higher in the UK, Sweden and Switzerland than in the US.