What's gone wrong with the European pharmaceutical industry - by Neil Turner

Fred Hassan, director general of Pharmacia & Upjohn, said at the turn ofthe year that the European Union's pharmaceutical sector was falling behind as the market's center of gravity moved rapidly towards the USA (Marketletter January 4 & 11, 1999). Last year, the European Federation of Pharmaceutical Industries and Associations (EFPIA) commented on the "slow but steady erosion of European pharmaceutical industry competitiveness." Countless other reports have come to the same conclusion: European drugmakers are at a clear competitive disadvantage to their US rivals. This has prompted many commentators to question just what has gone wrong in Europe and, even more importantly, what gives US firms their clear competitive edge?

It is not so long ago that the US industry itself faced an uncertain future. At the time of Bill Clinton's first election victory in 1992, the industry was widely perceived as the arch-villain in a health care system in which costs had spiralled out of control. So much so, in fact, that the new President appointed his wife to head up a special taskforce to report on a system with high per capita costs, but in which a significant minority of citizens had no health cover at all. The pharmaceutical industry was expected to come in for special criticism, with the possible threat of price controls on the previously unregulated market.

USA's pre-eminent position