UK pharma industry beset by economic and political pressures

The UK improved its position by one place, and is now ranked fifth of the nine Western European markets surveyed in Business Monitor International's Business Environment Ratings (BER) for the fourth quarter of 2009.

However, while the UK is one of the most developed pharmaceutical markets in the world, pressing economic and political issues, as well as its strict pricing and reimbursement regimes and the upcoming patent cliff - are conspiring to reduce the market's rate of development in the coming years. In the 2008-2013 period, BMI forecasts a compound annual growth rate (CAGR) of just 0.49 % in local currency terms, with the market value at consumer prices growing from £18.8 billion ($34.9 billion) to £19.3 billion.

Although the generics segment is forecast to account for as much as one-third of the market by value in 2013, foreign firms continue to invest in the UK's pharmaceutical R&D. In July 2009, Belgium's UCB Pharma inaugurated its new £25 million biologics research facility in the UK, which will specialize in the development of therapeutic antibodies. Over the course of 2008, the company ploughed some £200mn into local R&D, confirming its status as the fourth-largest pharmaceutical industry investor in the country. Similarly, Spanish company Almirall Prodesfarma opened a new headquarters in the UK which will serve both the British and Irish markets.

Proposal to bypass the NICE

Around the same time, the UK's Office for Life Sciences (OLS) - focused on the improvement of operating environment for the pharmaceutical industry - was working on a proposal that aims to allow innovative drugmakers to bypass the National Institute of Clinical Excellence (NICE) via a fast-track procedure. The products would be sold to the National Health Service at a higher price, with the NICE appraising their cost-effectiveness after a period of three years.

The Association of the British Pharmaceutical Industry (ABPI) has estimated that new medicines - defined as those launched in the last five years - account for a lower proportion of the UK's total pharmaceutical market than in other developed countries. An additional issue is that of recommendations made by the NICE - the medicine advisory agency - not being legally binding, but having a strong influence on the reimbursement environment in the UK, BMI noted.

In the meantime, in a bid to tackle the growing care problem as the population ages, the British government proposed a reform of the social care funding system in England. One of the three options laid out by the government is the creation of a compulsory national insurance scheme that would provide care for all elderly citizens. The other options include a partnership approach whereby all citizens would be entitled to a percentage of their costs being paid by the state. The poorest people would qualify for free care and the less well-off for more government help. However, some people with high care costs would have to raise their own funds via their savings or the sale of their assets. The additional costs could be covered by private insurance, or a voluntary state-backed insurance scheme, the report states.