Everyone knows that life is tough in the world of Big Pharma. And, in Europe, it's getting tougher every day. The most immediate blow is the threat that hangs over the scope for patent protection for blockbusters, as the dust settles from the European Commission's inquiry into competition in the sector (the EC's report on this is scheduled for release as this issue of Pharm Exec Europe hits your inbox.) The inquiry has cast a shadow over how far innovators can legitimately go in using their intellectual property rights to protect their blockbusters against generic erosion. At one point it seemed that this detailed examination might at least clear the air. But instead the inquiry has merely muddied the waters, leaving Big Pharma more cautious and more uncertain over what was already a difficult borderline between intellectual property law and competition law.
Even more inexorably, world pharma markets seem to be pointing in the wrong direction for pharmaceutical majors with a heavy presence in Europe. The growth prospects are increasingly focused on emerging markets, with the developed world, and Europe in particular, facing virtual stasis. Worse, at any rate for established companies with a classical product pipeline, the nature of the business is shifting further away from mass-market products and faster towards the specialised medicines that are being made possible by breakthroughs in science and the development of new technologies.
AstraZeneca is facing big challenges from generic competition to leading products in major markets, including Toprol-XL, Nexium, Casodex and Pulmicort. Sanofi-aventis' new boss, Chris Viehbacher, is planning major restructuring of the group this July. Johnson & Johnson is still fighting to break out of an earnings slump. BMS is seeking ways of offsetting the sales losses it faces as its Plavix runs into generic competition next year. And the French drug industry association, LEEM, has reported a low growth rate for its members in 2008 due to the "high level of change affecting the pharmaceutical sector." As LEEM points out, key factors are an increase in the use of generics, a slowing in the growth rate of blockbuster drugs, the development of niche products, and the emergence of new biotech drugs.
The other side of the coin is that new opportunities are becoming available and new vitality is visible across many of the smaller firms in Europe.
At the end of June, the European Medicines Agency in London issued its first-ever recommendation for a marketing authorisation for an advanced therapy medicinal product. And the ground-breaking product emerging from this new European regulatory procedure doesn't come from Big Pharma. ChondroCelect, a cell-based medicine that is used to repair defects in knee and thighbone cartilage, has been developed by TiGenix, a small Belgian firm which has also (and not coincidentally) just benefited from a successful 5.4 million private placement.
Only days later, another small Belgian firm, Galapagos, announced that it had won French government certification as eligible for investment grants under a new scheme to promote funding for innovative firms. And the UK government announced a £150 million investment scheme for life sciences innovation. As Clive Dix, chairman of the UK's BioIndustry Association, commented, the money will provide "much needed follow-on investment to early stage companies developing innovative technologies." Richard Barker, director general of the Association of British Pharmaceutical Industries, added: "Many great discoveries begin in small companies, many of which face an urgent funding crisis."
In recognition of this trend, the European biotech industry association, EuropaBio, has just announced a refocusing of its own activities to give greater emphasis to the 1,800 smaller firms in its membership. It has also set up a personalised medicines task force with representatives of big firms and small, to maximise the chances of turning the bad news about the European pharma scene into some good news.
Big Pharma is far from dead in Europe. But the entire pharma sector is in need of revitalisation. Much of that revitalisation is going to come from outside Big Pharma. Small is now not just beautiful it is smart, too.