Country Reports : France: The French Pharma Revolution

Apr 07, 2011

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"Pasteur," by Albert Edelfelt Courtesy of Institut Pasteur in Paris
Last October, French authorities sent a long awaited message of support to the healthcare industry. As decision makers from manufacturers, researchers, multinationals and local companies gathered for the 4th Strategic Council for Healthcare Industries (CSIS), French president Nicolas Sarkozy, who chaired the event for the first time, declared that the health industry was of premier strategic importance to France.

Philippe Lamoureux, Director General of LEEM
The French pharmaceutical industry received Sarkozy's pronouncement as an extremely positive sign. Indeed, like most of the nation's industrial sectors, pharma reels from the country's trademark government interventionism. According to Hervé Gisserot, president of GSK France, "This was the first time any French president has said this about our industry."

Sarkozy's symbolic keynote speech at the CSIS underscores the government's new understanding that there is more to pharmaceuticals than cost-containment. "We now live in a country where health industries are no longer regarded as a problem but as a solution to the end of the economic crisis," enthuses Philippe Lamoureux, general director of LEEM, an organization representing 98% of pharmaceutical industries in France.

Pharmaceutical production of the first European producer countries (in millions of Euros)
Breakthrough measures include the creation of Innobio, a €130 million ($161 million USD) biotechnology fund utilizing a combination of funds from France's sovereign wealth fund (Fonds Stratégique d'Investissement) and multinational laboratories including Sanofi-Aventis, GSK, Pfizer, Roche, Ipsen, Lilly, Novartis, Boehringer Ingelheim and Takeda.

Other highly anticipated, and long-awaited, changes include dual pricing for exportation, the possibility to start manufacturing generics before patent expiration, increasing public-private research cooperation, and announcing the national life and health science alliance AVIESAN's new role as the unique interlocutor for private companies willing to cooperate with public research institutions.

Pharmaceuticals contribute significantly to the French economy. In 2008, pharmaceutical revenues reached €47 billion ($58 billion USD), 45% of which are from exports generating a €7 billion ($8.7 billion USD) trade surplus. The industry is responsible for over 100 000 direct and 310 000 indirect jobs. Until recently, it was creating 2500 jobs per year.

Between 1990 and 2008, retail prices of reimbursable drugs decreased by 18.4%
As Europe's largest producer, and manufacturing powerhouse with over 210 production sites, France has long attracted investment in pharma. Market size, stability, and an exceptionally educated and productive workforce far outweigh concerns about high taxation, and price control that limit profitability (6.7% average in France compared to 15% in the US).

France is also a significant market for the international pharmaceutical industry. In 2008, France surpassed Germany to become the world's 3rd largest pharmaceutical market, despite having a headcount that is 20 million less than its neighbour. These numbers reveal, not wayward over-medication, but attest rather to the country's robust social healthcare system and strong tradition in the medical and innovation field. Indeed, French social health insurance (Assurance Maladie), established in 1945, currently finances up to 67.6% of all drug expenses, and universal health coverage was introduced in 2000.

In an industry boasting such performances, why were there so many worries and expectations?

Firstly, 2008 marked the end of a decade of strong and steady growth in the domestic market, due to a cocktail of patent-ending and cost-containment measures to minimize healthcare's chronic deficit, which hit €27 billion ($33 billion USD) in 2009. That's just for employees in the private sector.

Further, there are also fears that France may have lost its attractiveness as a production hub. The sector is indeed facing rough times ahead. Expiring patents will force factories, designed in the 80s-90s era of the "blockbusters" model, to shut, while the country hasn't developed sufficient bioproduction platforms to be able to replace them.

Lastly, in the country that saw Louis Pasteur discover immunology and Marie Curie medical applications with radioactivity, there are fears that the French public research infrastructure is no longer at the center of growth.

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