The leaders of three of Europe’s biggest pharmaceutical companies say the continent risks becoming a less attractive market for innovative medicines.
(Bloomberg) — The leaders of three of Europe’s biggest pharmaceutical companies say the continent risks becoming a less attractive market for innovative medicines.
Austerity measures in the UK and other countries are causing “great concern” and European governments must take seriously the need to invest in the sector and prioritize health care, said Novartis AG Chief Executive Officer Vas Narasimhan during a conference call Wednesday.
His comments were echoed by GSK Plc leader Emma Walmsley, who said the highest levels of government need to promote the industry, warning that Britain’s vision to become a leader in life sciences is at a “tipping point if we don’t make the right decisions now.”
Novo Nordisk A/S said the relative ease of doing business in the US, where the Danish company’s blockbuster obesity treatment Wegovy is flying off the shelves, means it’s a more attractive market to launch new drugs in than Europe. The company still plans to roll out Wegovy across Europe though, said Novo CEO Lars Fruergaard Jorgensen in an interview with Bloomberg.
Rising Sales
All three companies forecast rising sales and profit for 2023 driven by surging demand for key drugs. Novartis said sales of heart failure treatment Entresto and Kesimpta for multiple sclerosis are strong. GSK’s vaccine business, including its best selling Shingrix shot for shingles, is fueling sales at the UK business and Novo said the number of new Wegovy prescriptions are “higher than what we have seen anytime before.”
However, while political leaders say they want to attract innovation, they don’t reward companies for the advances they deliver, Narasimhan said, citing bureaucracy in the European Union.
“It certainly in the long run will erode companies’ desire and interest to invest in Europe,” he said.
Soaring medical costs are weighing on global budgets with leaders worldwide trying to contain inflation. The issue is particularly fraught in Europe, as demand for health care outpaces expectations and the war in Ukraine continues to drive up prices for everything from energy to consumer goods. It is even more pronounced in the UK where the country’s crumbling National Health Service is beset by rising costs, striking staff and falling innovation.
Read More: Britain’s Health Care Black Hole Is Devouring the Whole Country (1)
Drug pricing negotiations are becoming even more complex across Europe as a result.
Tough Talks
Novo’s Fruergaard Jorgensen said patients in Denmark and Norway are now paying out-of-pocket for Wegovy and he expects that to be the case for many markets in Europe where demand will be high but reimbursement discussions slow. Wegovy was rolled out in the US before Europe “as you can secure market access by negotiating with the pharmacy benefit managers relatively fast compared to Europe where you have to go country by country,” he said. Novo has also grappled with production issues.
In the UK a growing dispute with pharmaceutical companies over drug pricing recently led to US drug companies Eli Lilly & Co. and AbbVie Inc. pulling out of a voluntary agreement which caps the growth of spending by the NHS on medicines. Germany, where drugmakers have long been able to reach the market relatively quickly and set their own prices for a period of time, has also recently tightened its drug pricing and reimbursement laws.
Read More: Drugmakers Eli Lilly, AbbVie Leave UK Drug-Pricing Agreement
“Whatever works for Europe in the way you research, you develop, and you commercialized drugs, does not necessarily apply to the US,” said Victor Bulto, who leads Novartis’s innovative medicines unit in the US.
US needs are now “front and center” for decision-makers at Novartis, he said. “In the past they used to be more influenced by the European needs.”
–With assistance from Marthe Fourcade, Thomas Mulier and Francine Lacqua.
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