EU proposal may accelerate pharma innovation decline, industry group says

[November 06, 2023]  By Julia Payne

BRUSSELS (Reuters) - A major pharmaceutical rules overhaul, proposed by the European Commission in April, could see Europe's share in global research and development contract by a third to 21% by 2040 translating to 2 billion euros ($2.15 billion) per year in lost investment, industry group EFPIA said on Monday.

The European Federation of Pharmaceutical Industries and Associations (EFPIA) says the Commission has not conducted a competitiveness impact assessment and if the new rules become law, they would accelerate the negative innovation trend in the EU and hit small and medium-sized enterprises the hardest.

"Any changes to our incentives system would equally affect EU-based and foreign-based companies which bring medicines to the EU and, therefore, it would not put EU firms at a disadvantage," an EU Commission spokesperson said.

Medication was the single biggest contributor to the EU’s trade surplus, with 235 billion euro ($252.13 billion) worth of exports in 2021.

The EFPIA said small biotech companies have already moved to the United States and China.

The Commission has proposed shortening the time a new medicine remains patented in a bid to reduce the cost of medicines for its citizens with a faster shift to cheaper generics.

The Commission said its proposal would reduce new medicine approval times to 180 days from 400 days. It also includes boosts for small and medium-sized enterprises such a longer period to get data protection in all 27 member states as well as fee reductions or waivers schemes and favourable regulation for rare disease medicines.

Illustration photo shows various medicine pills in their original packaging in Brussels, Belgium August 9, 2019. REUTERS/Yves Herman/Illustration/File Photo

Lars Fruergaard Jorgensen, CEO of Novo Nordisk, said that the reduction would not allow a pharmaceutical company to recoup the investment in development as well as the cost of marketing.

"If you chop off, one or two or three years of exclusivity, it’s the peak sales that you take away. When you launch a product, you have a negative profit contribution because you invest more in marketing, sales...it's really only the last few years that you recoup your investment," Jorgensen said.

Novo Nordisk, a Danish firm, has become the Europe's most valuable listed company since it launched game-changing weight loss and diabetes drugs, Wegovy and Ozempic. Jorgensen added that Novo Nordisk has already invested more in its Boston presence.

"Everyone, going forward, will start conducting trials in the U.S....In some cases, they (the medicines) are not going to developed in Europe," Jorgensen said, adding that the U.S. offers a major market after one approval process versus country-by-country in the EU.

Germany, Belgium and France would be the hardest hit by the proposed rules, the EFPIA said citing research by Dolon that it commissioned.

($1 = 0.9321 euros)

(Reporting by Julia Payne; Editing by Lisa Shumaker)

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