Innovation needed to prosper
The pharmaceutical industry is a major contributor to the French economy, and a big exporter of drugs. However, it is a changing sector, which must innovate if it is to prosper
The pharmaceutical industry is a major contributor to the French economy, and a big exporter of drugs. However, it is a changing sector, which must innovate if it is to prosper
Welcome to a world of health, vitality and hope. This slogan, used a few years ago by Rhone-Poulenc Rorer (RPR), expresses succinctly the aims of France's pharmaceutical industry. Although there was a 23% increase in exports last year, there are worrying signs of weakness in profitability and innovation, according to the Syndicat National de l'Industrie Pharmaceutique (SNIP), the industry's trade association. The number of patents filed in France since 1990 has decreased steadily, as has the number of blockbuster drugs developed from French research. The problems were highlighted by a report from the French sciences academy, which concluded: 'Despite the quality fundamental research, the national therapeutic innovation remains weak and therefore worrying.'
The French pharmaceutical industry faces patent expiry on drugs worth more than $7bn (€8bn) over the next 10 years (table 1). This represents more than 50% of the audited market, according to a survey by IMS Health, and is significantly greater in monetary terms than the comparable figures in Germany, the UK, Spain or Italy. At least 300 drugs are affected in France, whereas in Germany and the UK, which have markets similar in size to that of France, the numbers are substantially lower (table 2).
generic sales
Although the future outlook appears bleak for the innovative pharmaceutical industry in France, it is not all doom and gloom. France has been more successful in protecting its market than other European countries, with the exception of Italy. Many of the drugs that lost patent protection in Germany are still protected in France and Italy, the survey concluded.
One area of growth has been generic sales. The French government has been encouraging the use of generics as part of its cost containment measures. Since generic substitution was introduced in June 1999, monthly sales of unbranded generics have trebled, but these still account for less than 2% of reimbursed pharmaceutical sales.
competitive sector
Another bright spot is that the country is still ranked third as a discoverer of new drugs. In the fight against cancer and diseases of the cardio-vascular and nervous systems, French pharmaceutical research, through an unprecedented research effort, has perfected some innovative drugs.
However, the industry is being held back by the number of small companies in the industry. As the sciences academy report stated: 'Lastly, and this is a special feature of our pharmaceutical industry, a very high number of small companies (more than 80) often developed from very old family chemist's shops, which market medicines whose effectiveness is often highly debatable.'
The industry remains competitive, with many major players in the global pharmaceutical industry having headquarters in France. 'Our enterprise's sales of acetylsalicylic acid, paracetamol, guaifenesin, calcium phosphates, salicylic acid, and methyl salicylate in France represent a significant portion of our European business. North America represents the largest portion of our sales in overseas markets,' commented Antoine Baule, president of Rhodia Pharmaceutical Ingredients.
'While 40% of our sales are in Europe, Asia is actually the fastest growing market for our pharmaceutical and nutritional ingredients, and important for our future success. Sales of these products in Europe and North America, however, will remain the largest in the world for the foreseeable future. France, of course, remains a very important market.'
Rhodia has increased its Asian investments in recent years. The company recently became the majority shareholder of a joint venture located in Wuxi, China, for the production of paracetamol. It has also increased the cost-competitiveness of its pharmaceutical ingredients operations in Europe and North America by concentrating on its salicylic derivatives product manufacturing footprint. 'We also offer formulation services to these markets in order to better suit the needs of our customers,' Baule commented.
He continued: 'Within the pharmaceutical ingredients enterprise, we are continuing to implement activities that are aligned with our long-term vision: to achieve growth by broadening our pharmaceutical ingredients and nutritional supplement product ranges and expanding our formulation services activities. We are improving our cost-competitiveness by consolidating some production and investing in Asia, and succeeding in more strongly differentiating Rhodia from low-priced suppliers.'
development areas
In the nutritional supplement sector, Rhodia's calcium phosphate business could be about to increase. Apart from the interest in the product as an excipient, there is also excitement about it in the nutraceuticals market, where it may have application in osteoporosis treatments.
Baule thought that Rhodia's r&d spending related to its pharmaceutical ingredients operations this year would be comparable to recent years. More of it will be focused, however, on formulation services and technical partnerships with customers.
'We expect that more pharmaceutical companies will be managing the whole life cycle of their specialties. They will be paying closer attention to each stage's requirements. We are lining up a solution which focuses on their needs in the mature phase of a product's life cycle, which is by nature the target of Rhodia Pharmaceutical Ingredients,' he said.
Caroline Guinet from Ethypharm highlighted the underlying weakness in the industry. She thought that the major change in the French pharmaceutical industry over the next 12 months will probably be more mergers and acquisitions between small, independent, privately owned companies.
About 15% of Ethypharm's sales are in France, with the rest of Europe accounting for 50% and the remaining 35% being outside Europe. Guinet said the company perceives North America to be the most important for Ethypharm in terms of growth. 'We have invested significantly in new technologies and in r&d to anticipate the needs of the pharmaceutical and biotechnology industry and we are expanding our capacity to serve the growth of the North American area.
'We are expanding significantly our manufacturing operations with, in particular, the extension of one of our current manufacturing facilities. This programme represents about €13m ($11m). We are also investing to comply with the US FDA's requirements. Lastly we are investing more than €8m ($7m) in r&d for equipment and facilities using new technologies,' she said.
'The main area of development will be to deliver biotech actives orally. To meet these challenges we have acquired and developed several promising technologies. Our current pipeline comprises more than 60 products in development; we see also a lot of potential in particular for oncology treatments, biotechnology products and pain treatment. Most of these products will reach the market between 2003 and 2006.'
This is a change from previous practices. 'In the past we developed products ready to be marketed through licensing contracts with major pharma companies. Since 2000 we have started to co-develop products with pharma and biotech companies. To improve the service to our customer we have created a customer service and project management organisation,' Guinet commented.
Delivery of the drug is also an important business for Valois, headquartered in Le Neubourg. The company's pharmaceutical division is based in Vaudreuil, with manufacturing plants in China, Switzerland and the US. In Norwalk, Connecticut, there are two pump assembly lines, one dedicated to nasal pump production.
The use of nasal and pulmonary routes is becoming increasingly widespread in the pharma market. They provide a viable alternative to conventional methods of treatment by syringe and offer advantages in terms of economy and safety. 'Valois is a world leader in non-invasive delivery systems, and there is great interest when considering an alternative to drug delivery by syringe and needle,' said Pierre Carlotti, marketing director, Valois pharmaceutical division.
'So far significant progress has been achieved and this will certainly revolutionise and improve the way drugs are administered,' he continued: 'Moreover, novel nasal and pulmonary delivery systems will certainly contribute to better patient compliance in the future.'
The French pharmaceutical industry is facing many challenges, especially with regards to keeping its status as an innovative drug discovery country, but as the celebrated scientist, Louis Pasteur said in relation to research breakthroughs: 'Chance favours the mind that is ready for it.' The industry has to ensure it is ready.