UK - How will the aftermath of the economic recession affect the UK pharmaceutical market?

Reductions in health spending and industry job cuts could have an impact on the market, but an ageing population and a health service under pressure will guarantee an increasing demand for pharmaceuticals.

The UK pharmaceutical market is set to experience moderate growth over the coming years, tempered slightly by the effects of the economic recession. Public spending cuts are inevitable, as public debt continues to increase, and health expenditure is set to suffer as a result. In 2010 the NHS budget is £102.3 billion, but this could fall by 2.5 to 3.0 per cent per annum from 2011/12. According to the Budget 2010, the NHS and the Department of Health will be required to make savings of £4.35 billion (US$6.81 billion) by 2012/13. This follows a period of huge growth in health spending under the Labour government, which has seen the NHS budget almost triple. Despite budget constraints, increased pressure on the NHS to cope with the health needs of an ageing population will lead to a rise in demand for pharmaceuticals, and a willingness to invest in new therapies to ensure effective treatments.

Many pharmaceutical companies based in the UK have announced job cuts and site closures in recent months, in an effort to reduce costs. AstraZeneca announced the closure of a number of its R&D sites in March 2010 leading to 3,500 job cuts worldwide, including a site in Charnwood and another in Cambridge. This follows a further 8,000 job cuts within the company worldwide, which were reported in January 2010. In February 2010, GlaxoSmithKline announced in 380 jobs cuts at its R&D site in Essex, following a shift in the company’s research focus. Furthermore, Eli Lilly, Pfizer, GlaxoSmithKline and AstraZeneca all announced job losses worldwide during 2009, affecting positions in the UK. These cuts are to be expected considering the economic climate, as well as upcoming challenges for these companies, including patent expiries, increased generic competition and slowing innovation.

Further reading - An in-depth review of the UK pharmaceutical market is available from Espicom: The Pharmaceutical Market: United Kingdom (published May 2010)

Mexico - How are biologics & biosimilars regulated in Mexico?

In September 2009, the regulatory reform for the sale and production of biologic and biosimilar medicines was enforced.

The new regulation establishes the requirements to launch ‘biocomparables’, which is the term chosen in Mexico to define off-patent biologics ‘comparable’ with innovative biologics; other terms such as ‘biosimilars’, ‘biogenerics’ or ‘non original biologics’ are rejected. The new regulation also sets out the creation of a Committee of New Molecules and a Subcommittee of Biologic Medicines to determine, on a case-by-case basis, the clinical or in vitro studies necessary for market registration, depending on the medical use of the product. Once marketed, a pharmacovigilance system will assess these products.

The new regulation represents sizeable opportunities for both local and foreign producers. Local producers such as Probiomed, Silanes and Landsteiner Scientific already produce biologic medicines in Mexico. Competition, however, is expected to arise from foreign producers such as Roche, Amgen, GlaxoSmithKline, Sandoz, Teva and Ranbaxy. On a patient level, the new regulation provides more safety and availability, as the sector had grown in the country without any legal framework.

Further reading - A detailed analysis of the Mexican pharmaceutical market is available from Espicom: The Pharmaceutical Market: Mexico (published January 2010)

UK - How will the economic recession affect the UK pharmaceutical market?

Reductions in health spending and industry job cuts could have an impact on the market, but an ageing population and a health service under pressure will guarantee an increasing demand for pharmaceuticals.

The UK pharmaceutical market is set to experience moderate growth over the coming years, tempered slightly by the effects of the economic recession. Public spending cuts are likely, as public debt continues to increase, and health expenditure is set to suffer as a result. In 2010 the NHS budget is £102.3 billion, but this could fall by 2.5 to 3.0 per cent per annum from 2011/12. This follows a period of huge growth in health spending under the Labour government, which has seen the NHS budget almost triple. However, the NHS is well equipped to deal with the financial shortage, as it has seen marked improvements in recent years.

Many pharmaceutical companies have announced job cuts worldwide in recent months, in an effort to reduce costs, and many staff based in the UK are likely to be affected. These companies include Eli Lilly, GlaxoSmithKline, AstraZeneca and Pfizer. Job cuts are to be expected considering the economic climate, as well as upcoming challenges for these companies, including patent expiries, increased generic competition and slowing innovation.

A number of key pharmaceutical and biologic products are going off patent in the coming years, which will strengthen the generics market. Despite budget constraints, increased pressure on the NHS to cope with the health needs of an ageing population will lead to a rise in demand for pharmaceuticals, and a willingness to invest in new therapies to ensure effective treatments.

Further reading - An in-depth analysis of the UK pharmaceutical market is available from Espicom: The Pharmaceutical Market: United Kingdom (published January 2010)

UK - GSK to Open £38 million Bioscience Park

GlaxoSmithKline (GSK) is collaborating with the government, the Wellcome Trust and the East of England Development Agency (EEDA) to create a new biotechnology science park at the company’s base in Stevenage, with total funding of £38 million.

GSK is contributing £11 million to the park in land and facilities. The Department for Business, Innovation and Skills will invest almost £12 million, the Technology Strategy Board £5 million, the Wellcome Trust almost £6 million and the EEDA £4 million.

The park will aim to attract small, early-stage biotechnology companies, which will have shared access to specialist skills, scientific equipment and expertise to stimulate innovation. It will initially house 25 companies, and it is estimated that 1,500 new jobs will be created. GSK also has plans to further expand capacity at the park in the future.

The new park has been conceived as a competitor to similar sites in Boston, California and North Carolina in the USA.

Building work will begin in early 2010 with companies moving onto the site in 2011.

Further reading - A detailed analysis of the UK pharmaceutical market, including some background information on GSK, is available from Espicom: The Pharmaceutical Market: United Kingdom (published September 2009)

Russia - Ban on Promotion of Medicines to Doctors Proposed

Prime Minister Vladimir Putin has proposed that pharmaceutical companies be banned from sending representatives to visit doctors in order to promote the use of their medicines.

At a meeting on the development of the drugs industry on October 9th 2009, Mr. Putin said, “We should get rid of these so-called pharmaceuticals representatives working in medical institutions.” He claimed that Russia has seen the rise of an “abnormal” interaction between pharmaceutical companies, particularly foreign ones, and the medical community over the past ten years.

In Russia, this form of communication is one of the main ways that companies are able to promote their products, and Mr. Putin’s statement has prompted fears that doctors will have no way of finding out about new medicines on the market. Under the law, prescription drugs can only be advertised in certain publications, which not all doctors are able to access.

Pharmaceutical companies spend an estimated 10-15% of their revenue on representatives, which amounts to around the same as production costs. For foreign companies who do not manufacture in Russia, this proportion can rise to as much as 40-50% of revenue.

Many pharmaceutical companies have hit back at the suggestion, claiming that what they are doing is not unethical or illegal. The head of GlaxoSmithKline in Russia, Fabio Landazabal, commented that representatives are not allowed to give doctors presents or money, and cannot hold entertainment or sport events. The drugmakers also asserted that it is in only isolated cases that doctors are paid for such activity.

Further reading - A detailed analysis of the Russian pharmaceutical market is available from Espicom: The Pharmaceutical Market: Russia (published September 2009)

EU - EU Commission Raids Pharmaceutical Companies Suspected of Anti-Competitive Behaviour

The EU Commission carried out raids at several pharmaceutical companies on 6th October 2009, as part of its investigation into anti-competitive behaviour within the industry.

Surprise inspections were confirmed at sanofi-aventis, Teva, Novartis and Ranbaxy Laboratories.

This is the third time that the EU Commission has carried out raids. In January 2008, the EU Commission raided the offices of GlaxoSmithKline, AstraZeneca, sanofi-aventis and several generic competitors, and in November 2008, Teva, Servier and Krka Group were all raided.

In a statement the EU Commission said, “The Commission has reason to believe that the provisions of the EC Treaty prohibiting restrictive business practices and/or the abuse of a dominant market position... may have been infringed.”

However the regulators stressed, “The fact that the European Commission carries out such inspections does not mean that the companies are guilty of anti-competitive behaviour nor does it prejudge the outcome of the investigation itself.”

The raids follow an 18-month inquiry into anti-competitive practices within the pharmaceutical industry, the findings of which were released in July 2009 (see EU - Competition Inquiry Findings Released). The inquiry found that at least 200 settlement agreements between generic and originator companies were known, and that many of these were formed to restrict generic entry onto the market.

The European Commission is already investigating Servier and some generic firms on suspicion of blocking a generic copy of the cardiovascular drug perindopril from entering the market.

Further reading - Pharmaceutical market profiles for all European countries are available from Espicom: Pharmaceutical Market Reports; Europe

EU - European Court Sides with Drugmakers on Pricing Matter

The European Court of Justice ruled on 6th October 2009 that the EU Commission should reconsider whether efforts by drugmakers to prevent traders from exploiting price differences across Europe should be allowed.

Up until now, the EU Commission has opposed companies changing their prices to compensate for parallel trade. Pharmaceutical companies, however, have complained that this undermines their ability to recover the costs of developing new medicines.

The case involved GlaxoSmithKline, who introduced a policy in the late 1990s to put higher prices on a number of drugs sold in the Spanish market, which it had determined were going to be exported. The EU Commission said that the company was restricting competition within the European Union, having long favoured the creation of a single market for goods, including prescription drugs, with the aim of lowering prices.

Many governments buy medicines in bulk in southern European countries such as Spain, and sell surpluses in northern nations such as the UK, where drugs usually cost more. This type of parallel trade helps to cut the price of medicines for their health services.

The traders were disappointed by the verdict. Andreas Mohringer, the president of the European Association of Euro-Pharmaceutical Companies, which represents the traders, commented, “Allowing the system in Spain to stand would mean competition would suffer in Europe with the losers being national social security systems, taxpayers and patients.”

However, the victory for the pharmaceutical industry could be significant at a time when companies face a great deal of price competition.

Further reading - Detailed reviews of the pharmaceutical markets in all European countries are available from Espicom: Pharmaceutical Market Reports; Europe

UK and China - GSK Invests in Joint Venture to Produce Paediatric Vaccines in China

GlaxoSmithKline has entered into a partnership with Jiangsu Walvax Biotech Company to develop and manufacture paediatric vaccines for use in China.

As part of the deal, GSK will provide the technology for its MMR jab Priorix to Walvax to enable local production and distribution of the vaccine. A manufacturing plant will built specifically so that the joint venture can eventually supply China’s public vaccine market.

The collaboration will be reached with a total investment of £41.2 million, of which GSK is providing £20.1 million to begin with and a further £7.3 million in 2015. Meanwhile, Walvax is investing £13.8 million into the partnership. From these investments, GSK has an equity share of 65% and Walvax 35%, although the companies noted that this can be revised in the future if necessary.

Further reading - Detailed reviews of the pharmaceutical markets in both the UK and China, including more information on pharmaceutical companies, are available from Espicom: The Pharmaceutical Market: United Kingdom (published September 2009) and The Pharmaceutical Market: China (published September 2009)

UK - Summary of NICE Appraisals in October 2009

NICE Rejects RoActemra for Rheumatoid Arthritis on the NHS

The National Institute for Health and Clinical Excellence (NICE) has issued preliminary guidance rejecting the use of RoActemra (tocilizumab) on the NHS to treat rheumatoid arthritis.

The drug, which is produced by Chugai Pharma and distributed by Roche, has demonstrated its potential benefits to patients in clinical trials. In studies including 4,000 patients, RoActemra, alone or in combination with a disease-modifying anti-rheumatic drug (DMARD), such as methotrexate, significantly reduced the symptoms of rheumatoid arthritis compared to DMARDs alone, regardless of previous therapies and the severity of the disease.

However, NICE has concluded that the drug is not cost-effective, costing £9,295 a year for a patient weighing around 70kg.

The National Rheumatoid Arthritis Society said the guidance means that sufferers’ only options now will be to retry therapies that have already failed or palliative care, which involves large doses of steroids which could cause side effects such as osteoporosis in the longer term.

NICE’s final guidance is due to be issued in February 2010.

NICE Approves Hycamtin for Small Cell Lung Cancer

NICE has approved Hycamtin (topotecan) for patients with small cell lung cancer on the NHS, under certain conditions.

The regulator’s Final Appraisal Determination recommends the use of the drug in patients suffering from a relapse of the disease, but only when treatment with the first-line therapy again is not appropriate, or the combination of cyclophosphamide, vincristine and doxorubicin chemotherapies is contraindicated.

In addition, the oral form of GlaxoSmithKline’s Hycamtin should be used, as the intravenous version is considered too expensive. The cost per cycle for the oral form of Hycamtin is £638, which is equal to an average cost per patient of £2,552, whereas the cost for the intravenous version is £1,495 and £5,980, respectively.

Lung cancer is one of the most common cancers in England, with over 33,000 new cases in England and Wales a year, of which between 10% and 20% are of the small cell type.

In September 2009, Hycamtin was approved by NICE to treat cervical cancer on the NHS (See NICE Approves NHS Use of Hycamtin for Cervical Cancer).

Further reading - A detailed review of the UK pharmaceutical market, including more information on NICE and its appraisal procedures, is available from Espicom: The Pharmaceutical Market: United Kingdom (published September 2009)

UK – NICE to Reconsider Guidance on Tyverb after GSK Appeal

The National Institute for Health and Clinical Excellence (NICE) has agreed to uphold an appeal from GlaxoSmithKline over guidance rejecting Tyverb (lapatinib) as a treatment for patients with advanced breast cancer.

Final guidance was issued in March 2009 on the drug, which did not recommend Tyverb on the grounds that it showed just “a small overall benefit” with a cost per QALY (quality assured life year) of £70,000, and therefore was not cost effective.

However, GlaxoSmithKline appealed against the recommendation and claimed that the drug was a cost-effective therapy when combined with chemotherapy and the company’s proposed patient access scheme. Under this scheme, the drug company would pay for the first 12 weeks of Tyverb treatment which would result in a QALY of £16,000.

As a result, NICE has agreed to re-assess the drug as part of the new guidance to be used when assessing end-of-life care, introduced in January 2009. This includes allowing companies and other stakeholders the right to submit evidence which they believe proves their product is cost-effective.

Further reading - An in-depth analysis of the UK pharmaceutical market, including some background information on NICE, is available from Espicom: The Pharmaceutical Market: United Kingdom (published March 2009)