Competition, Trends and Policy Issues
Edited by Peter Johnson
Chapter 6: Pharmaceuticals
6. Pharmaceuticals Paul Nightingale INTRODUCTION The pharmaceutical industry is an R&D-intensive manufacturing sector of major European strength where Europe competes well with the US and signiﬁcantly out-performs Japan.1 It is Europe’s ﬁfth largest industrial sector producing approximately 3.5 per cent of total manufacturing production. However, changes in regulations and new scientiﬁc developments have the potential to shift the main locus of the sector across the Atlantic. This chapter looks at the history of the industry and explores the nature of the pharmaceutical market, the role of regulation and research, and the industry’s performance. A Brief Historical Sketch The European pharmaceutical industry has been a major world player since the nineteenth century and today provides the largest contribution to the European high-technology trade balance – $16.2 bn in 1998. The history of the industry suggests that changes in regulation, market demand and scientiﬁc knowledge can change how drugs are discovered and produce new organisational forms that are better at producing drugs than previous organisational structures. One of the ﬁrst shifts from herbal to ‘modern’ drug discoveries was Jenner’s recognition in May 1796 that cowpox conferred immunity against smallpox. Its eﬀective use required organisational changes and the Royal Jennerian Institute was established in 1803 to produce the vaccine lymph and develop new legislation. The eﬀectiveness of natural product based drugs depends on the patient receiving a standardised dose of the active compound which can diﬀer greatly between batches. Consequently, the early nineteenth century saw a shift...
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