Pharmaceutical industry: 2020 and beyond. Driving prosperity, growth, and competitiveness in Switzerland

Transcription

1 Pharmaceutical industry: 2020 and beyond Driving prosperity, growth, and competitiveness in Switzerland

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3 Pharmaceutical industry: 2020 and beyond Driving prosperity, growth, and competitiveness in Switzerland Interplay of three factors: social acceptance, successful research, and a favorable operating environment A firm commitment to Switzerland The economic vision for 2020 Benefits for patients: the pharmaceutical vision for 2020 A favorable operating environment has helped the Swiss pharma industry to assume a leading role The Swiss pharma industry today

4 Research-based pharmaceutical com panies in Switzerland have a vision: they want to confi rm and reinforce Switzerland s leading position in pharmaceutical research not just in economic terms, but above all in pharmaceutical terms.

5 Interplay of three factors: social acceptance, successful research, and a favorable operating environment All industries face the challenge of fostering social and political acceptance by operating responsibly and demonstrating a willingness to engage in dialog. This is particularly true for the pharma industry, whose research gives so many people hope that disease can be prevented, healed or mitigated. Society demands openness and transparency on the goals of its research efforts, the potential of new therapies, and the findings of clinical trials. The industry must thus be willing not only to ensure that its products are effective and safe, but also to prove that they are cost-effective. Both in Switzerland and internationally, the pharma industry s license to operate depends on its social acceptance. Research-based pharmaceutical companies in Switzerland have a vision: they want to confirm and reinforce Switzerland s leading position in pharmaceutical research not just in economic terms, but above all in pharmaceutical terms. For this vision to come true, the companies themselves need to enjoy social acceptance as well as success in research and development, and they especially need the state to ensure that a favorable operating environment is in place. Research-based pharma can best exploit its opportunities and harness its potential as a driver of prosperity, growth, and competitiveness in Switzerland if the country boasts an exceptionally positive operating environment by international standards. Excellence in education, training, and research Education, training, and research are key success factors when it comes to competing at the global level. Money spent on them constitutes a strategic investment. Switzerland therefore has to improve the quality of its schools. Stepping up the teaching of natural sciences in the final years of high school (Sekundarstufe II) must be a top priority. Highly gifted pupils must be given intensive encouragement. Vocational training should be fostered as an important pillar of the education system. For its universities to remain internationally competitive, Switzerland needs centers of excellence to attract top international researchers. Switzerland s current position in the global chemical and pharmaceutical industries is built to a considerable extent on the quality of education and research at its universities, particularly the Swiss Federal Institutes of Technology. While Switzerland has an outstanding record of private research funding, it has fallen behind in recent years in terms of public investment in education and research. The universities thus require greater financial support. A steady stream of funding must be ensured, and it must be put to use efficiently. Swiss research policy should continue to focus on fundamental research, which provides a platform for supporting and enhancing technology transfer and thereby opening up new opportunities, particularly in biomedicine. 3

6 Innovation is the motor driving the free market economy Our ability to compete hinges on an economy geared to innovation and high added value. Innovation is the motor driving the free market economy. This economic reality is all too often neglected in discussions on economic policy in Switzerland. Low prices and wages are not the way forward for our country. Government should increasingly be judged by whether it helps or hinders innovation in much the same way as environmental protection and sustainability are assessed these days: The export industry is the backbone of the Swiss economy and needs access to international markets. Alongside a functioning global trade system within the framework of the World Trade Organization (WTO), an important goal in this respect must be to expand the network of free trade agreements with clear priorities. Improved access to emerging markets is of paramount importance. Particular attention must be paid, meanwhile, to safeguarding intellectual property. A flexible labor market makes it possible to adapt to structural change and provides access to top talent. The continued free movement of persons between Switzerland and the European Union is vital for the research-based pharmaceutical industry, but pharma must also be able to recruit top people from outside the EU. An attractive fiscal environment is crucial for both established research-based pharma firms and start-ups. It must be constantly monitored and quickly adapted to ensure it remains competitive. From the point of view of research-based pharma, any economic and industrial policy geared to innovation must also contain the following: Publicized and visible efforts to effectively safeguard intellectual property both in Switzerland and abroad. Intellectual property is a key factor for competitiveness in research-based pharma. Few other industries are as dependent on effective patent protection. To ensure that Switzerland can continue to play a leading role in discussions on international agreements and organizations such as the WTO, the World Intellectual Property Organization (WIPO), and the European Patent Agreement, effective measures must also be in place to safeguard intellectual property within the country itself. Parallel imports of goods for which prices are set by the state must not be allowed. An urgent priority is the creation of a federal patent court. Incentives are also needed for research into rare disorders or pediatric medicines, for example through improved data protection in respect of clinical trials. An efficient approval procedure that stands up well to international comparison. Having drugs assessed and approved by an efficient and internationally respected national agency acts as a seal of quality for products and their manufacturers. The work of the Swiss drug regulator is key to preserving Switzerland s appeal as a center for the industry. The Swiss authority must compete with its counterparts in the US the Food and Drug Administration (FDA) and Europe the European Medicines Agency (EMEA). Swissmedic is generally slower at present than both the FDA and the EMEA. The approval of new, innovative drugs in Switzerland should be back up to speed by 2010 at the latest, and as a rule it should never be slower than in the US or EU. There has to be increased cooperation with the EMEA and a means of exchanging confidential data such as that which already exists with Canada and the United States. 4

7 Rapid access for patients to innovative drugs. Benefits for patients have the highest priority of all. Adding drugs quickly to the list of approved prescription medicines means that even those with the most basic health insurance have access to the latest treatments. Further patient-friendly measures include regularly comparing prices against those charged abroad and encouraging competition on price from generic drugs once patents have expired. An internationally top-ranking framework for biomedical and clinical research. The procedures for initiating local clinical trials need to be accelerated and harmonized, and multicenter trials are also required. Additional administrative obstacles to preclinical and clinical research need to be avoided something that also applies to experiments on animals. Strong growth in the Swiss pharma industry can only be promoted through dialog and on the basis of a common understanding shared between policymakers, universities, and business. If Switzerland succeeds in harnessing the opportunities and potential of biomedical research, it will continue to contribute substantially to this country s high-quality health care as well as to employment, prosperity, and competitiveness. How Swiss innovation measures up internationally Innovation index 0,7 0,6 0,5 0,4 0,3 0,2 0,1 0 0,73 S 0,67 CH 0,64 FIN 0,61 DK 0,60 J 0,59 D 0,57 0,55 UK USA Source: European Innovation Scoreboard 2007: Comparative Analysis of Innovation Performance, EU Commission. Market for products of biotech and genetic engineering Market growth at factory prices (in millions of francs) Source: IMS Health GmbH, Hergiswil. Interpharma, Basel. 0,48 A 0,48 NL 0,47 F 0,45 EU 0,36 N 0,33 I 0 31 E 480 Biotech drugs in development by therapy group Cancers Other Infectious diseases Autoimmune diseases AIDS/HIV infections Cardiovascular diseases Neurological diseases Diabetes Respiratory diseases Source: Biotechnology Medicines in Development, 2006 Report, PhRMA. 5

8 The pharma industry s investments show its commitment to Switzerland as a center of production and research. 6

9 A firm commitment to Switzerland The desire for an outstanding operating environment goes hand in hand with a visible, firm commitment on the part of the research-based pharma industry to Switzerland as a center of production and research, manifested in its numerous major investments in the expansion and ongoing development of its bases in Switzerland. This allows the industry to hold its own against rival locations the dynamic Asian markets, for instance. The following projects clearly illustrate this commitment: The Novartis Campus project in Basel aims to turn a former industrial site into an attractive, state-of-the-art base for research, development, and management. The core zone, due for completion in 2012/2013, represents an investment of some two billion francs. The Campus will be developed further as required and may eventually house up to 10,000 staff. Rough long-term plans are in place that stretch as far ahead as Roche has built new facilities in recent years for research and the manufacture of biotech drugs, as well as plowing considerable investment into the headquarters of its diagnostics business in Rotkreuz in the canton of Zug. Added to this is the redesign of its Basel site with a number of new buildings. The investment volume in Basel alone comes to around 550 million francs. In 2010, Actelion will move into its new corporate center in Allschwil with workspace for 390 people. Planning is already under way for a new Actelion research facility at the same site that will house several hundred researchers. Vifor s parent company Galenica started up its new distribution center in Niederbipp in The investment came to 85 million francs. Cilag employs more than 1,300 people in Switzerland. Its new 30 million franc biotech production pilot facility in Schaffhausen went online in These infrastructure investments are accompanied by spending on research and development (R&D). The six Inter pharma firms spent some 16 billion francs worldwide in 2007 on R&D, with around 5 billion francs (32%) going to projects in Switzerland. Their R&D spend is thus substantially higher than in other sectors at more than 20% of total pharma sales. Merck Serono, founded in the 17th century and the oldest pharma company in the world, is planning the largest investment in its history in Corsier-sur-Vevey. The company will pump some 600 million francs into biotech production in the canton of Vaud over the next few years. 7

10 The unique mix of startups, global players, and leading universities all in such close proximity, together with a cluster of biomedical research operations, offers great potential for spawning and hosting new businesses. 8

11 The economic vision for 2020 The Swiss pharma industry is well placed to face up to the increasingly challenging international environment. Analysts take a positive view of its portfolio of drugs at an advanced stage of clinical development, and the Swiss firms have a relatively low proportion of high-revenue drugs with patents about to expire. Swiss biotech clusters Basel Area Basel Greater Zurich Area Zurich With start-up firms, large multinationals, and leading universities all in such close proximity as well as a cluster of biomedical research operations, Switzerland boasts great potential for spawning and hosting new businesses. Lausanne This means that Switzerland s ability to harness its potential and its future as a center of production and research will depend to a large extent on how the local operating framework measures up to the international competition. If the pace of growth witnessed to date is sustained, the economic vision for 2020 can become reality: Geneva Bio Alps Source: Swiss Life Science Marketing Alliance (SLSMA). Pharma industry workforce Growth in workforce (in thousands) Bellinzona Biopolo Ticino 1. Around 55, 000 people could be employed directly by the pharma industry, with another 200,000 or so Swiss jobs indirectly dependent on it. This would be an increase of 21,000 in the number of highly qualified people employed directly by the industry The pharma industry s direct contribution to value creation in Switzerland could double from around 10 billion francs to some 20 billion francs. 3. Annual pharmaceutical exports could double to well over 100 billion francs, compared with 50 billion francs at present Source: Interpharma, Basel. Interpharma firms in Switzerland: sales, research, and exports in 2008 In billions of francs billion billion 5 billion Sales Research and development Exports Source: Plaut Economics,

12 New scientifi c insights benefi t patients, the health care system, and society as a whole. 10

13 Benefits for patients: the pharmaceutical vision for 2020 The Swiss pharma companies research staff are already working on the science that will benefit patients in 2020 in the form of new drugs and therapies. Their labors in the fields of genetics, genomics, and proteomics are increasingly bearing fruit. Our knowledge of the human genome is growing all the time and will enable us to develop active substances that act in an even more precisely targeted manner. Biomarkers will make it possible to align the way new drugs are administered more effectively with patients needs. Stem cell research, systems biology, synthetic biology, and nanobiotechnology will have substantially expanded the options for using biotechnology in researching and manufacturing drugs and vaccines by New forms of drug delivery will enable active ingredients to be targeted at the diseased organ or tissue more accurately, making drugs safer and reducing their side-effects. New scientific insights and the successful development of new drugs, vaccines, diagnostics, and therapies will benefit patients, the health care system, and society as a whole: 1. Doctors will be able to use new types of therapies for forms of cancer, dementia, metabolic, inflammatory, and infectious diseases as well as other symptoms that were previously untreatable or difficult to treat. It will be possible to progressively improve existing treatments making them safer, more effective, and easier to tolerate. 2. Doctors will be able to offer patients customized programs for the early detection, prevention, and treatment of common diseases with serious health implications. 3. A healthier population, the ability to avoid handicaps, lower health care costs, and a reduction in absences from work will bring about a measurable and sustainable increase in the value of pharmaceutical products for society. 4. Drugs, vaccines, and diagnostics are among the cornerstones of effective and cost-efficient health care provision. 11

14 A stable and innovationfriendly operating environment is crucial to the success of the Swiss pharma industry. 12

15 A favorable operating environment has helped the Swiss pharma industry to assume a leading role A favorable operating environment will remain essential going forward. The leading position the Swiss industry enjoys today not only reflects business acumen, it can also be attributed to generally favorable and hitherto innovation-friendly operating conditions: Pharma s traditionally high degree of acceptance among the population, reflected in opinion polls and manifested in the results of various referendums. No other industry has been challenged and vindicated by referendums more often than pharma. In referendums on abolishing animal testing, banning genetic engineering and stem cell research, artificial insemination, and calls for cut-price medicines (the Denner initiative), Swiss voters have time and again come out in favor of the research and quality that are integral to Swiss health care. Parliamentary support for research-based pharma on issues of research and health care policy and on safeguarding intellectual property most recently with the revision of patent legislation to protect biotech discoveries. High educational standards in schools, universities, and vocational training. These high standards provide the industry with access to qualified workers and, combined with a flexible labor market, are key to maintaining a competitive edge. Stable fiscal and monetary policy and a financial market that gives start-ups access to venture capital. The success of the bilateral approach to relations with the EU, together with a trade policy geared to open markets, are also of decisive importance. Also indispensible to the highly export-dependent pharma industry are access to international markets and the ability to recruit specialists from around the world. Swiss pharma owes its current status to large multinationals and start-ups alike. This is what sets it apart. In biotech, for example, the last ten years have seen a whole series of university spin-offs, especially in the Zurich and Lake Geneva regions. The cluster of start-ups that has emerged in the Basel region is unique and the densest of its type anywhere in the world. These companies which include Actelion, Basilea, Cytos and many more besides make Switzerland one of the leading centers of biotechnology in Europe, with enormous growth potential. Importance of industries in terms of economic strength In your view, how important are the following industries for Switzerland s economic strength very important, quite important, neutral, unimportant or totally unimportant? As a percentage of voters Banking Chemicals and pharmaceuticals Tourism Insurance Energy Construction Machinery Information technology and telecom Food Agriculture Media Textiles very important quite important neutral unimportant totally unimportant don t know/no response Source: gfs.bern, Public Health Monitor 2008 (1,220 respondents). 13

16 The Swiss pharma industry today Research-based pharma is an important factor for Switzerland as a center of production and research. Given that this country s only natural resource is knowledge, high-added-value industries and rich innovation are the keys to its economic future. Hourly productivity in the pharma industry and the economy as a whole In francs per hour worked The Swiss pharma industry measures up well in terms of international benchmarking. Its growth has been healthy. In the past 15 years, it has held up well in the face of international competition and contributed disproportionately to the country s prosperity, growth, and competitiveness. Thanks to their capacity for innovation and successful research, Swiss pharma companies have been able to build on their international position. They currently hold a share of around 10 percent of the global market. While the EU bemoans the declining competitiveness of its drugmakers, Swiss pharma is posting above-average growth in terms of new jobs, value creation, and exports. In 2006, the pharma industry contributed, directly and indirectly, around 22 billion francs almost 5 percent to Switzerland s gross national product (GNP). At 304, 000 francs in 2006, Swiss pharma s GNP per employee was around three times the national average Nominal hourly productivity, pharma Nominal hourly productivity, overall economy Source: Plaut Economics, Balance of trade in pharma since 1990 In billions of francs Exports Surplus Imports Source: 2008 statistics of the Directorate General of Customs, Bern. 14

17 Most impressive is Swiss pharma s export performance. The industry has seen its exports multiply almost sixfold since Pharma is now the most important exporter in Switzerland, with exports of more than 55 billion francs accounting for a quarter of the Swiss total. An export surplus of 31,6 billion francs puts the industry at the top of the world rankings. Private R&D spend Intramural R&D spend by sector Total: 9,659 million francs (in 2004) Pharma 36.9% Machinery / metals 17.0% Research-based pharma is the most important source of private research funding in Switzerland. With research and development (R&D) investment of more than 5 billion francs in 2007, drugmakers spent many times their sales (878 million francs) on R&D in Switzerland. Other 7.1% Food 5.2% Chemicals 7.1% Research and development 14.2% Information and communication technology 12.5% Pharma companies are the leading representatives of Swiss innovation, with two Swiss drugmakers, Roche and Novartis, even figuring among the global top 12 in terms of research spend. The industry is also a major employer: 118, 000 Swiss jobs depend directly or indirectly on the pharma industry. The number of people employed directly by pharma has grown by 77 percent since 1991 to 34,000. Source: Swiss Federal Statistical Office, Education and Science Department, Neuchâtel. R&D investment as a percentage of sales (worldwide) in 2006 Interpharma companies (pharma) 20.9 Pharma and biotechnology 15.9 Computing (software and services) Information technology (hardware) Aerospace and defense Electrical engineering and electronics Automotive Chemicals Machinery Telecommunication Oil and gas Source: The 2007 EU industrial R&D investment scoreboard. Interpharma. 15

18 Interpharma firms key figures in 2007 Novartis Roche Merck Serono Actelion Vifor Cilag Pharma industry 1 in millions of francs Switzerland Sales R&D spend Capital expenditure Headcount Global Sales R&D spend as a percentage of sales 21,2 20,7 21,0 22,6 10,8 Capital expenditure Operating profit Headcount Consolidated (all divisions) in millions of francs Global Sales R&D spend as a percentage of sales 16,2 18,2 15,2 22,6 7,5 Capital expenditure Consolidated profit , Headcount , Novartis excluding Vaccines & Diagnostics, Sandoz, and Consumer Health; Roche excluding Diagnostics; exclusively Cilag Switzerland, global sales of Cilag products through Johnson & Johnson, Cilag s parent group. 2 Prescription drugs. 16

19 Visions Reaffirm Swiss pharma s leading position internationally Ensure benefits for patients, the health care system, and society as a whole Drive prosperity, growth, and competitiveness Success factors Social and political acceptance Fundamental and pharmaceutical research at the highest level A favorable operating environment ensured by the state (public health, fiscal and financial policies) A flexible labor market Access to international markets Commitment to Switzerland Invest in Switzerland as a center of production and research Create new, attractive jobs Promote dialog on research and health care policies Potential 55,000 people directly employed by the pharma industry 200,000 jobs indirectly dependent on pharma 20,000,000,000 francs contributed directly to gross national product twice as much as at present 100,000,000,000 francs of income from exports twice as much as at present Our demands Focus on quality and step up teaching of natural sciences in schools Increase and maintain investment in education, training, and research Promote and intensify technology transfer Make approval and compensation procedures more efficient Provide patients with faster access to new, innovative drugs Effectively safeguard intellectual property Stop focusing on low prices and start promoting innovation

20 Interpharma Petersgraben 35, P.O. Box CH-4003 Basel Phone +41 (0) Fax +41 (0)