Is the US pharmaceuticals industry losing its way?

The EU generally looks to the US as its model for pharmaceuticals innovation. But US companies are showing signs of vulnerability due to competition from generics and a lack of new ‘blockbuster’ drugs.

US pharmaceutical companies, such as Schering-Plough Corp., Merck & Co and Baxter International have recently announced job cuts due to worse-than-expected growth figures. Pfizer, the world's largest pharmaceuticals manufacturer, is likely to dismiss thousands of its employees following its merger with Pharmacia Corp. earlier this year.

This weak performance has partly been brought about by competition from generics and the lack of new drugs to replace those blockbuster drugs whose patents have expired. The US (where prescription drugs are the most expensive in the world) has been under mounting pressure to buy drugs from Canada and other countries (where the prices are controlled by the government). Expensive acquisitions and legal proceedings over recalled drugs make the US pharmaceutical industry's operations even more expensive.

Meanwhile, biotech companies have complained about the drugs approval procedures of the European Agency for the Evaluation of Medicinal Products (EMEA). Serono complained in the Financial Times about the rejection of its AIDS drug Serostim by the EMEA. Serono claims that the EU drugs approval process is too bureaucratic and lacks transparency and that this may lead businesses to move their operations more and more towards the US.

 

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