Europe must make a decision

Europe has the potential to be a leader in the research, development and production of new medicines. Geopolitical changes are transforming the global landscape of health innovation. However, by leveraging its strengths and taking decisive policy action, Europe can be competitive in the global race for pharmaceutical investment.

The benefits of a competitive biopharmaceutical sector

A more competitive biopharmaceutical sector would have clear and tangible benefits for Europe and its citizens:

• Faster access to medicines for patients.
• Better health for patients and society.
• Less pressure on healthcare systems, hospitals and healthcare professionals.
• More cutting-edge research and development in Europe.
• Greater capacity to manufacture innovative medicines.
• Economic growth in a strategic sector.
• Skilled employment.
• Greater resilience and strategic autonomy in the face of global crises.

The figures speak for themselves:

• 4x return for every euro invested in health.
• 900K employees in the pharmaceutical industry in Europe.
• 60M lives can be saved.

Europe continues to excel in scientific output. However, the United States attracts more than twice as much investment in R&D. Europe’s challenge is to transform its academic excellence into products and services capable of driving better health and greater economic growth.

A new reality requires a new approach

European healthcare systems are under increasing pressure from an ageing population and rising chronic diseases, at a time when defence and security are placing an additional burden on national finances.

Coping with these pressures often forces healthcare systems to focus solely on short-term cost control. This means missing opportunities to improve prevention and care, increase efficiency and achieve long-term sustainable savings by investing in innovation that can transform the future sustainability of healthcare.

The time has come to rethink how we value innovation in Europe: moving from seeing it as a cost to the system to considering it an investment in a healthier future for Europeans.

European policymakers have a choice to make: continue as before, caring for an increasing number of people with stagnant or even reduced budgets, or rethink the organisation of the system and the allocation of healthcare resources. This means taking a more strategic view of investments that can deliver better health for patients, strengthen the sustainability of healthcare systems and generate long-term economic growth and security.

The challenge: governments must invest in new treatments up front and exclusively from the health budget, while the benefits and savings are distributed throughout the patient’s lifetime and across different areas of the health system and society at large.

In per capita terms, high-income European countries spend about half as much as the United States on innovative medicines.

These differences are due to how governments value and reimburse innovation. Investing in the true value of medicines means reforming the way they are considered: expanding health technology assessment (HTA) to reflect broader societal benefits, streamlining pricing and reimbursement procedures, increasing investment in innovative medicines, and eliminating clawback mechanisms.

What are clawbacks?

Clawback mechanisms vary from country to country, but in general they require pharmaceutical companies to return part of their revenue or pay refunds if their annual sales exceed a certain threshold. These policies function as a tax, with no guarantee that the savings generated by the medicines will be reinvested in new drugs.

Industry contributions as a proportion of public spending on medicines have doubled between 2018 and 2023, rising from 12% to 24%. This means that the industry itself has fully covered the increase in spending associated with the introduction of its new medicines in EU markets.

What is at stake for the future?

The stakes could not be higher:

• Globally, R&D spending has increased by almost 60% in the decade from 2012 to 2022.
• In 2024, the industry invested €55 billion in R&D in Europe.
• Forty-four per cent of this investment went to clinical trials.
• The sector employs 2.6 million people across the region.
• The proportion of innovative medicines fully available on public reimbursement lists in Europe has fallen from 42% in 2019 to 29% in 2024.

Europe must decide whether it wants to invest in innovation, creating the right environment for the development and production of medicines, or stand aside and let other regions reap the benefits.

Europe has a solid foundation on which to build its future. It is home to world-class universities and research centres that drive scientific progress and guarantee universal healthcare coverage for its citizens.

These assets give Europe the opportunity to build a globally competitive biomedical innovation ecosystem, but only if the right decisions are made now.