The pharmaceutical industry warns of China's push.

BarcelonaIn recent years, China has managed to capture a significant portion of the market that until recently was dominated by the European pharmaceutical industry, displacing the Old Continent to third place globally in many aspects. This ranking is led by the United States, but the Asian giant continues to gain ground. In this context, Catalonia, the leading center for the sector in Spain, with 44% of the pharmaceutical manufacturing plants (79 out of 181), and one of the main centers in Europe, must play a key role in the effort to improve innovation in the industry and regain its position. Within this framework, the Catalan government (Generalitat) and the industry association Farmaindustria are working to boost competitiveness and increase innovation and patient access to new treatments. The last meeting between the two parties took place last month, attended by President Salvador Illa, before his medical leave, and the president of the industry association, Fina Lladós.

With almost half of Spain's pharmaceutical production and exports, Catalonia "is a strategic pillar" of the sector, with an ecosystem that combines large companies, start-ups biotechnology companies, leading research centers, and world-class hospitals "create an environment conducive to innovation," according to Hugo Dosil, partner in charge of the sector. life sciences From EY Business Consulting.

In his opinion, the Catalan case is an example of how "with appropriate policies, the trend can be reversed and Europe can be positioned as a leader in global health in a context of declining European competitiveness." Catalan pharmaceutical companies have been adapting to the new context for years. Some have opted to abandon prescription drugs and focus more on over-the-counter products, probiotics, or self-care; others have decided to concentrate on specific specialties, and traditional family-owned companies such as Esteve either Uriach They decided to open their capital to third parties for the first time in their history to strengthen their position in the market.

The power of large global groups pushed Catalan industry towards transformation. In an interview in theCompanies, the CEO of Reig Jofre, Ignasi Biosca, He emphasized that "the capacity to truly invest in research into new treatments is in the hands of very few very large pharmaceutical companies worldwide." "We, the local companies, must somehow coexist in this world between products that are more pharmacy-based, more OTC, more focused on health than on disease, and a certain kind of innovation that isn't radical—that is, developing a new drug that cures a disease. And we must commit to the greater end of the industry to incremental innovation, constantly improving it. The Catalan pharmaceutical industry is trying to achieve this incremental innovation," he explained.

In this context, and driven by roadmaps such as the Draghi report on the future of the European Union's (EU) competitiveness and the need to strengthen strategic autonomy, the European Commission is debating a legislative reform aimed at "modernizing the regulatory framework, incentivizing innovation, and ensuring more equitable access to medicines across the EU." These are all measures aimed at regaining the momentum the sector had years ago. But for this to truly materialize, it will have to be transformed into "effective policies" so that Europe can recover the weight it once held in this sector, which it is losing to emerging economies like Brazil, China, and India," says the EY representative. This industry, which is asserting its strategic importance, especially after the health crisis, has, in his view, reduced its ability to compete.

According to the latest report from the European Federation of Pharmaceutical Industries and Associations (EFPIA), "in 2024 China overtook both the United States and Europe as the creator of new active ingredients launched on the global market for the first time. After losing its position as the world's leading innovative region in 2000, Europe now ranks third in the creation of new molecules."

A few days ago, Carlos Gallardo, president and CEO of Almirall, one of the sector's major companies headquartered in Catalonia, and vice president of EFPIA, warned that "Europe is no longer the world's pharmacy." Fewer resources allocated to innovation, regulations that lengthen drug launch times, and other factors have reduced the industry's influence. Gallardo cited the example of regulation: the European Medicines Agency (EMA) takes an average of 426 days to approve a product, while in the United States, through the FDA, it takes 244 days. Furthermore, in Spain, another 600 days are added before the product reaches patients. Therefore, companies have only about six years to recoup their investment before the patent expires.

Both the United States and especially China are making progress in pharmaceutical innovation and clinical trials. Gallardo, speaking at a conference at Esade, stated that Europe "has gone from contributing half of all innovative medicines to producing only one in five in 25 years." Furthermore, investment in research and development (R&D) has fallen by 25% in Europe over the last 20 years, which is delaying the global launch of drugs.

Dosil points out that global spending on pharmaceutical R&D in Europe has fallen by more than 10 percentage points since the beginning of the millennium. In contrast, the United States has significantly increased its investment and has far surpassed Europe, while China has gone from a virtually irrelevant position to now accounting for 10% of global pharmaceutical R&D spending. Regarding clinical trials, Europe ranks third, with a volume that is approximately half that of the two leading countries, the United States and China. There are many structural, economic, and regulatory variables that contribute to the loss of competitiveness and stagnation of the sector relative to the United States and China, which "has gone from irrelevance to representing 10% of global spending." Investment in research and development (R&D) is growing more slowly, and fewer new molecules and breakthrough therapies are being generated, he explains.

According to this expert, the slower regulatory process, with 27 national legal frameworks and increasing international competition that "has driven the relocation of clinical trials to Asia and North America," is also a hindrance. Europe is losing ground in conducting clinical trials due to these factors. It also ranks third, behind the United States and China, whose number of trials is half that of the other two countries at the top of the ranking. Furthermore, the start-ups Biotechnology companies have greater difficulties attracting capital, especially in early stages, which limits the emergence of high-impact innovations born in the Old Continent..

And, at the same time, Dosil states, Europe is heavily dependent on external sources for raw materials to manufacture medicines, "a risk that the COVID-19 pandemic not only highlighted but amplified." Most of the active pharmaceutical ingredients used in Europe come from China and India, affecting both essential medicines and key components for their manufacture, explains the EY representative. Another problem is the fragmentation of the European market: "the existence of numerous regulatory and reimbursement systems that hinder access to new medicines and reduce incentives to launch products in the region." In the case of Spain, a European leader in clinical research, access to new medicines is very slow—the 600 days it takes to reach the market are in addition to the time it takes the EMA; "it's one of the highest figures in the EU"—and the public R&D budget "remains limited," which "constrains the development of basic science and the transition to our own groundbreaking therapies," according to Dosil. And there's another element they criticize in the industry: a public sector approach heavily focused on lowering prices. This, they warn, leads companies to abandon research and local production of certain prescription drugs. They assert that some medications are sold at a price set by the government that is lower than their production cost. And this runs counter to strengthening strategic autonomy, they conclude.