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Euro'vision blog

A look at the key issues for pharma across Europe

Is Europe heading for irrelevance in global pharma?

It’s a disturbing thought but is Europe becoming more and more irrelevant in the global pharmaceutical arena?

I'm writing this piece from China – this may seem like strange inspiration for the next piece on the European pharmaceutical industry – but bear with me while I explain.

Yesterday I travelled from Shanghai to Beijing by train, and several things struck me. Here I was, travelling on possibly the most comfortable, luxurious, cheap and clean train I have ever been on. All the infrastructure that I could see was new, well maintained and state of the art. There was marked orderliness of pretty much everything I could see passing by the window at 305km/h and the pace and sheer amount of development happening was tangible.

Even on slow-down, China is on fire. Contrast this to India, which I just came from. There the infrastructure is chaotic, the development sporadic and often fails to get completed. Nothing quite meets its end goal.

I think it's no coincidence that with similar population sizes, and mixes of rural and urban populations, there is such a huge contrast. The sheer ability of China, propelled by a single-minded, non-democratic government to push through development and change at a breakneck speed is contrasted by India's fragmented government, which itself is pushed in many directions and seems neither to have the will nor the resources to fully push through the types of large projects and change needed to propel it into the front ranks of global economies.

So what has this got to do with Europe? My conclusion is that in its current state Europe is much like India. Loads of potential, but so fragmented that there is not the real ability to fully implement policies and changes that could take it back to a leadership position.

Indeed it appears more and more apparent that the combination of monetary union paired with individual government freedoms may very well be part of the problem. By denying each country the ability to fine-tune their individual economies while at the same time lacking the political direction to take advantage of the population potential, Europe may have engineered the worst possible model for growth.

And the pharmaceutical industry in Europe, I believe, suffers because of this. Fragmented, and not acting in unison, the industry across Europe lacks the mass and will to make a true global impact and challenge the dominance of markets such as the US.

Indeed with the rise of China, there is a real danger that the European pharmaceutical markets will become at best third tier and at worse almost an irrelevance. Truly a sobering thought.

It is unlikely that in the short term the European political situation will change. Given this, the key question for the European pharmaceutical industry has to be 'how to compete effectively from a weaker position?'. As with many strategic issues, the key may very well lie in selecting an area where Europe can compete on level or even stronger ground vs the US and China.

This area may very well centre on innovation and creative solutions. China is well known for its ability to develop and improve existing technologies and products, and the US may be viewed as being able to thrive by maximising a limited number of innovations. Europe traditionally has been a centre of invention and open thinking.  By harnessing this capability and using it to drive new products and thinking, the European industry can remain relevant and important even in the face of its formidable competition.

I think the industry needs to look seriously at ways to do this. Worryingly, just when the importance of retaining innovation, research and new ideas becomes so apparent for Europe, many companies are looking to decrease or cease investment in these areas in Europe. Even more worrying is that in the consumer sector, companies such as Unilever, and IBM have moved, or are moving, their innovation and personal development centres to Asia.

Europe needs to understand that Asia thinks in generations, not in the short term. Pharma, as well as Western governments need to think along the same lines. Sadly, I think we may have 'evolved' too far already. Maybe the time has come to revise these cost-cutting strategies in favour of a more long-term vision for the industry in Europe. Either that or we should all start learning Mandarin….

Article by
Max Jackson

Max Jackson is CEO, EMEA & APAC, Sudler & Hennessey and former chair EACA Healthcare Communications Council

2nd August 2012


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