The French pharmaceutical market is forecast to grow at a ‘tepid’ rate due to the wider uptake of cheaper, generic medicines, according to a new study.
Research and consulting firm GlobalData says the country’s market will see an annual growth rate (CAGR) of just 0.7% from $46.2bn in 2014 to $48.2bn by 2020. This, GlobalData says, is primarily due to the increasing focus on generic drugs.
France has been a relative late-comer to the use of generic medicines compared to the UK and Germany. In 2008, generic drugs accounted for just 21.7% of the French pharmaceutical market in terms of volume, though by 2013 this increased to 30.2%.
One of the reasons the country has resisted greater use of generics is because of its economy’s reliance on the big French pharma firms – Sanofi, Ipsen and Servier – coupled with traditional consumer preferences for patented medicines.
But the cost of this is becoming too high for France’s healthcare system to sustain. Part of the problem stems from France’s notably high healthcare spend, which was 11.8% of its GDP in 2012 (the UK spent around 10% in the same period), pushed up, in part, by expensive, patented drugs.
Such government spending funds France’s extensive healthcare reimbursement system, which sees the state health system pay money back into citizens’ accounts after they have paid for a service, such as a GP visit – an increasing drain on the government’s coffers.
Joshua Owide, GlobalData’s director of healthcare industry dynamics, says that the French government is promoting generics as a measure to reduce healthcare expenditure. In September 2012, it introduced a scheme under which patients who agree to generic substitution will not be required to pay for their drugs.
One of the other cost-cutting measures has been to introduce a new, stricter method of deciding on reimbursement rates and pricing for drugs in the form of the Relative Therapeutic Index (ITR).
The ITR is based on how the new medicine compares with other similar treatments (regardless of whether or not they have been approved or are generics), the clinical relevance of its primary and secondary trial endpoints, and the validity of its methodological studies.
If a drug is approved for reimbursement it will retain this status for five years before having to be evaluated again. Drugs usually have a reimbursement rate of 65%, but this can be as low as 15% or as high as 100% depending on the benefit, cost, and innovation of the treatment.
Owide explains: “While patented drugs dominate France’s pharmaceutical market, the volume of prescribing attributed to generic drugs will shift closer to levels seen in the rest of Europe, restricting French market growth
“The generic sector is mainly driven by a favourable regulatory regime, patent expirations and a variety of government incentives for physicians, pharmacists and patients to choose generics ahead of branded products.”
Despite the negative impact of generics, France’s pharmaceutical market will however still be boosted by a number of factors, including: an ageing population, tax incentives, a substantial skilled workforce and high public healthcare expenditure.
Owide adds “By 2020, France’s elderly population is expected to account for almost 20% of the total population. As this demographic demands more medication than younger demographics, the need for high-quality healthcare is increasing.
“Additionally, numerous incentives, such as the abolition of corporate tax and the Research Tax Credit to support research and development, are enhancing the competitiveness of healthcare enterprises and will help to sustain the pharmaceutical market.”