Words by Isabel O’Brien
Europe’s pharmaceutical research and development sector is in a tight spot as new data reveals that R&D spending, while growing, isn’t keeping up with global competitors.
According to a report from the European Federation of Pharmaceutical Industries and Associations (EFPIA) and PwC, Europe’s contribution to pharma innovation is slowing, with the US and China pulling ahead at an ever-increasing rate.
In 2022, the pharma industry contributed €311bn to the EU’s economy, a sizeable chunk by any measure. But EFPIA’s latest data shows that Europe’s R&D spending growth has averaged 4.4% annually since 2010, while the US clocked in at 5.5% and China at a whopping 20.7% over the same period.
The fallout is clear: Europe’s share of new drug discoveries, known as New Molecular Entities, has slipped, with China surpassing Europe in the race to develop new medicines in 2023.
In a press release, Nathalie Moll, Director General, EFPIA, said: “Economically, the sector is delivering for the EU. It continues to be central to Europe’s health and economic security, despite a growing number of constraints.” But she was clear: Europe has limited time to address these trends. Her call for a “coherent life sciences strategy” a plea for action to make sure Europe doesn’t fade from the frontlines of global R&D.
The report, which builds on PwC’s previous analysis, paints a complex picture. Yes, the pharma industry supports a hefty 2.3 million jobs across the EU, and its per-worker productivity is three times that of the European economy as a whole. But that only tells part of the story. In terms of Gross Value Added (GVA) per hour, the US is pulling far ahead, with productivity levels nearly double those in the EU.
For now, Europe’s pharma industry is in a precarious position: a major contributor to the EU economy, but lagging behind in the R&D investment that drives innovation and long-term growth. Whether Europe can bridge this growing gap with the US and China remains to be seen, but one thing is clear – time is ticking.
