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EC Pharma Strategy: The first steps towards a more sustainable industry?

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On Wednesday 25 November, the European Commission published its Pharmaceutical Strategy, a first step towards addressing strategic vulnerabilities that are risking Europe’s ability to secure supply patients with key medicines, including those as basic and essential as paracetamol. Predictable and sustainable access to quality medicines sits at the heart of Europe’s health agenda and a patient’s confidence that what is in their medicine cabinet today will be there tomorrow. The strategy released by the European Commission represents a once in a generation opportunity to make the supply chain in Europe more resilient and provide medicines to patients when and where they need them if its implementation is done the right way, writes Richard Daniell, who leads Teva in Europe.

Positively, and for the first time, a European Strategy recognizes the complexity and value of securing the entire value chain for medicines, from production to distribution to patients as well as the drivers that hinder supply security. For too long, the combination of onerous regulatory conditions and unsustainable market conditions have driven a “race-to-the-bottom” on essential medicine pricing, harming European investments in manufacturing and consolidating the supply chain and creating vulnerabilities which have been exposed during the COVID-19 crisis.

Over the past decade, Europe has become overly reliant on so-called ‘third countries’ – non-EU states – to supply critical active pharmaceutical ingredients (APIs) and essential medicines. In 2000, Europe held more than half of the licenses to manufacture APIs that it needed to meet its demand, while Asia made up roughly a third.

Now, the situation has reversed, and over the past 20 years the API ratio has completely changed, with one in six APIs needed in Europe exclusively produced in China. The geographic concentration of Asia’s API manufacturing industry – in specific regions of China and India – now means the European continent’s supply chain is heavily exposed to geographical, environmental and political troubles in those areas.   It was therefore crucial that the strategy did a deep dive into the root causes that are driving investments out of Europe and causing shortages, and proposed concrete solutions to address them. If European lawmakers are serious about tackling these risks, they need to address the financial and regulatory factors that have driven industry away. So it is encouraging to see that the Commission has made some proposals to tackle some of those root causes that impact  security of supply.

However, reversing that trend is going to require an open and candid conversation how we value the production in Europe of essential medicines, The status-quo – where a medicine’s value is determined only by its price, and where Europe’s regulatory regimes are effectively playing against Europe’s manufacturing sustainability and security of supply – is simply not fit for purpose.

So, as we have said we need to start looking not just at the cost but also at the value that having a sustainable manufacturing network and footprint in Europe brings. We are not going to be able to make everything in Europe. We are not saying that. Diversification of the supply chain will remain important, but we must sure ensure that systemic and sustainable policy reforms will underpin such ambition.

Teva Pharmaceuticals Europe welcomes that the Commission has recognized some of the vulnerabilities hindering the continent’s pharmaceutical manufacturing and supply chains and its multibillion-euro contribution to European healthcare systems and economies.

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Of particular note is a springboard to build a modern, digitized environment that will support economic and environmental sustainability as well as providing the opportunity for a frank discussion on the need to design smart and innovative procurement procedures.

However, there are still greater opportunities to improve, and the strategy could fall short - if some of its proposals fall short to secure a vibrant and competitive European manufacturing footprint.

But we are encouraged that some measures indicate a clear willingness by the EC to deep dive into the root causes which expose European Patients ability to get their drugs where the need it, when they need it. However, moving forward, we’ll pay clear attention regarding the Strategy implementation. There is too much at stake to get it wrong.

As one the world’s largest medicine manufacturers, employing 20,000 people in Europe (of which around 60% are in manufacturing)  equalling a contribution of around $26bn to the GDP of 12 EU countries Teva looks forward to a continued partnership with the European Commission, and other concerned stakeholders, to ensure quality medicines are accessible for all. And that this strategically important industry remains a competitive advantage for Europe, especially at a time when economic and public health recovery is intertwined.

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EU Reporter publishes articles from a variety of outside sources which express a wide range of viewpoints. The positions taken in these articles are not necessarily those of EU Reporter.

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