pharmaceutical sectorThis brief EU Industrial policy overview for the Pharmaceutical sector is an extract of the report published January 22, 2014. This staff working document illustrates trends and the impact of the crisis on production, investment, productivity, employment, skills and innovation. It also describes the EU performance in the international arena and considers possible benefits from improvements in the internal market regulations.

Europe has traditionally been a world leader in the pharmaceutical sector. This high-tech industry presents an excellent overall performance and has been particularly resilient to the crisis and therefore, it can be considered as one of the gems of the European economy. The reasons why a viable European pharmaceutical industry is of the utmost importance are four-fold:
1°) it contributes to the health and the quality of life of our citizens by providing remedies to an ever-increasing number of patients. As the burden of disease is likely to increase as a consequence of the ageing European population it is to be expected that the 9.5% GDP spending on healthcare costs, including pharmaceutical treatment, on average across OECD countries in 2010 will increase significantly in the coming years.
2°) the healthcare sector and in particular the pharmaceutical industry is of economic significance, as demonstrated by €157 billion in annual turnover and 660,000 employees (of whom 110,000 are researchers).
3°) the European pharmaceutical industry serves as a major contributor to the EU's position as a successful trading power. In fact, the European Union is the world's major trader in medicinal and pharmaceutical products enjoying a trade surplus of EUR 56 billion in 2012.
4°) the world market of medical products is a growth market, i.e. global spending on medicines will grow to nearly $1.2 trillion by 2016. While the developed markets are expected to grow slowly due to the sustained impact of the global economic crisis, emerging markets will become the major sources of demand.


The European pharmaceutical sector is subject to many challenges which are likely to impede its development and future perspectives, for example:

  • Tighter public budgets as a consequence of sluggish growth rates in the EU suffering from the aftermath of the financial/economic crisis and consequently, reduced social security contributions;
  • The short-term orientation of measures taken to address the financial constraints in public health budgets in response to the ongoing budgetary crisis in some EU Member States and the subsequent lack of a predictable business environment;
  • Diverging policy responses (in particular with regard to pricing/reimbursement of medicines in Member States) and spill-over effects of national cost austerity from one Member State to another, irrespective of the socio-economic conditions;
  • Globalisation and the emergence of new competitors that target life sciences as future engines of growth while impairing the market access of non-domestic manufacturers through (non)-tariff barriers and the lack of a sufficient level of intellectual property protection.


Commission policies in the field of pharmaceuticals aim to secure the competitiveness and long-term viability of the industry. Such a policy aims at reaping the sector's full potential for growth and employment while ensuring better and timely access to medicinal products for European citizens and maintaining the sustainability of the healthcare systems.

  • Given that the industry faces numerous barriers to trade and an increasing competition in world markets, assuring fair market access in third countries is of utmost importance.
  • A European response to the challenges should build on the lessons learned over the recent years (including the results of the Process of Corporate Responsibility in the Field of Pharmaceuticals which was concluded last October).
  • Given the complexity of the subject matters and the different policies affected at EU and Member States' level, a comprehensive response is required. As announced in the Communication on Industrial Policy of October 2012, the Commission is committed to addressing the challenges by launching a new Strategic Initiative for the Pharmaceutical Sector. The comprehensive nature of such an exercise would require covering a wide scope of areas ranging from finding a consensus on the value of medical innovation, up-stream measures on R&D to down-stream measures on improving patients' access to medicines, including issues related to pricing/reimbursement of medicinal products.
    This would also need to include global competition and effective IP protection and enforcement, which are key for Europe's innovation and international competitiveness, while fully respecting the 2001 Doha Declaration on the TRIPS Agreement and Public Health, especially in the field of generic medicines and public health.

The Innovative Medicines Initiative, a Joint technology Initiative set up under the 7th RTD Framework Programme, is proposed to continue under Horizon 2020. It will aim at improving the drug development to bring new medicines more rapidly to the patients, through multi-stakeholder collaboration in an open-innovation framework.

Major efforts are also made to speed up the development of orphan drugs through the better coordination of research and innovation efforts across the globe via the International Rare Diseases Research Consortium (IRDiRC) that has been supported via FP7 and will be continue to be supported throughout Horizon 2020.


State of the Industry, Sectoral overview and Implementation of the EU Industrial Policy (also attached here below)
Accompanying the document

Commission calls for immediate action for a European Industrial Renaissance
The European Commission is urging Member States to recognise the central importance of industry for creating jobs and growth, and of mainstreaming industry-related competitiveness concerns across all policy areas. This is the key message of the communication 'For a European Industrial Renaissance', adopted on 22 January 2014.
The Commission calls on the Council and the Parliament to adopt proposals on energy, transport, space and digital communications networks, as well as to implement and enforce legislation to complete the internal market. Furthermore, industrial modernisation must be pursued by investing in innovation, resource efficiency, new technologies, skills and access to finance, accelerated by the use of dedicated EU funds. The Communication promotes a more business-friendly Europe through actions to simplify the legislative framework and improve the efficiency of public administration at EU, national and regional levels. Other key issues include easier access to third country markets through harmonisation of international standards, open public procurement, patent protection and economic diplomacy.