Could The UK Be Losing Its Pharma Luster?

When Pfizer decided to close its R&D site in Sandwich it renewed concerns over the UK's attractiveness to the pharma industry. The site employs 2400 people and although Pfizer has stated that some positions will be transferred to other sites or to other companies working with Pfizer, it is expected that most staff will be made redundant over the next two years (1).

Nathan Jessop

Historically, the UK has been one of the leading forces in the world of pharmaceuticals. The pharma industry is also a major contributor to the country's economy. The job losses at Pfizer have come at an unfortunate time with the UK economy still emerging from recession and unemployment remaining high. According to the European Federation of Pharmaceutical Industries and Associations (EFPIA), the innovative pharmaceutical industry is an "important engine of economic recovery", which means that the UK can ill afford to lose investment from a company of Pfizer's size and stature (2). It's not just Pfizer either; a number of other companies have announced cuts in the UK, including AstraZeneca, GSK and Novartis.

The pharma industry's economic importance to the UK is illustrated by figures from the Association of the British Pharmaceutical Industry (ABPI), which show that the industry has been a net earner for the country for the past 30 years (3). In 2009, the pharmaceutical industry invested £4.4 billion (€5 billion) in UK R&D and employed 72?000 staff. For a number of years, however, EFPIA has been concerned about a drift in investment away from Europe to the US and to the fast-growing economies of Brazil, China and India (2). According to EFPIA, excessive interventions by European national governments to control healthcare expenditure have dented multinational pharma companies' confidence to invest in the region. The organisation will, no doubt, be alarmed by Pfizer's decision to downgrade its investment in the UK, and the fact that it may prompt other large companies to reconsider their presence in the country.

Has the UK been complacent?

The irony for the UK is that there are a number of longstanding initiatives in place to help strengthen its position in both traditional pharma and biotech R&D. Despite opposing views over pharmaceutical pricing, government and industry representatives often have joint discussions on issues of common concern.

Indeed, in November 1999, the UK government, together with representatives of the domestic pharma industry, set up the Pharmaceutical Industry Competitiveness Task Force (PICTF) to identify steps that could be taken to make the UK more attractive for R&D investment (4). The PICTF team met in April 2000 and published its final recommendations in March 2001. Industry representatives were of the opinion that despite the UK's historically strong performance, traditional factors that had contributed to success in the past, such as established academic excellence in life sciences, could not be relied upon to maintain competitiveness in the future. Factors such as market access and intellectual property protection would gauge how the UK was viewed relative to the rest of the world — particularly the US.

PICTF focused on six areas of UK competitiveness (market developments, intellectual property rights, regulation of medicines licensing, science base and biopharmaceuticals, clinical research and wider economic climate) considered vital for future performance, and established working groups to examine them. Reliable competitiveness indicators were identified, with the intention of reviewing them annually. A quick look at the DoH site notes that reviews were not published for 2006–2008, though 2009 is available, so perhaps they are back on track (5).

The pharmaceutical industry representatives also used the PICTF initiative as an opportunity to gain commitment from the government to explore some of the industry's concerns. One particular worry at this time was the role that NICE would play in the future UK market (something which continues to trouble the industry today). They sought clarification on the timing of the body's decisions in relation to the availability of data, the limitations of modelling with reference to particular case studies, and how topics were selected for NICE appraisal. Separately, the industry representatives also had helpful discussions with the treasury on a range of fiscal and taxation issues.

PICTF was considered a success in that it established a framework for dialogue on issues over which the government and the pharma industry might differ. However, it also represented high-level recognition from the government that it valued the industry's contribution to the UK economy. The value of PICTF was also recognised by other countries, as well as by the European Commission (EC), and has shaped their own approaches to boosting national and regional R&D. In 2004, for example, the French government launched a similar exercise called PharmaFrance and even sent representatives to the UK to seek company viewpoints on the R&D environment.

Another pharmaceutical R&D initiative that featured UK pharma industry participation was conducted at an overall EU level by the EC's G10 Medicines Group (6). In 2002, the group brought together top European industry and public health decision makers to consider ways of improving competitiveness in line with social and public health objectives. In a similar fashion to PICTF, the G10 group set up a system of EU indicators to allow comparisons to be made between the EU and its major competitors as a basis for establishing best practice within the EU and uptake in each member state. The group also published a report on its findings for the EC, outlining proposals for concrete action to be taken (7).Out of the 14 or so G10 recommendations, perhaps the most one important was to set benchmarks by which Europe could measure its industry productivity against the US. More information was also to be made available regarding disease statistics, as there was an incomplete picture across Europe.

Recognising the growing importance of biotech R&D to the future of new drug development, in 2003, the UK Government launched the Bioscience Innovation and Growth Team (BIGT), which was led by the BioIndustry Association (BIA) in conjunction with the Departments of Trade & Industry and Health. Like PICTF, the BIGT issued a report, following consultation with more than 70 industry experts. Its recommendations included programmes to increase the scientific and managerial talent base available to the biotech sector, with the hope of emulating the leading position of the US in the field of biotech drug development. Many of the recommendations recognised the need for a long-term vision for the industry and reached as far as 2015. Unfortunately, such goals make monitoring its ongoing success difficult.

A much more recent initiative is "Lifescience UK". Launched in January 2011, four key members, the Association of British Healthcare Industries (ABHI), the Association of the British Pharmaceutical Industry (ABPI), the BioIndustry Association (BIA) and the British In Vitro Diagnostics Association (BIVDA), will all represent their own sector interests and work with the government to help strengthen and grow the UK's life sciences environment. Watch this space.

What next?

The UK's Ministerial Industry Strategy Group (MISG) continues to meet twice a year as part of the follow-up to the implementation of the PICTF recommendations. The latest review available from PICTF is for 2009, and it paints an optimistic view for the UK (8). Key highlights include the fact that the UK's corporate taxation rates are more favourable than those of the US and Japan, and that there is an upward trend in annual numbers of new graduates in subjects considered relevant to the UK pharma industry. The report also focused on the fact that 16 of the world's top-selling 75 medicines were discovered and developed in the UK — more than any other country except for the US. In light of the closure of Pfizer's Sandwich facility, which was often considered the jewel in the crown of UK R&D because of its role in development of a certain Pfizer blockbuster, it will be interesting to see what the next PICTF report contains.

The reaction of the government to Pfizer's decision will beimportant for a number of reasons. A primary concern is the economic impact that the closure will have on the local economy in Kent. Not only is the company a major employer in the area, but many other local businesses supplying goods and services depend on its presence for their own viability. Initial estimates suggest that outside Pfizer, 3000 extra jobs could be lost when contractors and other small businesses lose a major source of their revenue (9). The government has said that it will seek to preserve R&D activity in the area through discussions with other firms in the pharmaceutical sector, but it is difficult to see why such companies would commit themselves to high level investment in Sandwich, given that Pfizer has exited despite its long association with the area (10).

Other multinational pharmaceutical companies will be watching closely as they weigh up decisions to streamline their own operations. Although GSK's CEO, Andrew Witty, recently stated that Pfizer's decision had nothing to do with the UK business environment, there must be considerable unease over what lies ahead for the domestic industry (11). The UK Government's efforts to implement costcontainment measures have tended to be more direct in recent years, such as price cuts, which have angered companies. In 2008,the ABPI warned that the pharma industry had cut UK jobs by 10% over the previous three years because of the pricing environment, and claimed that there was a "direct link between job cuts and changes to the pricing mechanism" (12).

It certainly seems as though pharma companies are not happy with the UK at the moment and, as with most things, the likes of Pfizer will vote with their feet.

References

1. BBC, Pfizer to close UK research site (2011). www.bbc.co.uk

2. EFPIA, The Pharmaceutical Industry in Figures (2010). www.efpia.eu

3. ABPI, The pharmaceutical industry in the UK (2011). www.abpi.org.uk

4. UK Department of Health, "Pharmaceutical Industry Competitiveness Task Force" (2001). www.dh.gov.uk

5. Department of Health, "Pharmaceutical industry competitiveness and performance indicators" (2010). www.dh.gov.uk

6. EurActiv, "G10 Medicines Group makes recommendations to enhance pharmaceutical competitiveness" (2002). www.euractiv.com

7. European Commission, "High Level Group on innovation and provision of medicines" (2002). http://ec.europa.eu

8. Bioscience Innovation and Growth Team, "Bioscience 2015" (2004). www.bioindustry.org

9. Business For Kent, "Shockwaves of Pfizer closure will be felt across Kent" (2011). www.businessforkent.co.uk

10. InPharm, "Pfizer's CRO plans for Sandwich will have limited impact" (2011). www.inpharm.com

11. Sky News, "Glaxo Backs UK After Rival's Plant Closure" (2011). http://news.sky.com

12. The Telegraph, "UK Drug firms to slash workforce by 10pc" (2008). www.telegraph.co.uk