In its endeavor to regain its health sovereignty, Europe is moving forward slowly. On the website of the National Medicines Safety Agency (ANSM), the list of products in supply shortage or out of stock still stretches over several pages. At issue is an industrial model which relies on distant countries for the supply of raw materials and for part of its production. Getting out of this pattern takes time. To regain control, all-out relocation will not be the miracle solution, believes Eric Baseilhac, member of the Academy of Pharmacy and president of the Association for the Proper Use of Medicines. Beyond the issues of regulation and taxation, the Old Continent will above all have to resolve to pay more for its medicines and guarantee manufacturers a viable economic framework, he pleads to Express.
L’Express: Five years have passed since the start of Covid. How has Europe evolved in terms of pharmaceutical sovereignty?
Eric Baseilhac: The scale of the European challenge can be summed up in three figures: 80% of the active ingredients in the drugs most consumed in Europe come from India or China. Twenty years ago, it was 20%. The second figure is 40% of finished medicines which are imported today. Finally, France, the leading drug producing country in 2010, is now only the fourth.
The Covid pandemic was not the origin of an upheaval in the issues of sovereignty, it was the revealer of it. In the 2000s, pharmaceutical manufacturers made a series of decisions in response to pressure to lower drug prices. To preserve their margins, they opted for “mono-sourcing” – sourcing from a single partner. They also cut up their production chains, trying to find the least expensive offers in each segment. And since at that time, no one cared about transport costs or carbon footprint, China and India were the big winners.
These two choices led to relocations, which increased from the 2010s, with the tightening of regulations on medicines in Europe. Added to this is an increase in production costs, increased by around 30% by environmental standards in recent years. This is how we lost our pharmaceutical sovereignty.
The approach of each winter revives discussions on the risks of shortages of certain molecules, such as amoxicillin. How to avoid these scenarios of stocks under pressure?
Each surge in antibiotic consumption, following a major epidemic or infectious factors, causes tension on the supply chain. Then manufacturers get busy and end up readjusting supply to demand. But antibiotics are obviously reallocated to the countries that pay the most for them. And this is where France suffers greatly from its low prices. Our country has the lowest drug prices, on average, among developed European countries. We sometimes find ourselves in a shortage situation because France is systematically not a priority in these reallocations of medicines.
The price increases practiced in France were too late or too modest. A few cents for corticosteroids was ridiculous, while the Germans and Portuguese immediately reacted by increasing the price of several drugs. For a pediatric vial of amoxicillin, for example, the ex-factory price is 76 euro cents for a vial. And in these 76 cents, you have to fit an entire production chain, which often starts in China and ends somewhere in Europe for final assembly. It’s just impossible.
Faced with downward pressure on prices, we have not put in place enough safeguards to ensure economic viability. It’s actually a word that didn’t even exist in the vocabulary of industrialists. Finally, there is a new phenomenon: the increase in the world population and increasing access to the health system while at the same time, the production system has not changed. It has even shrunk at certain times due to offshoring and deindustrialization.
What assets allowed India and China to prevail?
India has benefited from its capacity to produce generics, with qualitative criteria and above all very low production costs. It is capable of producing large volumes, therefore serving extremely large markets.
China has taken another niche. With the Made in China 2025 plan, it has decided to move from subcontractor to the world’s leading pharmaceutical power. It has invested a lot, particularly in gene therapies, and is today probably the leading country in the world in terms of innovation in this sector. Its strategy consists of producing at low cost, for developing countries, in Africa or South America. And when these countries overwhelm the world’s population, China will find buyers for its innovations in the next twenty years.
What are the solutions to get out of this dependence?
Ultimately, everything must be done to reduce the competitiveness gap with China and India. This gap is already gradually narrowing, because Asian countries are in the process of adopting environmental standards, which will increase their production costs. In addition, transport costs have become prohibitive and will disincentivize sourcing from such a distance.
European innovation in its production technologies also makes it possible to reduce this gap. The latest factories to emerge, for example the paracetamol production unit in Roussillon, in Isère, reduce their carbon footprint by five to ten times, but also manage to optimize their efficiency.
Another lever concerns taxation: France is the European champion of taxes in the pharmaceutical sector. However, we must see taxation as a means to gain competitiveness. Reducing this pressure on protected medicines would make their costs, and therefore their prices, more competitive.
Is a relocation movement taking shape? What are the requirements for this to work?
We must first agree on the fact that the relevant geopolitical space for relocalization is the European Union. It is unreasonable to think that each country will be able to re-appropriate the entire production chain. Then, we must admit that we will not relocate all the medications. We must repatriate the production of essential and irreplaceable medicines. It is with this logic that Brussels published a list of essential medicines. And we must prioritize the production of active ingredients.
We must also create a viable economic framework, because otherwise, the same causes will reproduce the same effects. We can help manufacturers with subsidies, but that is not enough. If we choose to manufacture in Europe, the costs of payroll, production, environmental standards will be higher, and therefore we must assume that, initially, the prices of these drugs are higher and put in place in purchasing procedures preference criteria based on the location of production. These imperatives necessarily lead to the design of a true “Europe of medicines” within which countries are no longer in competition, but united.
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