The Scandinavian pharmaceutical sector has enjoyed a period of ...

denunequaledBiotechnology

Dec 1, 2012 (4 years and 6 months ago)

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hot spots
Scandinavian
S
candinavian countries have advanced welfare systems, a
relatively high per-capita expenditure on health, the
highest standards of living in the world and an ageing
population. These factors, plus business-friendly policies pursued
by the region’s governments, nurture the growth of various
industries such as the life sciences.
There is, as a result, a considerable biopharmaceutical presence
in Scandinavia. Some of the locally based pharmaceuticals and
biotech companies, such as Novo Nordisk and Lundbeck, have a
global footprint, while many small biotech firms have entered into
co-development agreements with larger players.
Investing in clusters
Scandinavian countries have invested heavily in life sciences
and healthcare clusters. For instance, the Swedish and Danish
governments jointly established the Medicon Valley Alliance in
the Oresund region, which is the location for firms such as
Novo Nordisk and Lundbeck. The initiative served as a catalyst
for the rapid development of life sciences and healthcare
companies in the region, which was boosted by the area’s
strong, historic foundation of knowledge-based industries and
universities. For instance, the University of Copenhagen and
Lund University are located here, and serve as an incubation
centre for research activities. In fact, these universities have
produced several Nobel Prize winners. Currently, this cluster
has more than 350 life sciences companies, plus several
universities and hospitals.
Initiatives such as the Medicon Valley Alliance have put
Scandinavia at the forefront of innovation, and research
The Scandinavian pharmaceutical sector has enjoyed a period of sustained growth in recent years.
The mix of smaller, more niche companies and the bigger global leaders is the result of a fl ourishing
business landscape, writes Frost & Sullivan’s Ranjith Gopinathan.
Special report > Scandinavia
WORLDPHARMACEUTICALFRONTIERS
|
www.worldpharmaceuticals.net
71
Ranjith Gopinathan
Ranjith Gopinathan is an expert in market
opportunity assessment, acquisition
target research and marketing due
diligence, competitive intelligence and
competitive benchmarking, gap analysis,
and procurement strategy.
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cancer and diabetes are predominantly carried out in the Medicon
Valley. It should be noted that about 18% of the total GDP of
Denmark and Sweden, combined, comes from the Medicon Valley,
and that Sweden and Denmark are the two biggest
pharmaceutical and biotechnology markets in Scandinavia.
Moreover, this cluster established the two countries as the hot
spots of the pharmaceutical and biotechnology industry within
the region. The life sciences cluster in Norway, meanwhile, is
relatively small but growing.
Apart from the Medicon Valley, Sweden’s Stockholm-Uppsala
region has a substantial presence of big pharma companies such
as Pfizer, GE Healthcare and AstraZeneca, while MedCoast, a
Norwegian/Swedish partnership, is another, relatively small,
healthcare cluster in the region. In Finland, the BioTurku region
also has a cluster of major drug companies, and the presence of top
education establishments such as the University of Turku and Abo
Akademi University has enabled the development of this cluster as
a R&D hub. Huge concentrations of talent in clusters such as these
offers opportunities for recruiting good specialists.
Government spending
The key factor for the growth of the pharmaceutical market is
government spending on healthcare. However, the impact of the
economic downturn could put a significant pressure on this,
which could lead to further drug price regulation – there is state
control of pharmaceuticals pricing in this region already – and
thereby hamper financial performance. In addition, increasing
government support for generics substitution and parallel import
availability acts as an impediment to growth. In fact, parallel
trade companies such as Orifarm, Farmagon and Paranova have
grown rapidly to become significant players in the market due
to government incentives.
As a result, the consumption of generics in Scandinavian
countries has significantly increased in the past few years. Despite
this, however, the pharmaceutical market offers significant growth
potential for both local and international companies. This is due to
the consistent, strong economic growth enjoyed by these
countries over the years. Therapeutic areas, particularly related to
lifestyle diseases such as CNS, obesity, diabetes and
cardiovascular, offer significant opportunity for growth.
Strong R&D is a major impetus for the development of drug
discovery and life sciences clusters in the region, and Scandinavian
countries have some of the highest R&D productivity in the world.
For instance, the region has one of the largest numbers of biotech
patents filed as a percentage of the national total.
Scandinavia has favourable policies, which encourage innovation.
For example, professors working at the universities can own full
rights to their scientific discoveries, and scientists can establish their
own companies. The abundant availability of venture capital
provides the capital infusion to launch, grow and sustain new
ventures. In fact, the region is attracting venture capital from around
the world. One of the reasons for this, for instance, is that in
countries such as Sweden, ex-manufacturer prices for new drugs are
one of the highest in Europe, encouraging pharmaceutical
companies to launch their new products in these countries, which in
turn ensures availability of the latest medical innovations in this
region. The governments of the respective Scandinavian countries
have indeed played their part in making the region one of Europe’s
most competitive and dynamic knowledge-based economies.
Sustaining the growth
In most Scandinavian nations there are no tariffs on imported
pharmaceutical products. Even though free pricing for novel
drugs exists, the product has to fall within a price ceiling to be
approved for reimbursement. Meanwhile, the health care system,
which is funded primarily through taxes, provides universal
coverage for most health care services, and the share of public
sector financing of total health care spending in Scandinavia is
one of the highest in Europe. This, however, has also led to severe,
cost-containment measures that would adversely affect the
growth of the life sciences industry. Hence, there is a need to
moderate parallel import and other cost-containment measures by
the governments of these countries in order to sustain the growth
of the pharmaceutical and biotech industry. ■
Regional focus
WORLDPHARMACEUTICALFRONTIERS
|
www.worldpharmaceuticals.net
72
Source: Frost & Sullivan, EGA Market Review 2007
Figure 1. Generic Pharmaceuticals Market Share in Europe 2009
% Share by volume % Share by value
100 -
80 -
60 -
40 -
20 -
0 -
Greece
Ireland
Finland
Italy
Portugal
Switzerland
Spain
Belgium
France
Austria
Norway
Hungary
Sweden
Netherlands
Turkey
Germany
Slovenia
UK
Denmark
Poland
The pharma market offers significant
growth potential for both local and
international companies due to
consistent, strong economic growth.
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