Biotechnology

Big pharma faces new challenges, says Andrew Jack

It can trace its roots to Europe’s apothecaries in the Middle Ages and the 19th-century dye and bulk ­chemical producers of ­Germany’s Ruhr valley, but the pharmaceutical sector has become a significant global industry in its own right.

Academic researchers and doctors make most breakthroughs, but the sector has supported the commercialisation of drugs that have contributed to a significant extension in the quality and length of life, with such benefits as higher productivity.

Drugs to reduce cholesterol and hypertension have eased the threat of heart disease. Treatments for asthma, HIV and rheumatoid arthritis have turned debilitating illnesses into more manageable chronic diseases. An effective cure for malaria exists and one for hepatitis C is in sight.

The sector employs hundreds of thousands of skilled staff, pays large sums in taxes, supports a global ecosystem of suppliers and spends more than $40bn a year on research and development – typically 10-20 per cent of sales is reinvested, the highest proportion of any industry.

But big pharma companies are victims of their own success. New scientific breakthroughs have slowed, while rising regulatory and other barriers increase the costs of clinical development.

Selling more high-priced, high-margin drugs has left a hole to be filled, with generic competition escalating and health services balking at the bill.

The sector is busy trimming costs, re-examining pricing policies and outsourcing research to universities and smaller biotech companies.

Treatments to offset the effects of ageing remain one of the biggest research challenges. But big pharma itself is in search of a remedy for its own ageing process.