Economics of the UK Pharmaceutical Industry April 2009Source: ABPI

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Contents

• A global industry

• Pharmaceuticals & the UK economy

• Medicines & the NHS

• Medicines value to the NHS

• Conclusion

Pharmaceuticals are one of Britain’s leading manufacturing sectorsThe value of UK pharmaceutical exports in 2007 was £14.6 billion

SourceEfpia,JPMA,US Census Bureau,UK Customs and Excise

Though the UK is low in the league of medicines expenditure It spends less than many of other European countries on medicines

Notes£ per personIncludes prescription and hospital medicinesSourceIMS World ReviewUnited Nations, World Population ProspectsOffice for National Statistics

But our two largest pharmaceutical companies are among the most successful in the world

NotesBy worldwide sales value* calculated in US$ ** IMS audited markets Source IMS

Of the world’s top 100 medicines, after the USA, Britain’spharmaceutical companies’ market share is more than all its European competitors combined

SourceIMS

However, British doctors are still reluctant to prescribe new medicines, clinicians in other countries are far more likely to prescribe medicines that have come on to the market in the past five years.

Products launched between 2002 and 2007Primary and hospital marketsSourceIMS World Review

POMs are the subject of Government controls and intensive competition. Pharmaceutical prices have grown at a slower rate than consumer prices as a whole and in real terms, are 24 per cent cheaper than ten years ago

NotesAmounts in £millionSourceSource: HM Customs & Excise

Within the UK economy, pharmaceuticals are consistently in the top three industrial sectors in terms of trade surplus

SourceBusiness Monitor MM20 (HM Customs & Excise)Business Monitor MQ20 (HM Customs & Excise)

And the industry is a major employer, with around 73,000 people employed directly.

SourceAnnual Census of Production (ONS)Annual Employment Survey (ONS)Census of Employment (ONS)Labour Market Trends (ONS)

The pharmaceutical market is highly fragmented: only one company has a ten per cent share of the UK market, most of the rest are far smaller

Leading pharmaceuticalcorporations' UK market share, 2007

Notes* Primary care sales are prescription and OTC medicines not dispensed in hospitals.SourceIMS Dataview

Of the major medicines sold in the UK, around half weredeveloped in British laboratories.

Notes* Primary sector sales are prescription and OTC medicines not dispensed in hospitalsSourceIMS

With the overall cost of the NHS steadily rising, the medicines bill is less than 10 per cent of the total, despite a constant growth every year in the number of prescriptions issued

More than 912 million prescriptions were dispensed in 2007, at an average cost of £10.37 each

The industry provides the nation's medicines at a cost of only 47p per person per day

A breakdown of the statistics by therapeutic group shows that a large part of the industry’s investment in medicines goes into cancer, heart disease, stroke and disorders of the central nervous system.

All figures are based on the British National Formulary (BNF).

SourceOHE Compendium

Value for money

• The pharmaceutical industry provides the nation's medicines to the NHS at a daily cost of just 47 pence per person

• Medicines account for only around 10 per cent of total NHS costs, despite a constant growth every year in the number of prescriptions issued

• Modern medicines offer real value for money - in real terms, medicines prices are around 24 per cent lower than 10 years ago.

• The annual cost of medicines prescribed by GPs in Britain is about £195 per person - much less than the cost in France, Germany, Japan or the USA

• Sales to the NHS in 2007 were £10.3 billion.

Conclusions

• The industry invested more than £3.9 billion in UK research and development in 2007, more than £10 million every day

• Pharmaceutical companies carry out more than a quarter of all industrial research and development in the UK, and spend more than 20 per cent of their gross output on R&D

• Around 20 per cent of the world's top medicines were discovered and developed in Britain

• A fifth of the top 25 medicines prescribed by GPs on the NHS are British

• Pharmaceutical industry exports in 2007 were £14.6 billion, creating a trade surplus of £4.3 billion

• The industry employs around 72,000 people and generates another 250,000 jobs in related industries

Mary McGregor

Digital Managing Partner

0870 444 0530

mary@msadigital.co.uk

www.msadigital.co.uk