United Kingdom Pharmaceuticals and Healthcare Report Q1 2009

In BMI.s new Business Environment Rankings for Q109, the UK continued to slip down the Western European table, and now occupies a lowly sixth position. Indeed, on a global scale the UK is now positioned in joint eleventh place with South Korea, indicating a deteriorating operating environment for pharmaceutical companies. While the UK is one of the most developed pharmaceutical markets in the world, valued at GBP18.7bn (US$36.8bn) at consumer prices in 2008, emerging and pressing economic and political issues, as well as its strict pricing and reimbursement regimes, have formed major clouds on the horizon. Still, given the high price of medicines, both generics and patented drugs will continue to bring in substantial income for companies operating in the country.

A new voluntary Pharmaceutical Price Regulation Scheme (PPRS), due to come into force from the start of 2009, will bring major challenges to manufacturers, as well as other players in the pharmaceutical supply chain. The scheme will result in a reduction in drug prices in 2009, with a further cut of 1.9% scheduled in 2010, although the PPRS also aims to encourage innovation by allowing manufacturers to set initial launch prices of new chemical entities (NCEs). On the other hand, the generics sector will continue to be provided with significant opportunities, with generic substitution scheduled for 2010.

Illustrating this point, Renata, the second Bangladeshi pharmaceutical company to be approved to manufacture medicines for the European market, recently dispatched its first shipment to the UK, while Indian drugmaker Glenmark Pharmaceuticals launched its generic anti-hypertension drug perindopril in the UK.

The quarter has seen plenty of developments involving existing players in the UK pharmaceutical market.

While some of the leading industry players, such as GlaxoSmithKline (GSK) and AstraZeneca reported mixed Q308 results, with the former also announcing that it will shut down one of its UK plants by 2013, smaller companies reported more positive news. In December 2008, ProStrakan Group, a UK-based speciality pharmaceutical firm, granted a licence to German research-centred pharmaceutical company Bayer Schering Pharma to develop and market its testosterone replacement gel Tostran in 65 countries.

The news shortly followed the announcement that ProStrakan's granisetron transdermal patch, Sancuso, received US FDA approval for the prevention of chemotherapy-induced nausea and vomiting.

In the meantime, the National Health Service (NHS) lifted the ban on controversial top-up fees, allowing patients to continue using state funds even if they choose to pay for additional drugs privately. Access to drugs looks to be further improved by the proposal by the National Institute of Clinical Excellence (NICE), the body making non-binding reimbursement recommendations, which would allow use of a higher incremental cost effectiveness ratio (ICERs) than the one presently used. Around the same time, independent thinktank Reform recommended the introduction of an insurance-based healthcare system in the UK in order to improve healthcare levels, allow the system to compete with the most highly rated systems globally and give patients choice over insurance providers.