How to address the growing competitiveness gap in pharmaceuticals according to Draghi

On September 9th, Mario Draghi, former Italian Premier and President of the European Central Bank (ECB), formally presented “The Future of Competitiveness“, a report commissioned by Ursula von der Leyen to outline the EU’s trajectory in the coming years as it undergoes a digital and green transformation. One of the main focuses is on the pharmaceutical industry, the third most lucrative in the world.

Draghi’s report

In his nearly 400-page report, Draghi emphasized that the EU needed to invest between 750 and 800 billion euros ($829-884 billion) annually, equivalent to up to 5% of its GDP – significantly more than the 1-2% of GDP that was allocated to the Marshall Plan for Europe’s post-World War Two reconstruction. He stressed that the bloc must tackle several issues simultaneously, warning that failure to act decisively would lead to a prolonged decline. Although EU countries had already started adapting to the new challenges, Draghi pointed out that a lack of coordination hampered their efforts.

The report also featured proposals for ten economic sectors such as energy, pharma and AI.

Suggestion for a new pharmaceutical industry

The EU has a strong historical presence in the pharmaceutical sector, leading global trade in terms of value, particularly due to COVID-19 vaccine exports. Between 2002 and 2023, EU exports of medicinal products grew by 10% annually, outpacing imports. The EU also maintains a robust manufacturing base, sourcing 77% of active pharmaceutical ingredients domestically. In research, the EU matches the US in publication volume but lags in citation impact. However, the EU is losing ground in key markets such as biologicals and orphan medicines, where US companies dominate.

Currently, the pharmaceutical industry directly employs around 937,000 people. This significant figure highlights the industry’s importance, bringing us to Draghi’s recommendations.

According to Draghi, the main goal is to strengthen and expand the EU’s capacity for Research and Development (R&D), which could positively influence decisions on manufacturing locations, particularly in the on-patent pharmaceutical sector. The focus is on biologicals, orphan products, and advanced therapy medicinal products (ATMPs), with the EU aiming for global leadership in ATMP R&D. To address the growing competitiveness gap in pharmaceuticals, several actions are recommended.

More specifically, the following nine proposals focus are recommended to address the current gap, also building on recent reforms. Moreover, proposals 1 and 2, as well as 4, will in particular draw novel R&D activities to the EU. Proposals 3-5 will help expedite the access to markets for products. Proposals 7 and 8 directly address options for increased and more focused R&D funding. Finally, proposals 6 and 9 aim at fostering business predictability in the longer run. Here we have the proposals:

• Developing strategic international partnerships to strengthen the EU’s global trade position in pharmaceuticals.
• Maximizing the impact of the EU Health Data Space.
• Streamlining the setup and management of multi-country clinical trials.
• Expediting market access for medicines.
• Providing clear guidance on AI use throughout the medicine lifecycle.
• Implementing the HTA regulation with adequate resources for joint clinical assessments by 2025.
• Enhancing business predictability through continuous dialogue on protection mechanisms for novel medicines.
• Increasing and focusing public R&D investment, particularly in life sciences and advanced therapies.
• Mobilizing private R&D investment and improving the supportive environment.