The Pharmaceutical Industry and Innovation

Even in the crisis year of 2009, research-based pharmaceutical companies further increased their investment in research and development in Germany to its current amount of EUR 5.22 billion, or more than EUR 14 million a day! Few other industries are as research-intensive. Around 20 percent of these companies’ employees work in the area of research and development, many more than the average of R&D-based companies. 37 new substances were launched onto the market, the highest number since 1997, providing for important medical progress, such as improvements in the treatment of rheumatism and some types of cancer. Germany remains a valued research location worldwide: We are number 1 in Europe in terms of the number of clinical trials and are surpassed only by the USA on a global level.

Market Launches of New Molecular Entities in Germany 2009

37 pharmaceuticals based on new NMEs (new substances known internationally as New Molecular Entities) were launched in the German market in 2009 – the highest number since 1997. Because of the global research process, the number of such substances launched in Germany is closely connected to the international development of pharmaceuticals. Unless they are of merely regional importance, most new NMEs receive marketing authorization as soon as possible in all key countries. This is the only way to balance the costs for research and development of an NME, which globally amount to USD 800 million on average, within its limited patent term.

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Pharmaceutical Projects by vfa Member Companies Promising Success by 2013

The vfa member companies are working on thousands of drugs. Pharmaceutical projects for medications to treat some 110 diseases have progressed so far that they could lead to marketing authorization by the end of 2013. Most of these projects target cancer (31 percent), cardiovascular diseases (13 percent) and infectious diseases (14 percent) but a particularly large number of drugs are also being developed against inflammatory diseases such as rheumatoid arthritis and type 2 diabetes (adult-onset diabetes). A total of 97 percent of the projects are concerned with severe diseases, some of them life-threatening; only three percent address less serious physical disorders such as incontinence or menopausal discomfort.

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Development Costs for a new Pharmaceutical

In 2001, an average of USD 800 million was required for the research and development of a new drug with a new molecular entity. More than half of these costs are spent on clinical development, especially the logistically expensive, multinational phase-III studies. The requirements involved in proving a new drug’s safety, efficacy, tolerability and quality during the marketing authorization process have increased steadily. A further reason for the high increase in costs lies in the growing complexity of the diseases treated. Examples include multiple sclerosis and Parkinson’s disease, for which researchers must take into account many physical processes simultaneously to identify possibilities for risk-free pharmaceutical therapy.

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Research Intensity: A Comparison

The research and development of new drugs is highly cost and labor intensive. The research intensity of vfa member companies continued to grow in 2009. A higher share of sales, 13.7 percent, was invested in R&D activities than in the previous year (13.6 percent). The proportion of R&D employees of all vfa company employees increased to 20 percent (from 19.7 percent in the previous year), which means one in five employees now works in this area. The R&D intensity of vfa companies thus remains much higher than that of other companies conducting R&D in Germany overall, which achieve a sales rate of 3.9 percent and an employee rate of 7.9 percent (2007, most recent available data).

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The Pharmaceutical Industry in Germany

Germany: The Perfect Location for Research, Production and Sales - a publication by GERMANY TRADE & INVEST and vfa
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