This document summarizes the economics of the UK pharmaceutical industry. It notes that pharmaceuticals are one of Britain's leading manufacturing sectors, with UK pharmaceutical exports valued at £14.6 billion in 2007. Though the UK spends less on medicines per person than many other European countries, its two largest pharmaceutical companies are among the most successful in the world. The industry invests heavily in research and development, employs over 73,000 people, and exports more than it imports, creating a trade surplus.

1. Economics of the UK Pharmaceutical
Industry
April 2009
Source: ABPI
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2. Contents
• A global industry
• Pharmaceuticals & the UK economy
• Medicines & the NHS
• Medicines value to the NHS
• Conclusion

3. Pharmaceuticals are one of Britain’s leading manufacturing sectors
The value of UK pharmaceutical exports in 2007 was £14.6 billion
Source
Efpia,
JPMA,
US Census Bureau,
UK Customs and Excise

4. Though the UK is low in the league of medicines expenditure
It spends less than many of other European countries on medicines
Notes
£ per person
Includes prescription and hospital medicines
Source
IMS World Review
United Nations, World Population Prospects
Office for National Statistics

5. But our two largest pharmaceutical companies are among
the most successful in the world
Notes
By worldwide sales value
* calculated in US$ ** IMS audited markets
Source IMS

6. Of the world’s top 100 medicines, after the USA, Britain’s
pharmaceutical companies’ market share is more than all its European competitors combined
Source
IMS

7. 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 2007
Primary and hospital markets
Source
IMS World Review

8. 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
Notes
Amounts in £million
Source
Source: HM Customs & Excise

9. Within the UK economy, pharmaceuticals are consistently in the
top three industrial sectors in terms of trade surplus
Source
Business Monitor MM20 (HM Customs & Excise)
Business Monitor MQ20 (HM Customs & Excise)

10. And the industry is a major employer, with around 73,000
people employed directly.
Source
Annual Census of Production (ONS)
Annual Employment Survey (ONS)
Census of Employment (ONS)
Labour Market Trends (ONS)

11. 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 pharmaceutical
corporations' UK market share, 2007
Notes
* Primary care sales are prescription
and OTC medicines not dispensed in hospitals.
Source
IMS Dataview

12. Of the major medicines sold in the UK, around half were
developed in British laboratories.
Notes
* Primary sector sales are prescription
and OTC medicines not dispensed i
n hospitals
Source
IMS

13. 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

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

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

16. 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).
Source
OHE Compendium

17. 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.

18. 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

19. Mary McGregor
Digital Managing Partner
0870 444 0530
mary@msadigital.co.uk
www.msadigital.co.uk