Pricing schemes stunts UK pharma manufacturing market's growth: report

Over the past few years the industry has yo-yoed between a 5.8 per cent decline in 2008-09, to a 6.1 per cent growth the following year – an average of 1.8 per cent rise over the half decade.

And though the UK’s pharmaceutical preparations market is set to increase slightly – largely attributed to the fact it is the third-largest exporter of generics globally– increasing price pressures are dragging the industry down, says the report.

A five year agreement beginning in 2009 between the Government and industry called the Pharmaceutical Price Regulation Scheme (PPRS) which means the British Department of Health (DoH) can control the prices of branded prescription medicines supplied to the NHS,is one such pressure.

In the IBISWorld analysis, titled ‘Pharmaceutical Preparations Manufacturing in the UK’, the authors wrote:  “Players in the industry are contending with declining profitability. This has come amid increasing competitive and pricing pressures, rising costs, more stringent regulatory controls and the loss of patent protection on former blockbuster drugs.​

“Roughly 150 companies signed up for the latest scheme (PPRS). Price cuts had some adverse effect on revenue from this product segment during 2009 and 2010.”​

The UK Government are also currently in discussions about implementing a value based pricing scheme by 2014, which would see the local market rate of the medication set according to local health authorities.

Not all doom and gloom​

It seems the saving grace behind the expected growth is the exports industry, which is forecast to grow at seven per cent per year up until 2013.

The report hails emerging markets as the driving factor, saying: “In contrast to the sluggish growth of the UK’s traditional markets, pharmaceutical demand in a number of emerging markets is increasing at exponential rates due to relatively strong economic growth and increasing access to basic health care.”​

A new trend towards stock-piling drugs to protect the Western supply chain is also a plus. And with a weaker pound, it seems the UK is a popular shopping destination for distributers.

“Closer to home, a weaker pound (particularly relative to the euro) has increased demand for UK drugs to the extent that there are concerns about potential shortages of key drugs,” ​the report said.