The pharmaceutical industry has at last been sucked in by the economic downturn in Europe and changes in the continent’s drug pricing ad reimbursement policies “may not be fully appreciated”.

This is the view of IHS Global Insight healthcare analyst Anu Bharath who notes that most of the 27 European Union nations have deficits in excess of the European Commission's permissible 3% of gross domestic product (GDP) threshold. Given that healthcare spending is a key aspect of government expenditure in the EU, averaging at 85% of total healthcare spend, she notes that the pharma industry “has not been immune”.

The report notes that most of the developed member nations of the region have announced "targets and tactics for drug price spending cuts", with the most significant ones being Greece, Germany, Italy, and Spain. Some of these measures are already in effect, leading to price cuts not only in the aforementioned markets, but also in other member nations due to the international reference pricing policies followed by most EU countries.

Ms Bharath notes that these cuts are also set to fuel parallel imports, "but given the cost-containment strategies in many of the parallel import hubs a reshuffle of the leading destinations may occur". She added that the industry "has responded to these measures in different ways, including negotiations to improve the clarity and/or reduce the severity of laws, and engaging in product withdrawals".

She concludes by noting that investors are now questioning whether the sector is in fact recession-proof, as pharma looks for solutions to remain profitable. Over the medium term, the reforms are likely to intensify firms' efforts to invest in emerging markets, "rationalise R&D investment in traditional prescription drugs, and diversify into over-the-counter and consumer products".