The US biopharmaceutical industry’s status as the global leader in innovative biopharmaceutical R&D is not guaranteed. Both R&D and manufacturing could shrink or shift to other countries if the business operating environment for the biopharmaceutical industry in the nation does not improve.
This prediction is the focus of a new report, The U.S. Biopharmaceutical Industry: Perspectives on Future Growth and The Factors That Will Drive It, published by Battelle and the Pharmaceutical Research and Manufacturers Association or PhRMA. The conclusions were based on industry statistics and input from senior-level executives at companies that represent 75% of US biopharmaceutical sales.
Leading threats to US dominance are the increasing capability of emerging economies to meet rising manufacturing demand for new medicines to treat their own growing middle class populations and a global race to attract research and development investment. Therefore, the nation "must assess its policies relative to other countries to ensure that the nation’s ability to compete is not impeded," the report says.
The report identified 10 attributes necessary to "advancing a more favorable business operating environment" in the United States. These factors include a competitive corporate tax rate; private funding of R&D in early stage and emerging companies; robust government investment in basic R&D; a strong R&D and science, technology, engineering, and mathematics workforce; favorable trade policy environment for US biopharmaceutical products; a robust manufacturing workforce; and competitive state-level incentives for innovation.
However, the executives identified three other factors as crucial to bolstering US competitiveness.
Coverage and payment policies that value innovative medicines.
According to the study findings, executives feel that US payers increasingly are not adequately valuing new treatments and are too focused on reducing prescription drug costs. This short-term approach creates uncertainty about reimbursement and can make drug development companies more risk-adverse to developing more expensive therapies.
Strong, science-based regulatory system.
FDA has long been viewed as the gold standard for a science-based regulatory system. However, the report says, the number and complexity of regulatory requirements has increased, and executives are concerned that the US regulatory process may soon be less favorable than that of other countries.
Robust intellectual property (IP) rights and enforcement in the US and abroad.
The executives expressed concern about patent challenges occurring earlier and more frequently, and with efforts by policymakers to reduce the favorability of IP rights in the US.
If the current "negative trends increasing business uncertainty" continue, the report says, the US industry can expect 19% growth in domestic biopharmaceutical R&D activities and a 21% increase in domestic biopharmaceutical manufacturing activities over the next decade. However, efficiencies in productivity could result in a decrease of 4.5% in industry employment, translating to more than 140,000 total jobs lost across the US economy over the next decade.
However, if "reasonable" improvements are made to the US business operating environment, a 36% increase in US biopharmaceutical R&D activities, a 31% increase in US biopharmaceutical manufacturing output, and a 5.4% increase in employment, or a gain of 180,000 total jobs across the economy, could occur over the next decade. However, the executives projected that this scenario has a less than 20% chance of taking place within the current business environment.
Rita Peters is the editorial director of Pharmaceutical Technology.