Executive Insights: BioPharm Investment and Competitiveness


From DCAT Value Chain Insights (VCI)

By Patricia Van Arnum posted 07-02-2015 11:16

  

What countries rank the highest and lowest for biopharmaceutical competitiveness? Where are companies investing in research and development and manufacturing, and how do executives assess the competitive landscape for such investment? A recent industry study by the Pharmaceutical Research and Manufacturers of America examines key factors and decision points.

The global survey examined biomedical competitiveness by polling 350 biopharmaceutical executives of top-ranking multinational companies operating in 16 economies to gauge their confidence in a given market and translate it into a quantitative score. Top performers were the US, UK, Switzerland, and Ireland, but how do these countries stand to each other and how do other countries rank? DCAT Value Chain Insights examines the findings.

A snapshot of the findings  
The study, Measuring the Global Biomedical Pulse: The Biopharmaceutical Investment & Competitiveness (BCI) was commissioned by the Pharmaceutical Research and Manufacturers of America and conducted by Pugatch Consilium consultancy. The study found that the US and European economies continue to top the global charts in terms of attractiveness for biopharmaceutical investment. Notwithstanding low costs and considerable potential, emerging markets still come in at the bottom.The BCI, a global survey-based index of economies’ biomedical competitiveness, polled 350 biopharmaceutical executives of top-ranking multinational companies operating in 16 economies. By gauging their confidence in a given market and translating it into a quantitative score, the provides a measure of economies’ biomedical competitiveness. Top performers in the BCI–the US, the UK, Switzerland, and Ireland–all scored above 80% of the total possible score and place at the top of the sample in most of the seven major categories of the survey, which range from the ability to leverage R&D and manufacturing capabilities to the regulatory, intellectual property (IP) and market environment. All four have effective scientific research systems, regulatory and IP frameworks that meet the international standards and relatively supportive market access environments. Markets falling into the bottom 25% of the sample–the BRIC (Brazil, Russia, India, and China) economies plus Turkey–scored less than 60 out of 100, with their biomedical investment environmentst characterized as “struggling to compete” relative to the other sampled economies. Though each market has its own specific challenges, common threads exist across all five, particularly in the areas of regulatory quality and efficiency, ability to secure a fair price, and protection of biopharmaceutical IP rights.

Details of the findings
In evaluating biomedical investment, the study examined three main areas: research and development, manufacturing, and commercial and market access operations. For overall scores, economies were divided into four groups, with the upper and lower ends based on the distribution of scores which ranged from 56 and 85. Economies with an overall score of 80 were classified as “strongly competitive; economies with scores of between 70 and 80 were classified as “reasonably competitive.” Economies with scores of between 60 and 70 were classified as “limited ability to compete,” and economies with scores below 60 were classified as “struggling to compete. The BCI rankings show a division between income and development. All high-income economies (except Russia) scored above 70 out of 100 with six of the seven achieving scores above 70%. The US was ranked the highest (score of 86.88), followed by the UK (82.60), Switzerland (82.56), Ireland (82.17), Singapore (78.14), Canada (76.56), and Israel (73.54). Middle-income economies and Turkey scored less than 60 out of 100. Brazil was ranked the lowest with a score of 56.57, then China (57.62), Russia (58.63), Turkey (59.93), and India (59.94). Other middle-income economies scored between 60 and 70: Mexico (66.21), South Africa (64.21), and Argentina (60.07).

In looking at the BCI rankings more specifically among high-income economies that scored above 70, there are some important differences. The US, the UK, Switzerland, and Ireland respectively had the highest rankings and their position was classified as “strongly competitive” relative to the other economies. The US and UK showed high marks in quality, scope, and effectiveness of the scientific research system as well as clinical research capabilities, but Ireland and Singapore ranked the highest in terms of manufacturing capacity. The US and Switzerland scored the highest in terms of IP protection.

Scientific capabilities and infrastructure. The BCI characterizes the biopharmaceutical innovation system by certain so-called “push factors,” including investment in biopharmaceutical R&D, advances in the life sciences, and a sustained supply of physical and human resources. Specific measures include a sufficient quantity of highly skilled biomedical professionals and researchers scientific infrastructure, the presence of research clusters, technology transfer frameworks, and financial support (both public and private) for R&D. In evaluating economies using this measure, the highest possible score was 14. The US ranked the highest at 13.38, achieving 96% out of possible 100%, followed by the UK at 11.90 or 85%, Switzerland at 11.06 or 79%, and Singapore achieving 10.71 or 77%. At the bottom of the rankings in this area was Brazil (4.93) or 35%, Turkey (6.11) or 44%, Russia 6.58 (47%), and India (6.94) or 50%.

Manufacturing and logistics.The BCI study also examined competitiveness in manufacturing logistics. In this category, there was a fairly large range of scores (with the highest possible score of 14) with a divide between high-income and middle-income economies. Economies at the top possess modern manufacturing capabilities and processing while meeting high international standards. High-income economies, such as the US and Canada, which scored below 90% did so according to the study due to bureaucracy associated with importing raw materials and obtaining manufacturing permits according to BCI respondents. Ireland was the top-ranked country for manufacturing, achieving a score of 13.17 or 94% followed by Switzerland with a score of 13.00 or 93%. The UK ranked third with a score of 12.60 or 90%. Singapore came in fourth with a score of 12.29 or 88%, and the US ranked fifth with a score of 12.00 or 86%. Canada and Israel also earned scores above 80%, respectively with scores for Canada of 11.54 (82%) and for Israel of 11.29 or 81%.

Middle-income economies, particularly the BRIC countries scored 20-40% lower than high-income economies according to the study. Russia ranked the lowest with a score of 7.58 (54%) followed by Argentina at 8.50 (61%), China at 8.62 (62%), Brazil at 8.79 (63%), and Mexico at 9.64 (69%). India, Turkey, and South Africa scored in the middle of the rankings with scores in the 70% range. South Africa had a score of 10.50 or 75%, Turkey had a score of 10.18 or 73%, and India had a score of 10.00 (71%).

IP protection.In relation to the life sciences IP rights are important in two major ways, notes the study: providing a guarantee of temporary market exclusivity that facilitates a return on investment and further investment in R&D and acting as a platform for transferring technologies among R&D entities. For the study, high-ranking economies showed BCI scores with strong and effective IP protection. This category was led by the US, with a score of 13.38 or 96% followed by Switzerland or 12.22 or 87%, then Singapore at 11.43 or 82%, the UK at 11.20 or 80% and Ireland at 11.17 or 80%.

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