China is already a bigger power than Europe in one of its key industries: drug development

For the first time, China has passed Europe as a developer of new active ingredients; that is, as a creator of new medicines. The data for 2023 confirm the ‘sorpasso’. And, if everything continues as it is now, it is only a matter of time before it overtakes the US as the world leader.

And, although we will obviously have to see the trend of the coming yearsThis is not anecdotal. The pharmaceutical industry is one of the most complex sectors in the world, both in terms of its level of investment and its technical procedures and dead ends. This is not a stroke of luck, it is a change of cycle.

A Europe on the wrong foot. “When the pandemic hit, we realised that not a single gram of Paracetamol was being manufactured in Europe,” Josep Borrell has been explaining for yearsthe High Representative of the European Union for Foreign Affairs and Security Policy. However, we had always thought that it was a problem of productive outsourcing.

But it wasn’t. Historically, Europe has been the world’s great pharmaceutical superpower. In the decade between 1995 and 2005, the US made a huge commitment to biomedical products and overtook the old continent. The years since then have only confirmed this American dominance.

In 2023, according to ‘The Pharmaceutical Industry in FiguresOf the 90 new molecules, 28 were North American compared to 17 of European origin. In any case, the relevant fact is another: China has put 25 on the table.

And that doesn’t mean that the sector is small in Europe. As Nieves Salinas explains in EPEnot only invests 50 billion euros in R&D and employs 900,000 people, but exports amount to 680 billion euros per year.

What this means is that the world of active ingredient development is becoming more and more dynamic and this is causing a “gradual migration of drug research and development activities from Europe to new areas of expansion” such as Brazil, China, Korea and India.

The motives? According to European Federation of Pharmaceutical Industries (Efpia), There are three big problems that are causing Europe to fall behind: growing “regulatory hurdles”, rising R&D costs and “the impact of fiscal austerity measures introduced by most European governments since 2010”.

Since 2010, in fact, the weight of European R&D has fallen by 5% globally and, if trends continue, will fall much further. However, the factors are complex: China, for example, has not overtaken Europe in terms of global R&D, and its results are better.

Europe’s role in the future as a whole. The latest controversies surrounding artificial intelligence (and the decision of many companies to not to take out their tools in Europe) have put the issue in the spotlight, but the problem is repeated in all sectors, including the pharmaceutical sector.

For years, Europe has been confident in its ability to regulate the world, but as the world grows, its ability is being affected. This may be one of the big decisions for Europeans in the coming decade: to realize that if they want to maintain their standards, they must put a lot more meat on the grill.

Image | Fuzzy Gerdes | Freestocks

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