France / pharmaceutical subcontracting: capturing new production and targeting export

Pharmaceutical subcontracting in France has advantages but will have to preserve existing productions, capture new ones and develop for export, according to a report produced for the general management of companies (DGE) and presented on Thursday.

The production for thirds of active ingredients used in pharmacy and drugs brings together in France more than 90 companies, SMEs or large groups such as Sanofi and Servier, employing 17.000 people and achieving 3,6 billion euros in turnover, according to this study conducted by Alcimed for the DGE.

The manufacture of medicines weighs 2 billion euros and concerns 35 companies and 12.000 jobs, while the production of active ingredients represents sales of 1,6 billion euros made by 57 companies employing 5.100 people.

“It is a sector of strategic importance for export” and which on the other hand “guarantees security of supply” and “quality of the manufacturing processes”, underlined Bertrand Gallezot, assistant to the general manager of the companies .

The report makes ten recommendations, including the extension of the Research Tax Credit (CIR) to all the pilot lots, the strengthening of the expertise of the ANSM - the drug agency -, the setting up of "showcase offers" towards the international market and the amplification of export support programs.

The situation is different for the two activities, but both have strengths and weaknesses.

The manufacture of active ingredients, which has been in competition with Asia since the 1980s, has gone upmarket since the early 2010s, and can rely on “recognized expertise”, explains the report.

But this activity must overcome weaknesses such as “reduced visibility”, in particular with regard to the production of biological drugs and a regulatory and normative environment “not conducive to productive investment”.

By 2025, however, the growth of biotechnologies and so-called “high activity” molecules constitute “strong opportunities” for France.

In the pharmaceutical sector, companies operating in France have developed an ability to adjust their production which differentiates them from their German or Italian competitors.

The main weakness, however, is the predominance of mature drugs in oral dry form, which faces downward pressure on prices from competitors based in Eastern Europe.

"We must constantly seek to improve competitiveness," said Géraldine Börtlein, associate director at Alcimed.

But "if we lower prices too much, investments will suffer," warned Pascal Leguyader, director of industrial affairs at Leem, the union for the pharmaceutical industry.

"In terms of employment, we cannot substitute all the uses of the chemical drug with biological", underlined Sébastien Aguettant, president of the Delpharm group.