But Europe, with its great history of medical innovation and global reputation for excellence in research, is in a strong position to grow.

Europe has been a leader in scientific research and development for hundreds of years, driving medical progress that has improved the health of people all over the world.

Many of today’s major pharmaceutical companies were founded towards the end of the industrial revolution. The use of steam-powered machines led to a massive increase in the number of factories and the development of the railroad supported industry’s growth. At the same time the chemical synthesis industry revolutionised pharmaceuticals: during the 1900s businesses with experience from the chemical industry, for example from Switzerland, used their expertise for pharmaceuticals and founded companies which are still prospering today including Novartis (formerly Ciba-Geigy and Sandoz) and Roche.

The first industrially made pharmaceutical, Aspirin, was patented by the German company Bayer in 1900 and marked the beginning of the modern pharmaceutical industry.

Using chemical synthesis to produce the active substance of natural remedies went on to become a huge industry and pharmaceutical companies began producing industrial products, especially tablets, for mass distribution. Key European discoveries, such as penicillin, helped the growth of the pharmaceutical industry with Switzerland, Germany and France taking the lead. Today, these countries are still the locations of major pharmaceutical companies and the early pioneers remain leaders in the field.

Today the pharmaceutical industry is one of Europe’s top performing high-technology sectors, according to the European Federation of Pharmaceutical Industries and Associations (EFPIA), and in 2010 the industry invested an estimated EUR 27,000 million in R&D in Europe. The annual growth rate for pharmaceutical R&D expenditure between 2006 and 2010 was 4.4% (compared with 3.9% for the US).

Around 640,000 people are employed in the pharmaceutical industry in Europe and studies have shown that this industry generates three to four times more employment indirectly – both upstream and downstream – than it does directly. The research-based pharmaceutical industry is therefore a key asset of the European economy, delivering a trade surplus in excess of EUR 50 billion.

However, Europe is facing competition from emerging markets such as China and India, where there is a rapid growth in both market and research activities. But Europe has a strong scientific foundation with highly-skilled researchers, healthcare professionals and engineers. Many manufacturing projects are initiated in Europe before being rolled out in emerging markets, where pharmaceutical production is primarily for the local market. The EU has a strong position in international trade, according to the ECORYS 2009 report for the European Commission, with external exports accounting for over 70% of total world trade in pharmaceuticals. The growth of contract manufacturing organisations in Europe is also anticipated to be significant in the coming years (see page 26 in the June 2012 issue of Angle on biopharmaceuticals).

In addition to the big pharmaceutical companies, small and medium-sized enterprises (SMEs) are also doing well in Europe, and the number of enterprises with less than 20 employees has increased over the last decade. Often privately-owned, it could be argued that without the need to show results for shareholder value each financial quarter, these companies are able to focus more on long-term strategies and innovation. Regardless of the underlying reason, SMEs are moving up the Scrip 100 list oftop pharmaceutical companies.

With an ageing population, many of whom have good health insurance, the pharmaceutical market in Europe promises to remain strong. Indications are that European pharmaceutical companies have promising drug candidates in their R&D pipelines and therefore the potential to launch new products that could make a significant difference to people with both acute and chronic conditions.