Pharmaceuticals –
under the Influence of Globalization
An extensive
structural change in the traditional German pharmaceutical industry has transformed
Germany into an innovative international pharmaceutical location – the world’s
biggest exporter of drugs
By Siegfried Hofmann
Recent reports on Germany’s
pharmaceutical industry have presented a conflicting picture. Many companies have slipped
back a few places in the international league table. Some major names like Hoechst or
Boehringer Mannheim have been lost in mergers. And even the Bayer group is keeping its
eyes open for a partner for its traditional pharmaceutical division. Experts complain that
an industry that used to be the "world’s pharmacy" has dropped to the
middle of the table.
A sector in transition
Yet according to business statistics the
sector is bursting with energy. With a workforce of 115,000 and a turnover of more than 22
billion euors in 2001, the German pharmaceutical industry is one of the most important
centres of drug manufacturing in the world. And the high level of exports illustrates how
globally oriented German pharmaceutical manufacturers are: according to the Chemical
Industry Association, in 2001 alone foreign deliveries grew by over a quarter to more than
19 billion euros. This makes Germany the world’s biggest exporter of medicines, ahead
of countries like the United States and the UK.
The apparent contradiction between the
impression of decline on the one hand and prosperity on the other is primarily the result
of a profound structural change. Domestic and foreign companies alike have been affected
by the trend towards concentration and globalization. While the major German manufacturers
have been concentrating on expanding their international presence, in the opposite
direction foreign corporations have been growing stronger in Germany – for example
through a series of takeovers and mergers. The US group Abbott Laboratories for instance,
recently acquired BASF’s pharmaceutical operations. Hoechst AG has merged with the
French firm Rhône-Poulenc to form Aventis now based in the French city of Strasbourg. And
only a few years earlier the Basel-based Roche group swallowed up the Boehringer Mannheim
group.
The main result of all this activity has been
that the "German pharmaceutical industry" has turned into the
"pharmaceutical industry in Germany." Yet when traditional names have passed
into foreign hands, this has certainly not meant that production and research have moved
out of the country. Frequently, operations have even been expanded. Today, major foreign
pharmaceutical groups, i.e. including companies like Aventis and Abbott, are among the
biggest employers in Germany alongside the remaining traditional companies like Schering,
Bayer, Boehringer Ingelheim, Merck KGaA and Altana. Despite all the criticism of German
public health policy, these foreign pharmaceutical companies have come to appreciate
Germany as a location. It offers not only an important sales market, but also a good
infrastructure, a high standard of staff training and, not least, a rich tradition.
The roots of the German pharmaceutical industry go back a long time – to the century
before last. On the one hand, they emerged from pharmacies, which were already
well-established at that time, gradually became more industrialized and developed into
companies like Schering in Berlin or Merck in Darmstadt. On the other, it was the
up-andcoming chemical industry that discovered pharmacy as a sphere of activity towards
the end of the 19th century. The scientific foundations for these activities were laid by
such eminent researchers as Rudolf Virchow, Emil von Behring, Robert Koch and above all
Paul Ehrlich, who laid the theoretical foundation for modern chemotherapy just over 100
years ago. On the basis of this kind of work, just a few years later German chemical and
dye manufacturers like Hoechst and Bayer were to build up a global business selling
painkillers and fever remedies such as aspirin, antipyrine and many other new active
substances. It was primarily these achievements that prepared the way for the rise of the
German chemical industry to the oft-quoted position of the "world’s
pharmacy" in the early 20th century.
New opportunities
The two world wars cost German pharmaceutical
manufacturers their outstanding position, even if Hoechst was still regarded as the
biggest manufacturer of drugs in the 1980s. Nevertheless, after the Second World War a
generally efficient drugs industry developed that was able to play an important role as a
producer and innovator.
The German companies – like all the
others – were permanently transformed by the structural change of the past few years,
which was characterized by the need to expand research and marketing, as well as by
growing competition from companies selling generic drugs. On the one hand, this
development boosted generic-drug specialists like Ratiopharm, Hexal, Stada and more
recently Schwarz Pharma from Monheim; on the other, it forced established pharmaceutical
concerns to reorientate and intensify their research.
Other companies have recently managed to
strengthen their position, however. Boehringer Ingelheim has progressed to the position of
Germany’s biggest drug manufacturer with a turnover of more than 6 billion euros.
Thanks to a number of new drugs for asthma, high blood pressure and cancer, the group
expects solid growth to continue over the coming years. The Berlin-based Schering AG has
become firmly established as a leading manufacturer of hormone and fertility-control
products and is also strengthening its position as a specialist in fields like multiple
sclerosis and cancer. Altana AG in Bad Homburg is promoting its stomach preparation
Pantoprazol and several new developments to combat asthma, seeking to reinvent itself as a
globally oriented pharmaceutical specialist.
Innovation remains the decisive factor that
will determine the success of these strategies. The German pharmaceutical sector still
spends more on research than most other industries in the Federal Republic – R&D
expenditure totals about 3.5 billion euros. Even so, its share of global expenditure on
pharmaceutical research, as well as its share of new active-substance discoveries, is
declining. This is a cause for concern among the experts. However, the picture is somewhat
distorted by the fact that drugs from German laboratories are often marketed by foreign
companies. Boehringer Ingelheim and Altana, for example, have forged major partnerships
for selling their new developments with US groups such as Pfizer or Wyeth.
Some of the Swiss Roche group’s most
successful products stem from previous research carried out by Boehringer Mannheim. And
when the American Abbott group recently extolled the new rheumatism drug Humira as the
most important new development in its history, it did not mention the fact that most of
the development work on the preparation had been carried out by researchers at the former
BASF pharmaceutical division.
Whereas research work in the 1970s
concentrated largely on classical strengths in the fields of cardiac stimulants and
antibiotics, the priorities have also shifted for German pharmaceutical manufacturers in
the meantime. Bayer, Merck and Schering, for example, have built up extensive cancer
research programs over the last few years. Similarly, the up-and-coming Altana AG is
aiming to establish a second pillar in this field. Research into new drugs for asthma and
diseases of the nervous system, for instance for Alzheimer’ disease, has also been
intensified.
Basically healthy
Biotechnology is becoming more and more
important in this context, even if many of the more chemical-industryoriented German
companies have made heavy weather of this change of paradigms in medical research. Major
chemical companies like Bayer, BASF and Hoechst decided to largely focus their biotech
research on the USA in the early 1990s. And it is only since the mid-1990s that a young
biotechnology industry has also developed in Germany, thanks to an improved legal
framework, the availability of state start-up funds, and above all the successful Bioregio
initiative to promote the location of biotech firms. For the first time, the brain drain
of young researchers to the USA has been successfully plugged. More than 350 young
companies have sprung up since then, largely in centres such as Munich, Heidelberg, Berlin
and the Rhine-Ruhr region. Although the difficult situation on the financial markets is
likely to force a painful process of consolidation, industry experts are confident that
this process will, in the long run, yield a strong core of new, innovative companies.
France and cultural
diversity
1. What is cultural diversity?
Cultural diversity cannot be dissociated from
human dignity. It is the primary requirement for the dialogue of cultures.
There are two aspects of cultural diversity
at the level of individuals, groups or even countries:
- It involves different cultural expressions,
both from the past (heritage) and in the present (creation);
- At the same time, it forges links between
cultures by fostering mutual understanding and creativity, which ensure mutual enrichment.
It concerns a country's right to support
national creation and public access to the diversity of world cultures.
2. How is cultural diversity being
threatened?
It is agreed that economic globalisation and
advances in information and communication technologies, by facilitating the circulation of
cultural goods and services, promote contacts and exchanges between cultures.
However, ongoing changes do not necessarily
favour balanced cultural relations. Businesses are required to address world markets,
which leads them to concentrate their activities and standardise production, even in the
case of cultural goods and services. The resulting threats of cultural domination and
impoverishment justify public policies aimed at safeguarding different forms of cultural
expression and access to a varied supply of cultural goods and services.
Such policies are now under threat: the
freedom of governments to define and implement actions to preserve and promote cultural
diversity is not compatible with the application of trade liberalisation rules.
At the WTO, the defence of cultural diversity
requires us to avoid making commitments to liberalise trade in cultural goods and
services. This was the position of the majority of WTO Member States during the Uruguay
round. As a new round gets under way, it is critical for governments that do not intend to
give up their margin for manoeuvre in cultural policy for good to refrain either from
making further commitments to liberalise trade or from making such commitments when they
join the WTO.
3. What can we do? Write cultural
diversity into law.
The UNESCO Universal Declaration on Cultural
Diversity, which was adopted unanimously at the 31st UNESCO General Conference on 2
November 2001, marks a major step forward in the international community's acknowledgement
of the importance of preserving and promoting cultural diversity.
The Declaration sets out the principles and
requires UNESCO and its Member States to take them further:
- UNESCO is required to pursue its activities
in standard-setting (…) in the areas related to the present Declaration within its
fields of competence (Article 12 c);
- and the Member States are given the task of
taking forward notably consideration of the opportunity of an international legal
instrument on cultural diversity (Point 1 of the Action Plan appended to the Declaration).
At the Johannesburg Sustainable Development
Summit in September 2002, the President of the French Republic reaffirmed the exceptional
nature of cultural goods and services, which are not ordinary merchandise, and presented
culture as the fourth pillar of sustainable development, alongside the economy, the
environment and social concerns. He declared his support for the adoption by the
international community of a world convention on cultural diversity that would lend the
weight of international law to the principles couched in the Declaration just adopted by
UNESCO . He also stated that it was up to UNESCO, the universal and politically legitimate
body with regard to cultural issues, to take responsibility for the convention.
A draft convention, drawn up by the
International Network on Cultural Policy (INCP) was presented to the meeting of Culture
Ministers held in South Africa from 14 to 16 October 2002. The Ministers deemed that the
document was a suitable base for continuing work and recognised UNESCO as the appropriate
multilateral body to receive and implement the future convention on cultural diversity.
At their Beirut summit (18 to 20 October
2002), the heads of State and government from the francophone countries also stated that
they had decided to contribute actively toward the adoption by UNESCO of an international
convention on cultural diversity, enshrining the right of states and governments to
maintain, set and develop policies supporting culture and cultural diversity. A working
group was set up after the Lausanne Ministerial Conference (12 and 13 December 2002) to
contribute to the international discussions, particularly at UNESCO.
4. What objectives and shape could a
future international convention on cultural diversity take?
Building on the foundation of the UNESCO
Universal Declaration, the purpose of the international convention on cultural diversity
could be to enshrine the legal legitimacy of policies to preserve and promote cultural
diversity. The convention would have legal effect and should become the frame of reference
for governments and other multilateral organisations. It would counterbalance the WTO
rules with a cultural standard.
The convention should set out countries'
rights and duties with regard to cultural diversity. These should be addressed at the
domestic level by upholding governments' ability to maintain and develop policies to
support cultural diversity, providing a free choice of suitable measures, space for
domestic cultural products, financial support and roles for public institutions and
independent cultural industries. These rights and obligations should also be addressed at
international level, including such issues as international cultural cooperation,
information exchanges, access to foreign cultural products, promoting cultural diversity
in other multilateral bodies and development assistance. A mechanism for monitoring
implementation of the convention and a dispute settlement arrangement need to be
established.
5. Timetable
Work at UNESCO could start at the next
Executive Board meeting (4 to 16 April 2003) with a decision to put the draft convention
on the agenda for the autumn General Conference (9 September to 18 October 2003). It will
be up to the Member States to decide whether the timing and form of the initiative are
appropriate, and the final adoption of a text could be slated for the 2005 General
Conference.
Text courtesy: Embassy of France, Kathmandu, Nepal. |
