The Competitive Status of the U.S. Pharmaceutical Industry The Influences of Technology in Determining International Industrial Competitive Advantage (1983) / Chapter Skim
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3. Determinants of National Pharmaceutical Competitve Advantage
3. Determinants of National Pharmaceutical Competitve Advantage
Pages 53-71
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From page 53... ...
Of these hypotheses, the first would appear to be of little explanatory value, while the second provides an important but only partial accounting for the documented relative decline. The sequence of hypotheses considered below begins with three microeconomic aspects (1 abor costs, domestic growth of demand, and national supply of qualified scientists)
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From page 54... ...
MARKET GROWTH Consumer demands for pharmaceutical products have increased in all nations, but at widely divergent rates (see Table 3-23. Data on consumption levels indicate that foreign markets have uniformly grown more rapidly than those of the United States.
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From page 55... ...
share of industrial pharmaceutical research and innovation, but suggest that no such trends should exist. A crucial aspect of the national scientific base is "over nm ental and nonprofit expenditures on research, which in the United States amounts to about 75 percent of all healthrelated RED.
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From page 56... ...
These general relative declines suggest that if deterioration of competitive position in the pharmaceutical industry is no worse nor no better than that of most industries, especially most high-technology industries, then there is no need for arguments unique to the pharmaceutical industry to explain these firms' relative decline. Instead, contemporary economy-wide factors such as taxation, investment policy, export policy, national levels of savings and investment, and so on must be invoked as hypotheses.
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From page 57... ...
Figure 3-1 and Table 3-7 suggest otherwise. Figure 3-1 demonstrates that the pharmaceutical industry has behaved uniquely among the west European and Japanese chemical induce tries, while in the United States, the performance of the pharmaceutical industry is literally indistinguishable from other components of the general chemical industry.
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From page 58... ...
1959 1978 High Technology Industries Aerospace 95.4 90.1 Chemicals 66.3 31.9 Electron~cs-appliances 75.6 46.9 E'harmaceubcals 61.1 35.0 Other Industries Automotive 84.3 59.7 Food products 66.6 55.7 General machinery 61.7 51.8 Metal manufacturing 89.9 32.4 Metal products 66.8 43.2 Paper and paper products 92.2 70.6 SOURCE: Nestor Terleckyj, "Technology and the Changing Position of U.S. Firms Among the World's Largest Companies," paper Oven at the December 1979 meeting of the New York State Bar Association, Antitrust Law Section.
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From page 59... ...
All industries 80.5 68.2 -12.3 Aerospace 74.9 58.8 -16.1 Chemicals 74.3 63.1 -11.2 Electrical 83.6 69.8 -13.8 Pharmaceuticals 64.0 54.7 -9.3 SOURCE: Nestor Terleckyj, "Technology and the Changing Position of U.S. Firms Among the World's Largest Companies," paper given at the December 1979 meeting of the New York State Bar Association, Antitrust Law Section.
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From page 60... ...
1 1 1 1970 1972 1974 1976 1970 1972 1974 1976 1970 YEAR United States Chemical industry · ~ Ethylene - Sulphuric acid — 0~0 Dyestuffs ·—·— Plastics materials Paints and varnishes Soap and detergents Pharmaceutical products .
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From page 61... ...
1967 1975 Change Aerospace 81.5 72.6 -8.9 Electrical 66.3 57.4 -8.9 Chemical 44.5 40.2 -4.3 Other transport 58.7 48.7 -10.0 Machinery 55.2 53.2 -2.0 Basic metals 37.8 40.1 +2.3 Chemical-linked 43.0 43.1 +0.1 Other manufacturing 49.7 49.8 +0.1 NOTE: Countnes surveyed include U.S., Japan, West Germany, France, U.K., Belgium, Italy, Canada, and Sweden. SOURCE: Organization for Economic Cooperation and Development, Trends in Industrial R&D in Selected OECD Member Countries, 1967-1975, OECD, Paris, 1979.
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From page 62... ...
The Congressional Information Service Index for 1969 and 1970 reports congressional hearings on FDA decisions concerning 38 specific drugs or drug classes. Of these hearings, only two questioned FDA decisions not to approve marketing of drugs; one of the latter hearings was on laetrile.
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From page 63... ...
Greater Acceptance of Foreign Data The traditional refusal by FDA to accept foreign data as a basis for NDA approval has required costly delay and new testing.
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From page 64... ...
We believe FDA needs to formally clarify and communicate its policy on the acceptance of foreign data. Less Politicization of Drug Approval Process In the European countries we visited, drug regulatory officials told us there was no direct parliamentary or consumer scrutiny on the drug regulatory process.
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From page 65... ...
drug firms told us that congressional and consumer scrutiny tends to slo w FDA's drug approval process. Greater Cooperation between Regulators and Industr y M ost foreign drug industry officials explained that they have easy access to British, West German, Swiss, Norwegian, and Swedish experts and drug regulatory officials for frequent and open scientific discussions off the record.
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From page 66... ...
The United Kingdom and West Germany now receive NCEs earlier than does the United States, and the U.S. position has moved from one of lead to lag as regards the diffusion of pharmaceutical innovation, as can be seen in Table 3~.
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From page 67... ...
These cost increases have influenced firm strategies dim cernibly, if unevenly, and the overall [U.S.] rate of innovation has been reduced as a result.4 The relatively early assessment of new drug candidates in the clinic is a particular advantage available to firms conducting research abroad.
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From page 68... ...
2.9 Million The second agency is the Council for New Drug Development Promotion that funds only pharmaceutical research . Recen t Council expenditures have been: 1980 Kyoto University 30.8 Million 1979 Takeda Chemical Co.
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From page 69... ...
Ethical drugs require a visa from th e French authorities before they can be marketed. To obtain a visa, the manufacturer must submit complete details of the production process and analytical control methods, together with the testimony of experts, drawn from a list of approved experts, concerning the safety and efficacy of the product.
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From page 70... ...
This trend is particularly disturbing because ROD for new products is the foundation of the modern ethical drug industry and the essential basis for pharmaceutical competitive advantage. Traditional microeconomic factors such as labor costs or resource availability fail to explain this distinctive trend, and by process of elimination leads to government policies as the most likely caus - Moth U.S!
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From page 71... ...
While the divergent government policies that have combined to make the United States a less hospitable environment to r pharmaceutical innovation can be listed, it has not been possible within the limits of this study to determine the relative significance of each specific policy. Given the complexity of the issue, such detailed policy evaluation may never be feasible.
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