The Pharmaceutical Industry In Germany 2009

Statistics 2009 The Pharmaceutical Industry in Germany

The vfa is the trade association of the research-based pharmaceutical companies in Germany. It represents the interests of 50 globally leading pharmaceutical companies and their more than 100 subsidiaries and affiliated companies in the areas of health, research and economic policy. The vfa member companies make up about two-thirds of the German pharmaceutical market and employ approximately 90,000 people in Germany. More than 17,000 of them are engaged in research and development.

Those who desire a bright future must use today’s opportunities! In 2008, the research-based pharmaceutical companies invested more in research and development than ever before: EUR 4.84 billion! As a result, the vfa member companies shoulder more than 10 percent of the overall research expenditures of German industry. This high R&D spending is a clear commitment to Germany as a research location and to the future of the pharmaceutical industry in our country. We have exciting plans: The pipelines of our companies are full, and more projects fighting more diseases than ever before have good prospects for obtaining marketing authorization by 2013. At the same time, we meet a fundamental societal need that defies economic crises. Therefore, the pharmaceutical industry is rightfully considered one of Germany’s future-oriented industries. But there’s still much to accomplish: The legal framework for our innovative industry is still characterized by overregulation. Those at the receiving end are not just the pharmaceutical industry but also patients who neither receive innovative pharmaceuticals quickly enough nor in sufficient quantities. If we are to succeed in continuously allowing patients to benefit from innovative pharmaceuticals made in Germany, this research location must be strengthened. And if we wish to preserve the production of pharmaceutical products as an asset for the German economy, we need our politicians to make a stronger commitment to our industry. Our companies are defying the crisis and investing in the future. We are creating up new opportunities for patients and for the German economy. The political arena can support us in this effort by creating a better legal framework.

2

Contents

The Pharmaceutical Industry and the Economy The Future-oriented Pharmaceutical Industry Production of Pharmaceutical Products in Germany Production in Europe, Japan and the USA Economic Stability Added Value Export Ratio of the Pharmaceutical Companies in Germany Employees of the vfa Member Companies Capital Spending Capital Spending of the vfa Member Companies Price Trends Price Changes: A Comparison Pharmaceutical Prices: A European Comparison Price Structure in Europe The Pharmaceutical Industry and Innovation New Molecular Entities in Germany New Molecular Entities and their Applications 2008 Pharmaceutical Projects Promising Success by 2013 of the vfa Member Companies Marketing Authorizations for Orphan Drugs in the European Union Development Costs for a New Pharmaceutical R&D Expenditures of the vfa Member Companies Research Intensity: A Comparison R&D Expenditures in Europe, Japan and the USA Patent Applications for Genetically Manufactured Pharmaceuticals

5 6 7 8 9 10 11 12 13 14 15 16 17

19 20 21 22 23 24 25 26 27

3

The Pharmaceutical Industry and the Health Care Sector Life Expectancy Trends in Germany Increasing Therapeutic Benefit of Innovative Pharmaceuticals Improved Substances Save Money Health Care Expenditures and National Product Health Care Spending Trends Health Care Spending in Europe, Japan and the USA Pharmaceutical Expenditures in Europe, Japan and the USA The Financing of the Statutory Health Insurance System (SHI) Expenditures in the Statutory Health Insurance System 2008 The Pharmaceutical Market The Global Pharmaceutical Market Development of the Largest Pharmaceutical Markets Per-capita Sales of Pharmaceuticals New Molecular Entities: A European Comparison Number of Pharmaceuticals in Germany From Manufacturer to Patients: Distribution and Financing of Pharmaceuticals in the 2008 Pharmacy Market Sales and Packages Sold through Pharmacies in 2008 Parallel Imports Sales of Genetically Manufactured Pharmaceuticals Sales Distribution in the SHI Pharmaceutical Market in 2008 Manufacturer Sales in the SHI Pharmaceutical Market 2008 Sales Growth: Driven by what Components? Changes in 2008 Sales based on Health Disorders Reference Prices in the SHI Market Generic Drugs in the SHI Market Appendix

29 30 31 32 33 34 35 36 37

39 40 41 42 43

44 45 46 47 48 49 50 51 52 53

The Pharmaceutical Industry and the Economy

Even in times of crisis, the pharmaceutical industry is stable. Apart from the significant innovative power of the pharmaceutical companies, this is due to the medical needs of society. With a gross added value of more than EUR 100,000 per employee, the pharmaceutical industry provides a significant asset for Germany’s national economy: Hardly any other industry provides such a high gross added value. The pharmaceutical sector is considered one of the industry branches with the best future prospects. The production of pharmaceutical products in Germany continued to increase in 2008, with more than half of all products still being exported. The number of employees in research and development also continued to rise despite a slight decrease in overall employment. This demonstrates the great potential of Germany as a research location, and the companies continue to invest: With capital spending worth EUR 1.53 billion for new production and research facilities, the pharmaceutical industry achieved another peak value in 2008.

Economy

The Future-oriented Pharmaceutical Industry Index (possible points achieved in percent) MMC technology/optics

76.8

Pharmaceuticals

75.8

Mechanical engineering

75.1

Other motor vehicle constr.

74.4

Automotive industry

73.8

Telecommunications

64.0

Chemical industry

63.8

Electronics industry

63.5

Corporate services

62.8

Supply industry

61.0

Logistics

59.2

Rubber/plastics

56.1

Real estate/housing industry

55.2

Health/social services

54.6

Office machinery

48.8 0

20

40

Source: IW Consult

After “medical, measuring and control technology,” the pharmaceutical industry has the best future prospects out of 35 analyzed German industries. It strongly benefits from expected technological and societal changes and has one of the best growth and development prospects. In this respect, the above-average industry focus on R&D also has a positive effect. Developments in employment also shows that the pharmaceutical industry is already benefiting from this change: Contrary to the prevailing trend, the number of jobs even increased by 8.5 percent in Germany from 2003 to 2008. Particularly negative, however, is the regulatory framework, which significantly hinders the pharmaceutical industry.

60

80

5

6

Economy

Production of Pharmaceutical Products in Germany in EUR billion 28 26 24 22 20 18 16 1994

1996

1998

2000

2002

2004

2006

2008

2000

2002

2004

2006

2008

Change over previous year in percent 11 9 7 5 3 1 -1

1994

1996

1998

2008: provisional data; for detailed data, see Appendix, page 55 Source: Federal Statistical Office, vfa

In 2008, Germany produced pharmaceuticals worth EUR 27.1 billion, a 3.5 percent increase over the previous year. Contrary to many other products, the production of pharmaceuticals is impacted much less by the economic situation than by government intervention to regulate the health care sector. Regulations regarding pricing and prescription restrictions predominantly limit domestic demand. Particularly drastic legislation has subsequently resulted in small or even negative growth rates in production, which was last observed in 2003 and 2004. The share of pharmaceutical production in overall industrial production has been stagnate at two percent for years.

Economy

Production in Europe, Japan and the USA 1990: EUR 136 billion Other 8% Switzerland 4% United Kingdom 7%

32% USA

Italy 8% France 9% Germany 9%

23% Japan

2007: EUR 352 billion Other 13% Ireland 4%

33% USA

Switzerland 6% Italy 6% United Kingdom 7% Germany 8% France 10% Japan: 2006 Source: OECD, EFPIA, Pharmaceutical associations of the European countries, vfa

In an international comparison, Germany has only barely been able to maintain its position as a production location for pharmaceutical products. Eight percent of the overall pharmaceutical production from Europe, Japan and the USA, worth EUR 352 billion in 2007, came from Germany. In 1990, this share was still at nine percent. Compared to Japan and the United States, the countries of the Euro zone have benefited from the strength of their currency over the past five years. Especially medium-sized European countries such as Ireland, Austria, Belgium and Switzerland (as a non-Euro country) have expanded their pharmaceutical production.

13% Japan

7

8

Economy

Economic Stability Index of orders received, adjusted seasonally, 2005 = 100 130 120 110 100 90 80 70 60

1991

1993

1995

Manufacturing industry

1997

1999

2001

Chemical industry

2003

2005

2007

2009

Pharmaceutical products

Source: Federal Statistical Office

The supply of pharmaceuticals is a basic human need and therefore not subject to economic fluctuations as much as other necessities. As a result, the pharmaceutical industry is one of those economic areas that lends continuity to economic development. One of the most important economic indicators, the index of orders received, shows that the economic cycles of the past years, especially 1993 to 1995, 1996 to 1998, 1999 to 2001 and the 2006/07 boom have barely impacted the pharmaceutical industry.

Economy

Added Value Net added value per employee in 2006 in EUR 1,000 Pharmaceutical industry

101.5

Chemical industry ¹

91.3

Electrical engineering ²

65.2

Mechanical engineering

64.4

Manufacturing industry (total)

61.6

Construction

41.8 0

20

40

60

¹ incl. pharmaceutical industry ² Office machinery, computing devices, electrical engineering

Source: Federal Statistical Office

With a net added value of almost EUR 100,000 per employee in 2006, the pharmaceutical industry is among the best performing and most productive industries in Germany.

80

100

9

10

Economy

Export Ratio of the Pharmaceutical Companies in Germany Foreign sales as percent of total sales 60 50.7 48.5 50.1

50

52.6 53.5 53.0

55.1 56.5 56.1

45.6 40.7 42.3

40

35.6

37.5

30

20

10

0 1995

1997

1999

2001

2003

2005

2008: provisional data; for detailed data, see Appendix, page 56 Source: Federal Statistical Office

Due to various types of regulations, the domestic pharmaceutical market has lost its significance for the German pharmaceutical companies in the long term. In contrast, international sales have become more and more important. The export ratio has increased from about 36 percent in 1995 to more than 56 percent. In a ranking of production locations, Germany still ranks fourth after the United States, Japan and France.

2007

Economy 11

Employees of the vfa Member Companies Number in thousands 2008

87.8 17.1

2007

91.5 17.0

2006

95.1 16.8

2005

91.9 15.9

2000

78.4 14.1

1995

73.2 14.5 0

Employees (total) 20

40

60

80

100

2008: provisional data Source: vfa

In 2008, the number of employees in the vfa member companies decreased to about 88,000, which corresponds to a 4.1 percent reduction compared to the previous year. In contrast, the number of employees in research and development increased (by 0.2 percent to 17,100). This shows Germany’s excellent potential as a research location. In particular, research-based pharmaceutical companies depend on the qualified workers they find in Germany.

R&D employees

12

Economy

Capital Spending as percent of sales Pharmaceutical industry

4.4

Chemical industry ¹

3.6

Manufacturing industry (total)

3.2

Electrical engineering ²

3.1

Mechanical engineering

3.1

Motor vehicle industry

2.9 0

1

2

3

¹ incl. pharmaceutical industry ² Office machinery, computing devices, electrical engineering

As of: 2007 Source: Federal Statistical Office

With a capital spending share of 4.4 percent of sales, the pharmaceutical industry is among the industries in Germany with above-average capital spending. This triggers considerable additional production and employment in other industries, as was shown in a study by the German Institute for Economic Research. These indirect production and investment effects increase the industry’s added value by roughly another 90 percent. Especially industry sectors that provide great added value and employment volume are pulled along by the pharmaceutical industry, e.g. research and development services. Each job in one of our companies creates another job in other industries.

4

Economy 13

Capital Spending of the vfa Member Companies in EUR billion 2008

1.53

2007

1.46

2006

1.51

2005

1.27

2000

1.04

1996

0.89 0

0.4

0.8

1.2

2008: provisional data Source: vfa

In 2008, the research-based pharmaceutical companies in Germany increased their high level of capital spending once again. At EUR 1.53 billion, the 2008 volume was even above that of the 2006 peak and therefore significantly higher than during previous years. As a result, the guarded behavior of the first half of the decade has not continued, proving the industry has greater trust again in Germany as an industrial location.

1.6

14

Economy

Price Trends 1995 = 100 125 Private consumption (total)

120 115 110 105 100 95 90

SHI pharmaceuticals 1996

1998

2000

2002

2004

2006

2008

For detailed data, see Appendix, page 57 Source: Federal Statistical Office, WIdO

Up until 2003, prices for pharmaceuticals barely changed. Over the past five years, they have significantly decreased. Today, pharmaceuticals are about 10 percent cheaper than they were in 1995. In contrast, prices for all consumer goods and services have increased by almost 20 percent from 1995 to 2008.

Economy

Price Changes: A Comparison Price increase from 2005 to 2008 in percent SHI pharmaceuticals

-5.5

Income subject to SHI contributions per SHI member

+3.4

Retail sector

+5.5

Private consumption (total)

+6.6 -6

-4

-2

0

2

Source: Federal Statistical Office, BMG, WIdO

The prices of pharmaceuticals provided to patients insured through statutory health insurance decreased by 5.5 percent over the past three years. In contrast, retail prices increased by 5.5 percent and prices for private consumption were up a total of 6.6 percent. The income of SHI members that is subject to contributions increased by 3.4 percent.

4

6

15

16

Economy

Pharmaceutical Prices: A European Comparison Germany = 100 Belgium

136

Ireland

133

Denmark

102

Germany

100

Sweden

99

Austria

99

Finland

93

Netherlands

92

United Kingdom

85

Norway

85 80

100

120

Source: SNF-report 05/08 (Bergen, May 2008)

Pharmaceuticals in Germany are not more expensive than in many other industrialized nations as confirmed by the latest research institute study commissioned by the Norwegian ministry of health. The survey examined the drug prices of 200 of the most frequently sold molecular entities in 10 European countries. The results show Germany in the midrange of the compared countries, on a par with Denmark, Sweden and Austria. Since the period of investigation (first half of 2007), pharmaceutical prices in Germany have again decreased by more than two percent.

140

Economy 17

Price Structure in Europe Shares in percent 3 16

Sweden

81

Portugal

71

France

68

Switzerland

67

Spain

65

Greece

63

Italy

61

Finland

60

3 24

Netherlands

60

7

Denmark

60

4 16

Norway

57

Germany

57

4 15

Belgium

57

8

Ireland

56

10

Austria

55 0

Manufacturers

5

17

7

7

2 23

Wholesalers

Pharmacies

9

24 13

6

27 20 20

15

8

40

8

24

6

20

4

26

5

5

2

25

6 5

24 6

29 34 17

23 60

80 Taxes and discounts

Prescribed or reimbursed pharmaceuticals; Ireland: only oral dosage forms; as of: 2007 Source: EFPIA, Pharmaceutical associations of the European countries, vfa

With a manufacturer’s share of 57 percent of the retail price, Germany is located in the bottom segment of the European ranking. Pharmaceuticals are subject to the full value-added tax rate in Germany. Together with legally mandated manufacturer and pharmacy discounts, the tax rate in Germany amounts to 24 percent of the retail price, making it the highest in Europe. In most other European countries, the tax burden for pharmaceuticals is either reduced or waived completely.

100

The Pharmaceutical Industry and Innovation

Research and development expenditures reached a new high in 2008: EUR 4.84 billion were invested in the research and testing of innovative pharmaceuticals. Once again, 31 new molecular entities were launched, some of which represent the first therapeutic options for serious diseases. Development continues: A total of 442 new projects of our member companies have the chance of obtaining marketing authorization by 2013. The focus of the projects is on cancer, but intensive research is also being conducted in the fields of infection, inflammatory diseases and geriatric disorders such as Alzheimer’s dementia. No other industry performs as much research as the research-based pharmaceutical industry: In a comparison of all industries conducting R&D, the intensity of the vfa member companies is three times as great and the number of employees twice as high.

Innovation

New Molecular Entities in Germany Number 44

36

34

36 31

29 25

35

23

27

26

25

29

29

27

31 31

23

21 17

14

1988

1990

1992

1994

1996

1998

2000

2002

Source: Pharmazeutische Zeitung, vfa

In 2008, 31 pharmaceuticals based on NMEs (new molecular entities) were launched in the German market. Based on the global research process, the number of substances launched in Germany is closely connected to the international development of pharmaceuticals. Unless their importance is merely local, most new molecular entities receive marketing authorization in all key countries. This is the only way to balance the costs for the research and development of an NME, which globally amount to USD 800 million on average, within its limited patent term.

2004

2006

2008

19

20

Innovation

New Molecular Entities and their Applications 2008

Eyes 1 Anemia 1 Urological diseases 1

7 Cancer

Immune system 2

Metabolism 3

6 Cardiovascular system

Nervous system 5

5 Infections

Source: vfa

In 2008, research-based pharmaceutical companies once again facilitated important progress in medicine based on new or novel pharmaceuticals, e.g. for the treatment of brain tumors or prostate cancer. Two new antibiotics also counteract bacteria that have become resistant to older antibiotics. Novel drugs in the form of capsules or tablets make injections for thrombosis prevention in orthopedic surgery obsolete. One pharmaceutical for epilepsy was developed especially for children. Overall, research-based pharmaceutical companies launched 31 pharmaceuticals with new molecular entities this year. Additionally, there were more than 40 drugs where known active ingredients were developed into a new dosage form, such as patches or lozenges melting in the mouth.

Innovation

21

Pharmaceutical Projects Promising Success by 2013 of the vfa Member Companies Distribution to various medical areas; overall number of projects: 442 Other medical areas¹ 10% Other nervous system disorders 4%

31% Cancer

Neurodegenerative diseases ² 2% Psychiatric diseases ³ 6% Pain 3% Diabetes type 2 4% Osteoporosis 1% Inflammatory diseases4 10%

14% Infectious diseases COPD 2% 13% Cardiovascular diseases ¹ Each individual one accounts for 1% or less ² Alzheimer’s disease, Parkinson’s disease ³ Depression, schizophrenia, bipolar disorder, etc. 4 Rheumatoid arthritis, asthma, multiple sclerosis, Crohn’s disease, psoriasis, etc. Source: vfa

The vfa member companies are working on thousands of drugs. Pharmaceutical projects for some 110 diseases have progressed so far that they may lead to marketing authorization by the end of 2011. Most of these projects will target cancer (26 percent), cardiovascular diseases (18 percent) and infectious diseases (15 percent). But a particularly large number of drugs are also being developed for inflammatory diseases such as rheumatoid arthritis and for type-2 diabetes (the so-called adult onset diabetes). A total of 93 percent of the projects are concerned with severe diseases, some of them even life-threatening while only seven percent address less severe health disorders such as the common cold or incontinence.

22

Innovation

Marketing Authorizations for Orphan Drugs in the European Union Number 13

European Orphan Drug Regulation effective from 2000 onward 9

7¹ 6

6

5

5 4 3

4

3 1

1

1

2

0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 ¹ expected marketing authorizations (as of: June 2009) Source: vfa

Since the start of 2000, companies have had the opportunity to apply for “orphan drug status” for a pharmaceutical being developed in Europe, if said drug is for a disease that affects no more than one out of 2,000 EU citizens. With this status comes lower marketing authorization fees, free scientific consulting and exclusive marketing rights for a maximum of 10 years, among others. While only one orphan drug on average was approved per year prior to the regulation, this number has increased significantly. A total of 52 orphan drugs have received marketing authorization in the EU since 2000. More than 650 additional ones are being developed (as of June 2009). As a result, the Orphan Drug Regulation is a good example of how meaningful political regulatory activity can increase pharmaceutical research in areas desired by society.

Innovation

Development Costs for a new Pharmaceutical in USD million 2001

802

1999

610

1997

429

1993

359

1991

231 0

200

400

600

800

Source: Di Masi J. et al., Tufts University (1991); Office of Technology Assessment (1993); Myers and Howe (1997); Office of Health Economics & Lehman Brothers (1999); Tufts University (2001)

In 2001, an average of USD 800 million was required for the research and development of a new drug with a new molecular entity. More than half of these expenditures are spent on clinical development, especially the logistically expensive, multinational phase III studies. The requirements with regard to proven safety, efficacy, tolerability and quality during the marketing authorization process have increased steadily. Another reason for the strong cost increase is the growing complexity of the diseases to be treated. Examples include multiple sclerosis or Parkinson’s disease for which researchers must take into account many physical processes simultaneously to identify possibilities for risk-free pharmaceutical therapy.

23

24 Innovation

R&D Expenditures of the vfa Member Companies in EUR billion 2008

4.84 1.26

2007

4.53 1.27

2006

4.37 1.27

2005

4.16 1.16

2000

3.08 0.95

1996

2.45 R&D expenditures

0.94 0

1

2

3

4

2008: provisional data Source: vfa

Once again, the research-based pharmaceutical companies in Germany intensified and expanded their research and development (R&D) activities for new pharmaceuticals in 2008. R&D expenditures were up 6.9 percent to EUR 4.84 billion, which corresponds to more than EUR 13 million per day. As a result, not just the volume increased significantly. Research intensity has grown as well. At 13.2 percent, a higher share of sales was invested in R&D activities than during the previous year (12.8 percent). Even though pharmaceutical products make up only about 2.5 percent of German industry sales, the research-based pharmaceutical companies contributed more than 10 percent of R&D spending in 2007. This share may have even increased in 2008.

5

Share of human resources costs

Innovation

Research Intensity: A Comparison Share of R&D expenditures in sales in percent 13% vfa companies

4% companies conducting R&D (total)

Share of R&D employees in overall employees in percent

19% vfa companies

8% Companies conducting R&D (total)

Source: Stifterverband für die deutsche Wissenschaft (2005), vfa (2008)

The research and development of new pharmaceutical substances is highly cost and labor intensive. In 2008, the research intensity of the vfa member companies continued to increase. At 13.2 percent, a higher share of sales was invested in R&D activities than during the previous year (12.8 percent). The share of R&D employees in total employees at the vfa member companies also increased to 19.4 percent (previous year: 18.6 percent). This means that one out of five employees works in this area today. As a result, the R&D intensity of the vfa member companies remains at a much higher level than in companies conducting R&D in Germany overall, which achieve a sales rate of four percent and an employee rate of eight percent (2005, last available data).

25

26

Innovation

R&D Expenditures in Europe, Japan and the USA in USD billion

Shares (2007) 82.9

Japan 13%

76.0

44% USA Europe excl. Germany 35%

67.8

8% Germany

44.8

2000

2005

2006

2007

2007: provisional data Source: EFPIA, PhRMA, vfa

In 2007, the R&D expenditures of the pharmaceutical companies in Europe, Japan and the USA increased to more than USD 80 billion. This corresponds to a 61 percent increase since 2000 (adjusted for exchange rate fluctuations). Calculated in local currency, R&D expenditures in the USA (71 percent) and Japan (68 percent) have risen more strongly than in Europe (46 percent). Almost half of global R&D expenses continue to be made in the United States.

Innovation

Patent Applications for Genetically Manufactured Pharmaceuticals 1990: 432 patents Other 16% France 6%

45% USA

United Kingdom 7% Germany 11% Japan 15%

2008: 1,232 patents Other 29% 39% USA

United Kingdom 4% France 7% Germany 9%

12% Japan

Published patent applications effective in Germany, IPC main classification and subclassification (A61K); For detailed data, see Appendix, page 57 Source: German Patent Office

In 2008, 11,425 patents were registered for pharmaceuticals in Germany, of which 1,232 applications (10.8 percent) were for genetically manufactured drugs. In 2001 and 2002, this share was still at 20 percent. Since 1990, the share of patent applications from the United States has gone down slightly. Patent applications from Germany, which were at 16 percent in 2003, have decreased to under 10 percent (2008: 109 applications). Japan, whose share shrank to five percent in the meantime, recorded increases over the past few years and once more ranks higher than Germany with 150 applications. The “Other” category, whose share has increased significantly, is dominated by Switzerland, Sweden and Canada.

27

The Pharmaceutical Industry and the Health Care Sector

Thanks also to new pharmaceuticals, people in Germany are living longer and longer. Health care expenditures as a share of gross domestic product remains stable at just below 11 percent and is therefore in the upper medium range when compared internationally. The share of expenses for pharmaceuticals also remains constant at under two percent of the gross domestic product, even though more and more people depend on pharmaceuticals with increasing age. The share of pharmaceutical expenditures in overall health care spending has remained unchanged at 15 percent for years. Germany ranks in the middle segment in Europe in this respect as well. This shows that pharmaceutical expenses are predominantly controlled by the growing demand and do not represent a risk for the overall financing of the German health care system.

Health Care System 29

Life Expectancy Trends in Germany in years 2005/07

82.3 76.9

2000/02 81.2 75.4 1995/97

80.2 74.1

1990/92

79.3 72.9

1985/87

78.4 71.8 60

Women 65

70

75

80

85

Source: Federal Statistical Office

Thanks partly to new pharmaceuticals, the average life expectancy in Germany has increased by four years for women and five years for men over the past 20 years. For example, several drugs targeted at tumors have helped make the median lifetime after a cancer diagnosis significantly longer for many patients and prevent a relapse in many cases. This applies e.g. to breast, colon and renal cancer and some types of leukemia and lymphoma. Disease prevention was also improved, i.e. based on new vaccines against rotaviruses, pneumococci and meningococci. Physicians can also protect patients suffering from diabetes or hypertension better and better from life-threatening secondary diseases. Moreover, an increasing number of rare diseases have become more treatable, or treatable at all, due to pharmaceuticals.

Men

30 Health Care System

Increasing Therapeutic Benefit of Innovative Pharmaceuticals Share of new molecular entities rated as an innovative pharmaceutical or significant therapeutic improvement (in percent) 72 64 53 44

1991–1995

1996–2000

2001–2005

2006–2008

Source: Arzneimittelverordnungs-Report 2007, Fricke

Of the 87 molecular entities that received marketing authorization in Germany for the first time during the past three years, 63 (i.e. more than 72 percent) were rated innovations or therapeutically relevant improvements – even by critical experts. The share of new molecular entities that can be considered innovative in this respect has continuously increased over the past 17 years.

Health Care System 31

Improved Substances Save Money Costs of patented products per daily dose in the 2007 SHI market in EUR Pharmaceuticals with novel active ingredient/therapeutic principle

6.85

Pharmaceuticals with improved qualities of known therapeutic principles

4.05

Pharmaceuticals with small differences to previously released active ingredients

1.41

0

-41%

-79%

1

2

3

4

Source: Arzneimittelverordnungs-Report 2008

Active ingredients whose molecular structure resembles substances that have already been released often realize therapeutic benefits, e.g. through improved pharmacokinetics or fewer side effects. After all, there is a reason why many of these products are part of the essential drug list of the World Health Organization (WHO), while the original product is not listed. In addition, molecular variations promote price competition between patented substances of a given substance class. The latest data of the Arzneiverordnungs-Report 2008 (p. 171) show that pharmaceuticals with a novel active ingredient or therapeutic principle cost an average of EUR 6.85 per daily dose while substances associated with the improvement of the pharmacological quality of previously known therapeutic principles cost about 41 percent less on average. As a result, they offer a greater benefit at a reduced price.

5

6

7

32

Health Care System

Health Care Expenditures and National Product Share of gross domestic product in percent 11 Health care spending in total 9

7 SHI service expenditures 5

3 Pharmaceutical expenditures

1 1992

1994

1996

1998

2000

2002

2004

2006

2008

From 2007 onward: provisional estimate; for detailed data, see Appendix, page 58 Source: Federal Statistical Office, vfa

The service expenditures of the statutory health insurance funds have been stable for more than 12 years. Due to the various intervention measures by the legislature, the share of gross domestic product has actually decreased rather than increased. Pharmaceutical expenditures as a share of GDP is consistently below two percent. More than two-thirds of the expenses for pharmaceuticals are shouldered by the statutory health insurance funds. About one-fifth is financed directly by private households in the form of copayments and self-medication, and 12 percent are covered by other sponsoring institutions.

Health Care System 33

Health Care Spending Trends Increased expenditures 1992 to 2007 in percent Office-based doctor’s care

53.4

Health care spending in total

60.4

Pharmaceuticals

63.9

Prevention/ health protection

66.0

Administration

69.3

Other medical needs

81.6

Nursing care/therapeutic services

82.7 0

20

40

Source: Federal Statistical Office

This long-term comparison between 1992 and 2007 (last available data) reveals, expenses in the pharmaceutical sector increased just as strongly as overall health care expenditures.

60

80

34

Health Care System

Health Care Spending in Europe, Japan and the USA as percent of GDP USA

15.3 13.2

Switzerland

11.3 10.1

France

11.1

Germany

10.6

9.8 10.4 Italy

9.0 7.4

United Kingdom

8.4

Spain

8.4

Japan

8.2

7.0 7.5 7.0 0

2006 3

6

9

12

15

2006: Japan, Switzerland estimated; United Kingdom: different methodology Source: OECD

In an international comparison, Germany (after the United States, Switzerland and France) spends the fourth largest share of its gross domestic product on health care services. In contrast to the other nations, Germany’s share barely increased over the past 10 years.

1996

Health Care System 35

Pharmaceutical Expenditures in Europe, Japan and the USA as percent of total health care expenditures Spain

21.7 19.8

Italy

20.0 21.1

Japan

19.8 21.6

France

16.4 16.0

Germany

14.8 13.0

USA

12.6 9.3

Switzerland

10.5 10.0 0

2006 5

10

15

20

2006: Japan, Switzerland 2005 Source: OECD

With regard to pharmaceutical expenditures, Germany remains significantly below the level of most other European countries and Japan with a share of 14.8 percent in overall health care expenditures.

1996

36

Health Care System

The Financing of the Statutory Health Insurance System (SHI) Employee wages as percent of GDP 56 54 52 50 48 1992

1994

1996

1998

2000

2002

2004

2006

2008

1998

2000

2002

2004

2006

2008

SHI contribution rate in percent 15 14 13 12 11 1992

1994

1996

For detailed data, see Appendix, page 59 Source: Federal Statistical Office, BMGS

For years, statutory health insurance (SHI) has been facing the problem of increasing expenditures and decreasing revenues. One important reason for the striking increase in SHI contribution rates is the weaker growth in employee wages, which represent the most important basis for the funding of statutory health insurance. Between 1992 and 2008, employee wages as a share of gross domestic product (GDP) decreased from 55.7 to about 49 percent. At the same time, the average SHI contribution rate increased from 12.7 to 14.9 percent. In 2004 and 2005, another increase in contribution rates was prevented only by transferring expenses to insured patients and service providers, especially pharmaceutical companies.

Health Care System 37

Expenditures in the Statutory Health Insurance System 2008 in EUR billion (percent) Administrative costs, etc. 6% 33% Hospital care

Other services 22% Remedies and medical devices 6%

15% Office-based doctor’s care

Pharmaceuticals 18%

Change over 2007 in percent Total service expenditures

4.7

Hospital care

3.5

Office-based doctor’s care

5.0

Pharmaceuticals

5.3

Remedies/medical devices

4.6

Other services

5.9

Administrative costs, etc.

3.7 0

2

4

6

provisional data; for detailed data, see Appendix, page 60 Source: BMG

At EUR 52.6 billion, one-third of the total SHI expenditures in the amount of EUR 160.8 billion is spent on hospital care. Together, expenditures for office-based doctors’ care (EUR 24.3 billion; 15 percent) and pharmaceuticals (EUR 29.2 billion; 18 percent) represent another third. A total of EUR 8.3 billion (5.2 percent) was used to cover administrative costs. Due to the value-added tax increase, effective from January 1, 2007, expenditures in some service areas (notably pharmaceuticals) exhibited above-average growth. Expenditures for preventive medicine were also significantly higher. Of the overall expenditures of statutory health insurance, only four percent (EUR 6.4 billion) belong to the manufacturers of patented pharmaceuticals.

The Pharmaceutical Market

Over the past eight years, sales in the global pharmaceutical market have more than doubled. The United States is still in the lead, reaching the highest per-capita sales in the market as well. In Germany, pharmaceutical spending is only about half as high. In Germany, legal regulations still prevent patients from benefiting quickly and sufficiently from pharmaceutical innovations after their marketing authorization: In 2007, only six percent of pharmaceutical expenditures were made for innovative pharmaceuticals launched during the past five years. This brings Germany to the bottom of the table in Europe. The dominant factor in the dynamics of the pharmaceutical market continues to be medical and therapeutic needs: Not only were increases recorded for serious and life-threatening diseases such as cancer, rheumatoid arthritis and multiple sclerosis but also for widespread conditions such as cardiovascular diseases or diabetes as well as in preventive medicine with the first vaccine against one type of cancer, the human papillomavirus (the trigger of cervical cancer).

Pharmaceutical Market

The Global Pharmaceutical Market in USD billion

773

Shares (2008) Other 21%

715

37% USA

648 605

Japan 10%

Europe 32%

2005

2006

2007

2008

Sales at manufacturer prices in the pharmacy market Source: IMS Health, vfa

From 2000 to 2008, global pharmaceutical sales have more than doubled. With about 37 percent, the United States remains the largest individual market worldwide. Over the past three years, the growth of this market, which always was above average until the first few years of the new millennium, now has more in common with the moderate dynamics of the European markets. The strongest growth was exhibited by the Eastern European, Latin American and Asian markets. In 2008, Europe’s share of the world market grew to 32 percent (2003: 26 percent) primarily due to the strength of the euro against the U.S. dollar. Germany’s share of the global market remained nominally (i.e. at the current USD exchange rate) at about 4.5 percent. This represents a real decrease to 3.5 percent.

39

40 Pharmaceutical Market

Development of the Largest Pharmaceutical Markets 2001 = 100 170

Spain

160 USA 150 140 United Kingdom 130

France Germany

120

Japan

110 100

Italy

2001

2002

2003

2004

2005

2006

2007

2008

Sales increases adjusted for exchange rate fluctuations; sales in Germany adjusted for manufacturer discounts from 2003 onward Source: IMS Health, vfa

With a volume of about USD 31 billion in 2007, Germany is the third largest market for pharmaceuticals in an international comparison and at the same time one of the markets exhibiting below-average growth. This is due to the cost containment measures of the legislature. From 2001 to 2008, sales in the German pharmacy market increased by about 25 percent, while the U.S. and Spanish pharmacy markets increased by more than 50 percent. In the United Kingdom and France, sales increases were also larger than in Germany.

Pharmaceutical Market

Per-capita Sales of Pharmaceuticals 2008 in USD (adjusted for purchasing power) USA

676

Japan

509

Canada

444

France

398

Switzerland

373

Germany

352

Spain

330

Italy

245

United Kingdom

199 0

200

400

600

Sales in the pharmacy market at manufacturer prices; Switzerland 2007 Source: IMS Health, OECD, vfa

With regard to per-capita sales (sales in the pharmacy market at manufacturer prices), Germany ranks in the middle of an international comparison. When comparing European countries, Germany lies behind France and Switzerland. Also in non-European industrial nations such as the USA, Japan and Canada, per-capita sales are higher than in Germany.

41

42

Pharmaceutical Market

New Molecular Entities: A European Comparison Market share of new molecular entities launched during the past five years in percent Ireland

16.7

Sweden

14.7

Belgium

14.4

Netherlands

13.3

Italy

13.0

Spain

13.0

France

12.9

Denmark

11.5

Utd. Kingdom

9.0

Austria

8.2

Switzerland

7.2

Germany

6.0 0

5

10

15

20

As of: 2007 Source: Pharmaceutical associations of the European countries, vfa

When it comes to enthusiasm for innovation, Germany ranks near the bottom in Europe. In 2007, only 6.0 percent of expenditures in Germany were made for innovative pharmaceuticals launched during the previous five years. As a result, Germany spends less on novel pharmaceuticals than most other European countries, despite the fact that an equally large number of pharmaceuticals receive marketing authorization domestically. However, they are prescribed less frequently or they have lower prices.

Pharmaceutical Market

Number of Pharmaceuticals in Germany Number 2009

8,778

2007

8,834

2005

8,933

2000

9,615 0

8,500

9,000

9,500

Shares (2009) Homeopathics 7% Pharmaceuticals from botanical sources 8%

4% Other

81% Chemically defined pharmaceuticals

Source: Rote Liste

The number of pharmaceuticals is decreasing over the long term. The well-known German drug directory known as the “Rote Liste” currently includes 8,778 product listings, including many rarely used pharmaceuticals. Based on evaluations made by statutory health insurance, 90 percent of physicians’ prescriptions are for only 2,000 pharmaceuticals. The number of available pharmaceuticals is often represented imprecisely. For example, if not just the individual product but all of its dosage forms and concentrations are counted separately, one may arrive at numbers of 40,000 pharmaceuticals or more. However, this method of counting is not customary in other countries and is therefore inappropriate for the purpose of comparisons.

43

44 Pharmaceutical Market

From Manufacturer to Patients: Distribution and Financing of Pharmaceuticals in the 2008 Pharmacy Market in EUR billion Manufacturer sales (at manufacturer prices) Trade mark-ups

23.8 10.7 6.6

Sales tax Pharmacy market at retail prices Self-medication with OTC drugs Private prescriptions

41.0

SHI prescriptions

31.7

4.3 5.0

Insured patients’ copayments Manufacturers’ and trade discounts Expenditures of the health insurance funds

1.7 2.6 27.4

Simplified representation of the most important cash and service flows (with approximate values) Source: vfa

In 2008, the pharmaceutical companies provided pharmaceuticals for human consumption worth EUR 23.8 billion (at manufacturer prices) via pharmacies for outpatient treatment. After adding the wholesale and pharmacy mark-ups as well as sales tax, this corresponds to a market volume of EUR 41.0 billion at retail prices. A total of 11 percent of this amount was for selfmedication, 12 percent for private prescriptions outside of statutory health insurance and 77 percent for SHI prescriptions. This latter category was financed through copayments by insured patients (5.4 percent), manufacturer and pharmacy discounts (8.2 percent) and the health insurance funds themselves (86.4 percent).

Distribution Financing

Pharmaceutical Market

Sales and Packages Sold through Pharmacies in 2008 Sales: EUR 22.5 billion (+4.4% over previous year) unrestricted over-thecounter drugs 6% pharmacy-only drugs 13%

81% prescription drugs

Packages: 1.59 billion (+1.7% over previous year) unrestricted over-thecounter drugs 11%

46% prescription drugs

pharmacy-only drugs 43%

Sales at manufacturer prices minus manufacturer discounts pursuant to the German Social Code V Source: InsightHealth, vfa

As during the previous year, sales in the German pharmacy market increased slightly in 2008. After deduction of legally mandated discounts, net sales were EUR 22.5 billion, i.e. 4.4 percent more than the year before. However, actual net sales were even lower due to the discount agreements concluded between the health insurance funds and manufacturers. The companies’ mandatory discounts for the benefit of statutory health insurance funds were about EUR 1.25 billion. The amount of the individual, contractually agreed discounts is unknown. In 2008, the number of packages sold reached a volume of 1.61 billion, which represents a 1.5 percent increase over the previous year. This increase occurred primarily in prescription drugs, whose share grew from 44 to 46 percent. In contrast, sales of over-the-counter drugs from pharmacies decreased.

45

46 Pharmaceutical Market

Parallel Imports Market share in percent 10 8 6 4 2

2000

2001

2002

Growth rates (in percent)

2003

2004

Parallel imports

2005

2006

2007

2008

2007

2008

Overall market

60 40 20 0 -20 2000

2001

2002

2003

2004

2005

2006

Sales at pharmaceutical manufacturer prices; for detailed data, see Appendix, page 59 Source: IMS Health, InsightHealth, vfa

Still less than 1.8 percent in 1998, the market share of pharmaceutical parallel imports in the pharmacy market has increased to 9.0 percent in 2008. This was due in large part to targeted government support. Beginning in 2004, the introduction of a minimum price difference for imported products to the original products has only partially interrupted this development. Parallel imports mainly focus on patented, innovative pharmaceuticals. As a result, research-based pharmaceutical companies suffer considerable sales losses in the domestic market. In 2008, importers generated sales worth EUR 2.14 billion.

Pharmaceutical Market

Sales of Genetically Manufactured Pharmaceuticals Share of biopharmaceuticals in the entire German pharmaceutical market (2008) 16% Biopharmaceuticals

Chemical and other active ingredients 84%

Sales of biopharmaceuticals in Germany in EUR million (2008) Total sales Metabolism Infections Immunology

4,389 904 861 769

Oncology

627

CNS Hematology ¹ Others²

Sales at manufacturer prices in the pharmacy market ¹ Excl. hematological oncology ² Incl. gastroenterology, dermatology, urology, etc. Source: vfa member companies, EvaluatePharma, BCG analysis

The share of pharmaceuticals with genetically manufactured substances is constantly increasing: With EUR 4.4 billion in sales in 2008, (at manufacturer prices) it was 16 percent. In 2000, this share was still at 8 percent. About 40 percent of sales fall into applications of metabolism (especially insulins for treating diabetes) and infections (especially vaccines) and insulins. Additional important applications include interferons used for immune disorders, monoclonal antibodies against cancer and EPO (erythropoietin) against anemia.

563 310 355

47

48 Pharmaceutical Market

Sales Distribution in the SHI Pharmaceutical Market in 2008

16.0% Taxes

8.9% Legally mandated discounts

Manufacturers 57.1% 14.5% Pharmacies

3.5% Wholesale

Sales at pharmacy retail prices Source: InsightHealth, vfa

In 2008, gross sales with proprietary medicinal products in the SHI market (at pharmacy retail prices incl. VAT without rebate deduction) were EUR 29.5 billion. Based on the German Contribution Rate Safeguarding Act, the SHI Modernization Act and the Economic Efficiency of Pharmaceutical Care Act, the discounts the pharmaceutical companies as well as wholesalers and retailers must grant to statutory health insurance have been changed several times between 2002 and 2008. In 2006, the mandatory discount was expanded again for manufacturers. Due to the value-added tax increase to 19 percent, the share of taxes included in gross sales increased to 16 percent.

Pharmaceutical Market 49

Manufacturer Sales in the SHI Pharmaceutical Market in EUR billion at manufacturer prices 2008

16.86

2007

15.88

2006

15.37

2005

15.37

2004

12.87

2003

14.51

2002

13.57

1.25 1.22 1.04 0.55 1.65 0.58

Net sales Manufacturer discount

Source: InsightHealth, vfa

Based on several tightenings of discount regulations, the manufacturer discount more than doubled from 2005 to 2008 and is now around seven percent of gross sales (at manufacturer prices). Net sales in 2008 were EUR 16.86 billion, which represents a 6.2 percent increase over the previous year. Additionally, discounts based on individual agreements between health insurance funds and manufacturers pursuant to Section 130a para. 8 of the German Social Code V must also be taken into account.

18.11 17.10 16.41 15.92 14.52 15.09 13.57

50 Pharmaceutical Market

2008 Sales Growth: Driven by what Components? Change in sales in EUR billion Overall

+1.5

Consumption

+1.8

Innovation

+0.5

Technical savings

-0.5

Price

-0.3 -0.5

0

0.5

1.0

1.5

Source: IGES

The EUR 1.5 billion sales increase in the SHI market in 2008 was determined by opposing components that either had a sales-increasing or decreasing effect. Consumption (increase in the prescribed daily doses) and innovative pharmaceuticals have created an additional demand of about EUR 1.8 billion and EUR 0.5 billion respectively. In contrast, “technical” savings, e.g. selection of more cost-effective drugs, including those with active ingredients whose patents expired in 2008, or larger packages, have led to almost EUR 0.53 billion in savings. Savings from further price cuts amounted to EUR 0.33 billion. As during the past three years, the dominant factor in the dynamics of the pharmaceutical market are medical and therapeutic needs.

2.0

Pharmaceutical Market

Changes in 2008 Sales based on Health Disorders Changes in sales in EUR million Cancer

+208

Rheumatoid arthritis¹

+177

Multiple sclerosis

+171

Diabetes

+159

Cardiovascular diseases ²

+112

Human papillomavirus (vaccine)

+79

Asthma, COPD

+76

Epilepsy

+75

HIV infections

+75

Depression

+70

Parkinson’s disease

+64 -79

Renal anemia Neuroleptic drugs, antipsychotics

-104

Cardiovascular diseases (beta-blockers)

-115 -100

-50

0

50

¹ and other immune system disorders ² renin-angiotensin system Disorders of more than +/- EUR 60 million Source: IGES

Sales increases were recorded predominantly for the treatment of serious or life-threatening diseases, primarily cancer and – in the case of vaccines, e.g. against human papillomavirus – for the prevention of diseases. In particular, sales decreases were recorded for categories of diseases for which classes of active ingredients are used that could be prescribed more cost-effectively due to expired patents or price reductions.

100

150

200

51

52

Pharmaceutical Market

Reference Prices in the SHI Market Shares in percent 2008

74.9 43.8

2007

75.0 47.1

2006

71.0 43.9

2000

64.6 46.5 Prescriptions 0

25

50

75

2000: as of: July 1; 2006 to 2008: annual averages Source: SHI, vfa

Over the past two years, indirect price regulation based on reference prices has been significantly expanded again. In 2007 and 2008, almost three-fourths of all pharmaceuticals prescribed in Germany were subject to this regulation. As a result, this share is the highest since reference prices were introduced. The sales share of pharmaceuticals subject to reference prices has remained relatively constant due to decreasing reference prices. Effective 2005, new reference price categories may also include patented active ingredients. This involves additional, considerable burdens, especially for the research-based pharmaceutical companies. Since January 1, 2009, more than 29,000 proprietary medicinal products have been subject to reference prices. As a result, the statutory health insurance funds will probably save more than EUR 4 billion in 2009.

Sales

Pharmaceutical Market

Generic Drugs in the SHI Market Shares in the market eligible for generic drugs (in percent) 90 85

Prescriptions

80

Sales

75 70 65 60 55 50 1996

1998

2000

2002

2004

2006

2008

For detailed data, see Appendix, page 60 Source: Arzneiverordnungs-Report 2008 (up to 2007), SHI (2008)

When patents expire, the imitation products of other manufacturers (generic drugs) can also be authorized for marketing alongside the original pharmaceuticals. In Germany, 80 percent of SHI prescriptions – and at 45 percent almost half of all sales in the entire market – are generated in this so-called genericseligible market. During the past 12 years, Germany has evolved into the world’s most generics-friendly country. Often, original products lose almost their entire market share to generic drugs within just a few months after patent expiration. On average, more than 85 percent of all prescriptions and about 80 percent of sales in the generics-eligible market were generated by imitation products in 2008.

53

Appendix

Appendix

The Production of Pharmaceutical Products in Germany Year

Production of pharm. products in EUR billion

Change over previous year in percent

2008

27.136

3.5

2007

26.219

10.6

2006

23.700

4.6

2005

22.654

8.4

2004

20.893

0.8 0.2

2003

20.720

2002

20.672

2.3

2001

20.200

9.2

2000

18.500

2.8

1999

18.000

1.1

1998

17.812

2.5

1997

17.380

-0.4

1996

17.442

4.8

1995

16.641

-0.9

1994

16.800

6.4

2008: provisional data; distinction according to technical company segments Source: Federal Statistical Office, vfa

55

56

Appendix

Pharmaceutical Product Sales of Manufacturers Domestic sales

Foreign sales

Total

2008

14.0

17.8

31.8

56.1

2007

13.6

17.6

31.2

56.5

2006

13.2

16.2

29.4

55.1

2005

13.1

14.8

27.9

53.0

2004

11.4

13.1

24.4

53.5

2003

11.1

12.4

23.5

52.6

2002

11.4

11.7

23.2

50.7

Year

Export ratio in percent

2001

11.2

11.2

22.5

50.1

2000

10.8

10.2

21.0

48.5

1999

11.3

9.4

20.7

45.6

1998

11.4

8.4

19.8

42.3

1997

11.4

7.9

19.3

40.7

1996

11.6

6.9

18.5

37.5

1995

11.6

6.4

18.0

35.6

2008: provisional data; distinction according to technical company segments Source: Federal Statistical Office, vfa

Appendix

Price Trends 1995 = 100 Year

Private consumption

SHI pharmaceuticals

2008

122.4

90.4

2007

119.3

91.8

2006

116.6

93.3

2005

114.8

95.6

2004

113.1

96.3

2003

111.3

100.8

2002

110.1

101.3

2001

108.6

101.9

2000

106.5

101.0

1999

105.0

100.5

1998

104.4

99.7

1997

103.4

99.5

1996

101.5

100.1

1995

100.0

100.0

Source: Federal Statistical Office, WIdO

Patent Applications for Genetically Manufactured Pharmaceuticals Country of origin 1990 USA

1995 2000 2005 2006 2007 2008

192

352

891

597

517

468

482

Germany

49

65

183

157

146

102

109

Japan

66

28

82

162

198

173

150

UK

29

41

90

78

64

42

52

France

25

41

84

81

57

52

78

118

285

300

319

276

361

Other

71

Total

432

645 1,615 1,375 1,301

1,113 1,232

Published patent applications effective in Germany, IPC main classification and subclassification (A61K) Source: German Patent Office

57

58 Appendix

Health Care Expenditures and Gross National Product Share of gross domestic product in percent Health Care Spending in total

SHI service expenditures

Pharmaceutical expenditures

2008

10.43

6.06

1.73

2007

10.43

5.96

1.72

2006

10.55

5.97

1.71 1.76

Year

2005

10.68

6.02

2004

10.58

5.94

1.61

2003

10.81

6.29

1.70

2002

10.64

6.27

1.67

2001

10.44

6.18

1.62

2000

10.30

6.10

1.53

1999

10.30

6.12

1.52

1998

10.23

6.11

1.52

1997

10.23

6.18

1.47

1996

10.39

6.44

1.48

1995

10.09

6.33

1.43

1994

9.79

6.24

1.41

1993

9.58

6.04

1.41

1992

9.57

6.20

1.54

2008: provisional estimate Source: Federal Statistical Office, vfa

Appendix 59

The Financing of the Statutory Health Insurance System (SHI) in EUR billion Gross domestic product (GDP)

Employee wages

2008

2,492.0

2007

2,422.9

2006

2,321.5

Year

Employee wages in %

SHI contribution rate in %

1,225.8

49.20

14.90

1,181.6

48.77

14.80

1,149.5

49.52

14.22

2005

2,241.0

1,129.9

50.42

14.17

2004

2,207.2

1,134.5

51.40

14.23

2003

2,161.5

1,131.1

52.33

14.31

2002

2,143.2

1,128.7

52.66

13.96

2001

2,113.2

1,120.6

53.03

13.54

2000

2,062.5

1,100.0

53.33

13.57

1999

2,012.0

1,059.5

52.66

13.60

1998

1,965.4

1,032.3

52.52

13.62 13.58

1997

1,915.6

1,010.7

52.76

1996

1,876.2

1,006.6

53.65

13.48

1995

1,848.5

997.0

53.94

13.15

1994

1,780.8

961.9

54.02

13.17

1993

1,694.4

938.7

55.40

13.22

1992

1,646.6

917.2

55.70

12.71

Source: Federal Statistical Office, BMG

Parallel Imports Year

Market share in percent

Overall market Growth rates in percent

Parallel imports Growth rates in percent

2008

9.0

4.3

5.5

2007

8.9

4.4

20.2

2006

7.7

– 0.4

36.6

2005

5.6

5.9

28.1

2004

4.7

0.2

–29.1

2003

6.6

11.1

2.6

2002

7.2

6.5

65.4

2001

4.6

9.3

60.7

2000

3.1

5.9

52.2

Sales at pharmaceutical manufacturer prices Source: IMS Health, InsightHealth, vfa

60

Appendix

Expenditures in the Statutory Health Insurance System in EUR billion Area

2000

2005

2006

2007 2008

Total spending without RBFE

133.8

143.6

147.6

153.6 160.8

Total expenditures on health care services

125.9 134.8

138.5

144.3

151.1

Hospital care

44.5

49.0

50.3

50.8

52.6

Office-based doctors’ care

21.5

21.6

22.2

23.1

24.3

Pharmaceuticals

20.1

25.4

25.9

27.8

29.2

9.4

8.2

8.2

8.6

9.0

30.4

30.6

31.9

34.0

36.0

7.9

8.8

9.1

9.3

9.6

Remedies/medical devices Other services Administrative expenses, etc.

RBFE: risk-based fiscal equalization; 2008: provisional data Source: BMG

Generic Drugs in the SHI Pharmaceutical Market Shares in the market eligible for generic drugs (in percent) Year

Prescriptions

Sales

2008

85.5

79.9

2007

82.3

75.4

2006

76.7

74.0

2005

74.2

68.3 70.1

2004

74.1

2003

75.0

67.3

2002

74.7

68.2

2001

72.2

65.2

2000

71.0

63.7

1999

68.2

59.4

1998

65.7

55.9

1997

65.0

54.2

1996

63.1

51.2

1995

62.1

50.0

Source: Arzneiverordnungs-Report 2008 (up until 2007), SHI (2008)

Imprint Published by Verband Forschender Arzneimittelhersteller e.V. (German Association of Research-based Pharmaceutical Companies) Hausvogteiplatz 13 10117 Berlin

Diagrams Adler & Schmidt Kommunikations-Design, Berlin

Printer Ruksaldruck

Updated July 2009

For additional vfa media, please visit: www.vfa.de/publikationen

vfa Hausvogteiplatz 13 10117 Berlin, Germany Phone +49 30 206 04-0 Fax +49 30 206 04-222 www.vfa.de