Friday, July 23, 2004

The worm turns?

According to The Daily Telegraph today, even the drugs companies are getting sick of regulation in EU countries. Sir Tom McKillop, chief executive of Astra Zeneca, has issued "a stark warning" to European governments: "improve the business environment, or we'll take our investment elsewhere".

McKillop adds: "If you look at the history of industry, where it is not welcome and does not have a receptive market, there will be a loss of competitiveness… It is for Europe to decide whether it wants to be in the high technology business or not."

He was speaking in response to questions over an interview given by his research and development head Martin Nicklassen to Swedish radio this week. Nicklassen appeared to hint that the company would move its business from Sweden, where it has about 5,000 researchers.

And Astra Zeneca is not the only company that is having problems. Hank McKinnell, chairman of Pfizer, is another executive who has blamed European healthcare regulators for killing the industry in Europe. He blamed price controls and restrictions placed on producers. Many others have threatened to move research from Europe if the environment does not improve.

The crucial thing about these statements, however, is that drug companies, as a rule, actually favour tight regulation. At a certain level, the tight restrictions on marketing new drugs make it too expensive and difficult for medium-sized and small companies to gain entry to the market, and thus serve to reinforce their market dominance.

Furthermore, the "market authorisation" granted by the European Medicines Evaluation Agency, which certifies the safety of products, effectively insulates drug producers from claims by users who have been harmed by their products – as anyone who has tried to sue a drug company will readily attest.

On that basis, if the drugs companies are ganging up to complain about the poor trading environment, things really must be bad.

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